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Curve DAO Token jumps more than 51% – what‘s behind the CRV price rise?

By Capital.com News

Edited by Charlie Mellor

11:01, 23 November 2022

Representation of the curve dao token (CRV)
Curve dao token (CRV) has been on a rollercoaster – Photo: Shutterstock

Curve dao token (CRV) – the native crypto of the Curve decentralised exchange (DEX) that only trades stablecoins and wrapped assets – has seen a massive amount of volatility over the last few days. 

CRV jumped more than 51% at one point on Wednesday after seeing a major dip the previous day – the result of an apparent short attack, reportedly carried out on the decentralised finance (DeFi) Aave protocol.

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Curve dao token (CRV) to US dollar

So what happened with CRV?

On-chain analysts have detailed the attack over the last couple of days.

On 20 November 2022, Twitter user DefiMoon accused Avraham Eisenberg – a trader reported to have been involved in October’s Mango Markets attack – of having a $17m CRV short position.  

ETH/USD

3,134.63 Price
-1.180% 1D Chg, %
Long position overnight fee -0.0616%
Short position overnight fee 0.0137%
Overnight fee time 21:00 (UTC)
Spread 6.00

DOGE/USD

0.15 Price
-1.510% 1D Chg, %
Long position overnight fee -0.0753%
Short position overnight fee 0.0069%
Overnight fee time 21:00 (UTC)
Spread 0.0012872

BTC/USD

64,316.65 Price
-0.680% 1D Chg, %
Long position overnight fee -0.0616%
Short position overnight fee 0.0137%
Overnight fee time 21:00 (UTC)
Spread 106.00

XRP/USD

0.53 Price
-0.060% 1D Chg, %
Long position overnight fee -0.0753%
Short position overnight fee 0.0069%
Overnight fee time 21:00 (UTC)
Spread 0.01168

Two days later, Lookonchain tweeted that another shorter had borrowed 20 million CRV ($9.9M) from Aave, before sending half of it to OKX exchange. Lookonchain said: 

“He has lent 37M CRV from Aave in the past seven days. The price of CRV dropped from $0.625 to $0.464, a decrease of about 26%. Now he is dumping the 20 million CRV he borrowed!”

As of 23 November, Lookonchain then detailed the tug of war between CRV short and long traders the day before. He said on Twitter

“CRV war was played out on Aave yesterday and ended with the longer defeating the shorter. Ponzishorter.eth shorted CRV by borrowing and dumping CRV. CRV guardians bought CRV, soaring the price to $0.72, and liquidating all collateral of ponzishorter.eth.”

At the time of writing, CRV was trading at $0.62, up 51% in the past 24 hours.

Markets in this article

CRV/USD
CRV/USD
0.4498 USD
-0.0073 -1.640%

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The difference between trading assets and CFDs
The main difference between CFD trading and trading assets, such as commodities and stocks, is that you don’t own the underlying asset when you trade on a CFD.
You can still benefit if the market moves in your favour, or make a loss if it moves against you. However, with traditional trading you enter a contract to exchange the legal ownership of the individual shares or the commodities for money, and you own this until you sell it again.
CFDs are leveraged products, which means that you only need to deposit a percentage of the full value of the CFD trade in order to open a position. But with traditional trading, you buy the assets for the full amount. In the UK, there is no stamp duty on CFD trading, but there is when you buy stocks, for example.
CFDs attract overnight costs to hold the trades (unless you use 1-1 leverage), which makes them more suited to short-term trading opportunities. Stocks and commodities are more normally bought and held for longer. You might also pay a broker commission or fees when buying and selling assets direct and you’d need somewhere to store them safely.
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