Upon reviewing the comments from readers today and gathering information online, it became apparent that the price of CRV has plummeted. The catalyst for this downward spiral was the founder of the project having his CRV collateral liquidated in various lending applications, triggering a sell-off and resulting in a significant price drop. This incident marked the second time the project founder had caused such an event. Previously, the founder had collateralized a substantial amount of CRV in lending applications to borrow stablecoins, causing panic. There were even calculations estimating that if CRV were to be liquidated, it could lead to AAVE, which had collateralized a large amount of CRV, being unable to liquidate in time and thus incurring debt.
Fortunately, during that critical moment, several prominent players privately purchased tens of millions or even hundreds of millions of CRV tokens at around $0.5 each, preventing imminent liquidation. However, this time around, CRV was not as fortunate. These two incidents ultimately revealed a fundamental issue: the project founder lacked confidence in the project’s token.
Given this, how far can a project like this truly progress? I have always believed that the potential for long-term development in a project primarily depends on the project team. Assessing the current situation of Curve against this standard, it is evident that the project’s future growth potential is quite limited.
One reader in the comments section asked how to handle their CRV holdings at the moment. After fully understanding the recent events, I promptly sold all of my CRV holdings. Will the price of CRV rise again in the future? It is possible, especially when the bull market truly arrives, as sector rotation will likely benefit the DeFi sector, and CRV will potentially rise alongside it. However, it is challenging to estimate how high CRV may rise.
For me, the most crucial aspect is that after these two incidents, I no longer have confidence in this project. Therefore, I will not dwell on minor details (such as selecting an appropriate high point to cash out) and will instead steer clear of this project.
Reflecting back on my investment journey with CRV, I realize that I made a mistake. When the founder almost triggered a liquidation due to collateralizing CRV the first time, it was already evident that the project founder had issues. Various rumors online at the time indicated that the founder was spending recklessly. These signs should have been enough to prompt me to sell all of my CRV without hesitation.
At that time, my reservation was mainly due to this project’s extraordinary role in the entire DeFi ecosystem, as it served as a cornerstone for the ecosystem. However, it is crucial to refocus on the project itself, using evaluation criteria to gauge the project and determine the next steps.
Another reader inquired about whether the current price of CRV is attractive and worth buying. My judgment on whether a project is worth buying hinges on one condition: I must have confidence in the project at the moment to consider if the price is cheap enough. If I do not have faith in a project, I will not buy it even if it is cheap.
A reader mentioned that they hold a significant position in CRV and asked what to do now. I recall a similar query during a period when the price of Matic (now Polygon) was struggling. My response then was to advise against heavy positions in any coin other than Bitcoin and Ethereum, emphasizing the importance of strict position control to mitigate risks.
As for users with substantial positions, my approach would be straightforward: decisively divest from projects that lack my confidence. However, I understand that many readers may hesitate to take such action when executing it. If in doubt, I suggest converting half of the position into Bitcoin or Ethereum.
For our longstanding readers who have been following our articles for some time and have encountered various events and surprises, I hope that through these experiences, everyone is increasingly realizing a fundamental principle: while accidents and risks may be unpredictable and challenging to assess, risk prevention and control are entirely within our reach. Many events and operations mentioned in my articles revolve around mitigating and controlling risks.
Regarding this recent event, the best preventive measure remains the age-old adage I have reiterated many times: control positions to prevent risks.
