DeFi stands for Decentralized Finance and Curve is its biggest propagator in the world. So naturally, when Curve made a move this week over the nature of decentralization in DeFi, it was bound to turn heads. It all comes down to just one question – Was it the right thing to do or not?
The ongoing Curve Wars, one where a meme project Mochi Inu’s rewards were cut off, has divided the community. Put simply, Curve Wars is the fight to acquire the most CRV rewards through the emission system.
Mochi Inu openly declared the Curve War when it bought and locked in over 1 million Convex Finance’s CVX tokens in order to boost the USDM/3CRV pool to secure yields for its LPs.
Since manipulating the rewards emission system this way is considered sketchy, the Curve Emergency DAO stepped in soon after and cut off Mochi Inu’s rewards completely. The 9-member team characterized Mochi Inu’s move as being a “governance attack” on Curve.
On the contrary, there are many in the community who consider Curve cutting off Mochi’s rewards as an attack on the permissionless feature of DeFi. Many believe Curve is guilty of overreach and an overextension of its powers.
However, many others called this move reasonable mitigation due to the unique nature of this case.
Popular analyst Adam Cochran, however, explained Curve’s decision as “not an attack on the decentralized nature.” He explained that as in governance, not all users have the technical expertise on a matter. Some actions need a quicker reaction, and the need to ensure safety and the prevention of any abuse can be fulfilled in this manner.
Thus, what Curve did does not make it centralized in any way, he concluded.
In any case, at best, what Mochi did was simply abuse the loophole in the Curve emission system. This unique incident could be the trigger to fix it.
The only reason why this became such a public incident is that Curve is the biggest DeFi protocol with over $21 billion in TVL.
Any effect on CRV?
Fortunately, the ongoing war did not have much impact on the protocol’s token CRV in the spot market in any way. Following the broader market’s cues, the altcoin did lose 11.53% of its value this week. However, investors continue to remain bullish, with 50% higher buy orders when compared to sell orders.
With no other anomalies in terms of participation i.e. No investors exiting the market or volumes spiking as a result of selling, it seems that the DeFi space’s events do not have much impact on the spot market.