Emergence of DeFi Bribing. What is it?

DeFi bribing is about getting decisions in your favour in a digital space.

Decentralized Finance (DeFi) protocols are based on smart contracts, a piece of code that executes after certain condition(s) is met.

Since it is unregulated and decentralized, anything can happen.

That’s why in DeFi, a new phenomenon called bribing has emerged.

No, it is not the physical or real-world bribing where a person pays money to the authorities to commit a crime.

This is bribing in the digital world paid to digital protocols, participants, and actors.

It involves paying in tokens.

To understand this, we would take an example of Curve Finance, the protocol with the highest assets in Total Value Locked (TVL).

What is Curve Finance?

So, Curve Finance is a decentralized automated market maker (AMM) focused on stablecoin swaps.

It holds a weekly governance vote to decide the allocation of CRV (its native token) rewards. Only those who hold its governance token, veCRV, can vote.

veCRV lets you vote on proposals, liquidity gauges, and also earns you trading fees. 

CRV and veCRV have a finite supply of a little over 3.3 billion.

To obtain veCRV, one has to ‘vote lock’ CRV token.

Liquidity Pools and Bribing

Curve Finance have Liquidity Pools that provide the different tokens to the protocol. During every weekly vote, it is decided how much CRV rewards should be allocated to the various liquidity pools on its platform.

Through bribing, the bribers are trying to influence the voters to make a decision in favour of their Liquidity Pool so that it gets a higher allocation of the rewards. In exchange, the voters are provided with another token.

The Liquidity Providers on Curve Finance have limited CRV tokens. That’s, they engage in bribing.

The fight is ultimately for deep liquidity and accumulation. Liquidity means the volume of a specific asset or token pair. The higher the liquidity, the less is the slippage.

With deep liquidity, projects can influence the markets that have a high volume of trades between many buyers and sellers.

And the ones who hold the most CRV and veCRV have the most power.

But, bribing can also change the game.

DeFi Bribing Platforms

Last year in August, Andre Cronje, the founder of Yearn Finance, released a tool for bribing called bribe.crv.finance. 

It is a platform for CRV bribes. It lets bribers create offers, and bribees claim offers. Moreover, it can help projects who want to increase their liquidity by offering a higher APY.

One of the most successful bribing platforms is Convex.

Currently, it controls close to 52% of the voting power of Curve.

DeFi is reminiscent of direct democracy and lobbying. Every participant is free and independent. Anyone can play any tactics. Nearly all decisions are decided through vote. So, whoever can get the required number of votes wins.

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