Convex tokens are in high demand and are soon to be unlocked. The liquidity is limited for the swapping of CVX to Ethereum (ETH). Fears of a further price drop are heightened by the fact that more than a quarter (25%) of the supply of Convex Finance is about to be unlocked. This is because the liquidity on the platform, which can absorb selling pressure, has decreased significantly.
Curve’s main CVX token pool is currently balanced. Data shows that Curve has approximately $11.2 million in wrapped ETH and more than $11.8 million in CVX tokens available for liquidity.
According to this Dune Analytics dashboard, about 27.4 millions CVX coins valued at $126 million will not be available for unlocking until June 30. This represents more than 27% of total Convex token supply.
These unlocked tokens represent the first 16 unlocks of vote-locked CVX tokens. They will occur once per week starting June 30. Total, 52.2 Million CVX tokens are expected to be unlocked.
Convex is a DeFi protocol that is built on top Curve (CRV), which is a decentralized exchange to facilitate token swaps. Convex allows CRV holders to place the token and receive compound rewards through Curve.
CVX holders have the option to lock their coins so they can vote on which pools will incentivize liquidity on Curve. Stablecoin issuers such as Frax Finance or other DeFi protocols tend have the largest number of CVX tokens. These Convex token holders can be bribed by other projects to get more yield from their liquidity pools. Vote-locked Convex tokens can only be unlocked after 16 weeks.
CVX will likely see further selling pressure after the unlocking process. Convex’s current price of $4.82 is more than 90% below its January record of $60. Holders may decide to lock their coins again and retain their Curve voting rights.
If Convex is sold in significant numbers, the Curve pool (currently still balanced) could become unbalanced as liquidity evaporates for swaps.
