Convex Finance is the synergistic flywheel of Curve Finance. It is composed of anonymous CRV developers, at least several of which are closely aligned with CRV, including Charlie Watkins, the chief dev at CRV.
CREAM is presently contributing to Andre Cronje’s bribe project on Curve. Essentially, this is resulting in a biweekly payment to any veCRV wallet addresses who vote for the CREAM v2 gauges.
The bribe protocol is currently able to be followed here: https://cur.vote/
Only 1,309,219.18 veCRV (or 0.49% of all veCRV at 267,394,811.02 total) participated this week in the Bribe protocol. Soon, the number of veCRV eligible to participate in Bribes will increase dramatically on 9/16/21 when Convex initiated voting rights for locked CVX.
Only locked CVX can vote for a gauge pool and carries a ratio of voting rights commiserate with the amount of CRV locked into the convex platform.
i.e. If 30% of the 21million circulating CVX are locked, then these 7 million CVX would control all presently locked cvxCRV (90.5m). As such, 1 CVX would carry the voting power of 12.9 veCRV.
Convex Finance controls 33% Curve Finance governance by virtue of perpetually locking 90.56 million veCRV as cvxCRV into its platform. Because of this, 1 CVX controls 4.6 veCRV at present. TVL on CVX is 7.7Billion, contributing to 54% of the TVL on Curve. Recently, CRV has announced its intention to expand to AVAX, Sol, Arbitrum, Celo. CRV is already on Polygon, Fantom, Ethereum and xDai. Essentially, our participation in gauge voting has supported our belief that CRV is the backbone of defi and likely to continue to outperform other, similar protocols.
By virtue of it’s flywheel, Convex finance is making a mean of 1million per day in protocol fees since its inception. Vote locked CVX will be eligible to vote from Sept 15th 2021 and onward. APY on vote locked CVX is expected to be 20%+. This would provide the treasury with a source of income from its investment as well as a guaranteed biweekly vote for the CREAM v2 related gauges.
I propose that the CREAM treasury allocate funds to CVX purchase and vote lock rather than paying for the Bribe Protocol. It is important to note that this proposal is NOT suggesting CREAM build on the Convex flywheel. That comes with complex tokenomics issues that are not applicable to this proposal.
VOTE FOR (PRO):
This proposal is strictly to suggest that the treasury allocate funds to buy CRV voting rights thru the purchase of CVX. This would benefit CREAM as follows:
- Perpetual, weekly GUARANTEED voting rights for the CREAM v2 gauges by an expected ration of 1 CVX controls the vote of approximately 12.9CRV.
- Buy the purchase of CVX, CREAM would be able to diversify its treasury and receive income from yield generating, vote locked CVX on the order of 20%+
VOTE AGAINST (CONS):
Risks associated with this proposal include the fact that CVX may not lock as much CRV in the future as predicted, essentially diluting future voting power for token holders. Based on their flywheel Tokenomics with high APY in CRV/CVX and 3CRV rewards, this is unlikely but a possibility.
Another risk is that this is a long-term commitment to CRV gauge voting and if CRV ever voted to stop gauge voting, the value of CVX to the platform would be diminished. I think this is unlikely since CRV’s plan all along has been to provide permissionless, v2 gauges with veCRV based governance…but its still a risk.