Due to a bug in the smart contract Convex Finance (CVX) The locked coins on it were released before they expire, and these coins entered circulation. As a result of this altcoin There was a sudden drop in price.
In its announcement on Twitter, the Convex Finance team shared that the contracts responsible for the vote lock management mechanism were reactivated after a bug was discovered that could cause some users to win too many rewards.
Important update for vote-locked $CVX Holders: the vote-locking contract has been re-deployed, and users will need to re-lock their $CVX tokens.
Full details in our latest medium post:https://t.co/qMGhn7aAqP
— Convex Finance (@ConvexFinance) March 4, 2022
This is the latest example of supply shocks, smart contracts bugs, and volatile prices being the norm in the dangerously experimental world of decentralized finance (DeFi).
The vote locking mechanism on Convex Finance is one of the key structures of the project’s economy. On this platform, users could collect “rewards” from protocols and direct their liquidity deposits to Curve Finance, another protocol. However, this required users to keep their coins locked for 16 weeks.
72 percent of CVX Supply was being held locked
Thanks to the vote locking mechanism, the circulating amount of CVX altcoin was also kept under control. 72% of CVX’s supply was locked.
However, there was a supply shock on Friday, with millions of coins suddenly unexpectedly circulating.
Cryptocurrency The price fell 20% from $19.10 to $15.22 within hours.
After that, some big investors and platform users stepped in and instead of selling some tokens from their own positions, they re-locked and the price of the altcoin stabilized.