Curve Finance encounters crisis, affecting CRV and crvUSD. Stablecoins fluctuate but recover slightly as bearish trend challenges Curve’s resilience.
crvUSD depegged at 0.35% but has since risen to 0.1%.
CRV has been unable to regain its pre-hack price range.
The recent hack involving Curve Finance had a significant impact not only on its native token CRV, but also on its native stablecoin crvUSD. Both tokens were affected, and the extent of the damage they suffered has raised concerns.
crvUSD stabilizes
On July 30, Curve Finance suffered a security breach that resulted in a massive loss of approximately $70 million. The vulnerability exploited multiple stable pools that use Vyper (a programming language) and took advantage of a vulnerability in some versions of the Vyper compiler.
The vulnerability prevents the correct implementation of reentrancy protection, a mechanism designed to lock contracts and prevent multiple functions from executing simultaneously.
Due to this vulnerability, both the native token CRV and the stablecoin crvUSD were negatively affected. The value of CRV fell, and crvUSD also suffered from the decoupling effect.
However, according to a recent Curve article, the impact on the crvUSD peg was relatively minor. The stablecoin decoupled by only 0.35%; since then, it has increased to 0.1% as of this writing.
Curve fights decoupling, volume surges
By analyzing the stablecoin trend on CoinMarketCap, it is clear that the decline of Curve Finance's stablecoin began on July 31. At the beginning of the decline, the trading volume trend was normal, hovering around US$30 million.
However, as the Curve stablecoin moved further away from its peg, trading volumes began to surge, with between $40 million and $60 million traded between August 1 and 2.
As stablecoins decoupled from their pegs, the increase in trading volume indicated heightened market activity. As stablecoins lost their pegs, some traders chose to sell their holdings, while others took advantage of the minor dips to establish new positions.
As stablecoins gradually resumed their pegs, trading volumes resumed normal trends, indicating that market participants were responding to the dynamics and volatility of stablecoins.
CRV's struggles continue
According to the daily timeframe chart, Curve Finance has been struggling to recover the price range it had previously fallen into. Despite experiencing an 8% rally on August 1, it has since resumed its decline. As of the time of writing, the token is trading at around $0.5, with a loss of less than 1%.
Furthermore, the Relative Strength Index (RSI) on August 30 shows that Curve is still in a strong bearish trend. This suggests that the selling pressure and negative sentiment surrounding the coin remain significant.