After reading the comments from readers today and gathering information online, I discovered that the price of CRV has plummeted. The catalyst for this was the founder of the project having their CRV collateral liquidated in various lending applications, triggering a sell-off and causing the price to drop significantly. This is the second time that the project founder has caused such an event. The last time involved a substantial amount of CRV being collateralized in lending applications to borrow stable coins, leading to considerable panic. Fortunately, some prominent players stepped in at the last minute and bought millions or even billions of CRV tokens at around $0.5 each, preventing imminent liquidation. However, this time, CRV was not as fortunate.
These two incidents highlight the fundamental issue that the project founder lacks confidence in their own project’s token. How far can a project like this go in the future? I have always believed that assessing a project’s long-term potential begins with looking at the project team. By this standard, it is clear that Curve’s future development potential is limited.
A reader in the comment section asked me how I am handling my CRV holdings now. After fully understanding the recent events, I immediately sold all my CRV. Will the price of CRV rise again in the future? It is possible, especially when the bull market truly arrives, and sector rotation is likely to benefit the DeFi sector, with CRV rising along with it. However, it is difficult to estimate how high CRV’s price will rise.
For me, what is more important is that through these two events, I no longer have confidence in this project. Therefore, I will not dwell on details like how to cash out at the right time but will instead stay away from this project altogether. Looking back on my investment process with CRV, I realize that I made a mistake:
When the project founder almost triggered liquidation by collateralizing CRV the last time, it was already evident that there were issues with the project founder. Numerous rumors online at the time indicated that the founder was extravagant. These signs were sufficient to indicate problems with the project founder. I should have sold all my CRV without hesitation back then.
At the time, the reason I hesitated was mainly due to considering the project’s significant role in the entire DeFi ecosystem, as it was a cornerstone of the ecosystem. But now, it is essential to focus on the project itself and evaluate it based on the standards of evaluating a project to determine the next steps.
A reader in the comment section asked if the current price of CRV is attractive and worth buying. My assessment of whether a project is worth buying is based on one premise: I must believe in the project at present for me to consider if the price is cheap enough. If I do not have confidence in a project, I will not buy it even if it is cheap.
A reader asked what to do now since they have a significant position in CRV. I recall a similar question being asked when the price of Matic (now Magic) was very low. My response at the time was that for any coin other than Bitcoin and Ethereum, it is not advisable to have a significant position. Position sizes need to be strictly controlled to mitigate unforeseen events and risks. So, how should users with significant positions handle this?
If it were me, I would act decisively and cut ties with projects I do not believe in without hesitation. However, many readers may hesitate when actually executing this. If you are unsure, I suggest converting half of your position into Bitcoin or Ethereum.
For our long-time readers who have been following our articles for some time and have experienced various events and surprises, I hope that through these experiences, everyone is becoming increasingly aware of one thing: unexpected events and risks are difficult to predict and estimate, but risk prevention and control are entirely within our reach. Many events I have written about and operations I have shared repeatedly focus on preventing and controlling risks.
For example, the best way to prevent such incidents is still the old adage I have mentioned many times:
Control your position to prevent risks.