Last week’s Decrypting DeFi dispatch gave a general rough-and-tumble overview of what’s happening with Curve and the so-called “Curve Wars.” If you haven’t read it yet, check it out here.
To recap: DeFi projects are scrambling to get their hands on more Curve tokens (CRV) by first getting their hands on vote-locked Curve tokens (veCRV).
With these vote-locked tokens, projects can then vote to have more CRV tokens distributed to the liquidity pool of their choice. And because the supply of CRV is capped, there will only ever be so many (3.3 billion in total, to be precise).
Thus, with a finite supply, it’s essentially an accumulation race with extra steps: Acquire CRV, lock it up in exchange for veCRV, then vote to distribute CRV tokens to a specific pool, and earn more CRV. Rinse and repeat.
Amidst all this, another market is emerging: bribes.
These days, several secondary platforms all enable bribes in one form or another. First, let’s break down how the mechanism works in general.
Let’s say you are a large liquidity provider on Curve Finance, and you want to increase the amount of CRV rewards that pool is earning as you hang out and, well, provide liquidity. But you only have so much CRV (and thus only so much veCRV-based sway in this community).
So, you decide to set up a bribe of sorts.
You essentially say, “Hey, if you use your veCRV holdings to vote for my pool to receive more rewards, I’ll give you another token in exchange.” If users think this other token…