Today, after reading a reader's message and checking the information online, I realized that the price of CRV has plummeted.
The trigger was the liquidation of CRV pledged by the project founder in many lending applications, which triggered a sell-off and caused a sharp drop in prices.
As far as I can remember, this is the second time the project founder has caused such an incident.
The last time, the founder also pledged a large amount of CRV to a lending application to borrow stablecoins, which caused quite a panic. At that time, it was estimated that if CRV was liquidated, it might even cause AAVE, which had pledged a large amount of CRV, to not be liquidated in time, thus causing AAVE to be in debt.
Fortunately, at the critical moment, several well-known players privately bought tens of millions or even hundreds of millions of CRV tokens in batches at a price of about US$0.5, thus avoiding the imminent liquidation.
But this time, CRV was not so lucky.
The most fundamental problem reflected by these two incidents is that the project founders themselves have no confidence in the tokens of their projects.
How far can such a project go in the future?
I always think that the first thing to look at when judging whether a project has long-term development potential is the project team. Using this standard to evaluate Curve's current situation, it is clear that the project's future development potential is very limited.
A reader in the comment section asked me what I am doing with my CRV now?
After I fully understood the incident, I sold all the CRVs I had at the first opportunity.
Will the price of CRV go back up in the future?
I think it is possible, especially when the bull market really arrives, the sector rotation will most likely benefit the DeFi sector, and CRV will also benefit when DeFi rises generally.
But it is difficult to estimate how high CRV can rise.
What is more important to me is that after these two events, I no longer have high hopes for this project. So I will no longer worry about some details (such as how to choose the right high point to cash out), but will just stay away from this project.
Looking back on the investment process of CRV, I feel that I made a mistake earlier:
The last time the founder almost triggered a liquidation action because of pledging CRV, it was already clear that there was something wrong with the project founder, and there were many rumors online at the time that the founder was extravagant. These signs are enough to show that there was something wrong with the project founder.
At that time, I should have sold all the CRVs without hesitation.
The reason why I still had reservations at the time was mainly because I considered that this project played an extraordinary role in the entire DeFi ecosystem and was the cornerstone of the ecosystem.
But now I think we should go back to the project itself and measure the project itself according to the standards for evaluating the project, so as to decide how to proceed next.
A reader in the comment section asked whether CRV is worth buying since its current price is quite attractive?
There is a prerequisite for me to judge whether a project is worth buying: that is, at least I am optimistic about the project at the moment, and then I will see whether its price is cheap enough. If I am not optimistic about a project, I will not buy it no matter how cheap it is.
A reader left a message asking what he should do now that he has a heavy position in CRV?
I remember that when the prices of Matic or Magic were very low, some readers also asked similar questions.
I replied at the time: It is not recommended to hold a large position in any currency other than Bitcoin and Ethereum. Positions must be strictly controlled in order to prevent accidents and risks.
So what should be done with users who already have heavy positions?
If it were me, I would handle it very decisively, and directly sell out all the positions in projects that I am not optimistic about without hesitation.
However, I think many readers will hesitate when using this method. If you are really hesitant, I suggest you change half of your position into Bitcoin or Ethereum.
For our old readers, you have been reading our articles for a while and have experienced many events and accidents. I hope that through these experiences, everyone should understand one truth more and more:
Accidents and risks are difficult for us to predict and estimate, but we can definitely prevent and control risks. For this incident, the best way to prevent it is the old saying I have said many times: control positions to prevent risks.
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