As far as DeFi platforms are concerned, Convex Finance (CVX-USD) offers one of the best products for investors. The project seeks to better reward users of the Curve (CRV-USD) network and to streamline the investing process. Today, it’s making news because CVX crypto is declining, however. It appears Convex developers have identified a contract bug. As they look to remedy the issue, the token is suffering.
Convex can’t exist without Curve; that’s because the project is built as a companion to the network. Curve boasts the second-highest total value locked (TVL) on a DeFi platform in the world, with nearly $11 billion in assets secured.
Convex takes Curve’s passive-yield generating capabilities a step further; using Convex boosts rewards on Curve liquidity pool (LP) contributions in addition to CVX rewards. All one needs to do is take their Curve LP tokens and stake them into Convex. It also allows users to skirt Curve’s fees entirely, while actually earning trading fees themselves.
Launched just last year, Convex has become one of the leading players in the DeFi 2.0 industry. From its rollout in May 2021 to the beginning of this year, CVX gained more than 650% in value. It has since been brought down thanks to a bearish market. However, today’s losses are all on the protocol itself.
CVX Crypto Sinks as Contract Bug Forces Users to Migrate
The CVX crypto is trading down to the tune of 16% this afternoon. The culprit behind this pessimistic price movement is a contract bug. While typically not a huge deal, the flaw is proving much more troublesome than anticipated.
Earlier today, the Convex team tweeted out a notice, telling users that its vote-locking contract had to be redeployed. As a result, it notified users they would have to re-lock their tokens on the new contract or withdraw them. The vote-lock contract is important for Convex; users must lock CVX tokens into this contract if they want to vote on community proposals and other network changes. Unlike other pools on the network, the contract does not allow users to withdraw funds until the lock period is over.
The reason behind this development was the discovery of a bug on the original contract. The bug would allow users who vote-locked CVX to exploit the protocol for more rewards than they were meant to receive. According to developers, no funds were at risk and no losses occurred because of the bug.
While the news isn’t world-ending for the CVX crypto, it is still dragging down the token quite a bit. With prices deflated by 16%, trading volume is rising by more than 50% as some users sell off their assets and others double down thanks to the discount.
On the date of publication, Brenden Rearick did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
