The entire DeFi sector has caught up a strong uptrend and many of the top market cap tokens rallied by double and triple-digits.
Curve DAO's governance token CRV has also performed strongly, down to a low at $0.54 on January 11 to a 2021 high at $1.78 on January 17.
CRV/USDT 4-hour chart. Source: Tradingview
There are three reasons for the latest surge in volume and price for CRV, including a new collaboration with the Yearn.finance (YFI) ecosystem, positive regulatory developments in the U.S., and an increase in engagement, which boost the total value locked on the platform.
The significant uptick in trading volume for CRV happened on January 14 following Andre Cronje, Yearn.finance creator, tweeted a gif that read:
"Curve.fi presents, in collaboration with Yearn.Finance, permissionless pool creation. Stablecoin pools in 3 clicks. Crv.finance."
Collaboration with YFI has tended to result in sharp breakouts in DeFi token price, which is similar to the days when any partnership or integration announcement from Chainlink (LINK) would offer an immediate boost in volume and price. Taking Cream Finance and SushiSwap as examples, both of them rallied by more than 100% following Yearn.finance partnership announcements.
After Cronje's tweet and a follow-up tweet on Jan. 15, CRV's trading volume increased from $59 million to $350 million, which provides an update on the progress of the collaboration stating, "crv.finance updated; Permissionless pool creation added, anyone can create a curve pool that can swap to DAI, USDC, or USDT."
This drove the 24-hour trading volume as high as $478 million and boosted the price to $1.23.
CRV price vs. Reported trading volume. Source: TheTIE
Crypto friendly regulation creates an opportunity for Curve
The second reason why CRV has experienced an over threefold increase since the start of 2021 is the recent stablecoin announcement from the United States Office of the Comptroller of the Currency.
The OCC noted banks will be able to "use new technologies, including INVNs and related stablecoins, to perform bank-permissible functions, such as payment activities." Banks will soon be able to utilize a variety of blockchain platforms to conduct stablecoin transactions as well as provide custody services for those assets, and this indicates a trusted stablecoin ecosystem and oracle provider is required.
The Curve DAO platform serves as one of the larger decentralized exchanges for stablecoins that adopts an automated market maker (AMM) to manage liquidity so as this shift occurs, more people may seek the platform as the preferred option.
Increasing user activity and total value locked boost fundamentals
Any cryptocurrency project that aims to succeed must have the engagement of its community. When it comes to CRV, this is represented by metrics like total value locked (TVL) on the platform and the volume of transactions per day.
Total value locked on Curve.Finance. Source: Defi Pulse
As per DeFiPulse, the TVL on Curve received a noticeable increase since January 4 following remaining relatively flat throughout December.
Curve.finance has also experienced a steady increase in the total volume per day transacted on the platform as shown in the chart below from Dune analytics.
Daily volume on Curve.fi. Source: Dune Analytics
Another positive development for Curve came from the Jan. 17 announcement that "cross-asset swaps via Synthetix.io are now live." This triggered another wave of high volume trading volume and hours following the announcement CRV hit its 2021 high at $1.78.
With the total value locked on Curve hitting new highs and daily volume soaring, future collaborations like these are probably met with similar enthusiasm.