The Convex Finance (CVX) token enjoyed a stellar December. Upon hitting a low currency exchange price during the early days of the month, CVX soared by more than 200% as it got closer to Christmas, and the rally did not stop until December 27, when it set a record high exchange price of $60.22. To understand why traders are taking notice of this token, it helps to learn about how the project works.
The Convex Finance project is an interesting experiment and a novel idea in the world of blockchain tokens and cryptocurrency. It represents an effort to find an elegant solution to the problem of fiat currency value instability. More specifically, the Convex project seeks to create a stable cryptocurrency, the CVX token, that does not behave like the most popular cryptocurrency of today, the USD coin (USDC). The CVX token is meant to offer an attractive way to value cryptocurrency without the instability of fiat currency. And Convex has already done this more than three times since June.
The main idea behind the Convex project is to value currencies based on their actual perceived value, not volatility. This is a very important characteristic, since many people do not seem to realize that volatility is inherent in the nature of fiat money. It is also a characteristic that Convex does not want to share.
When the CVX token is used as a currency, it will not be subject to a volatile exchange rate; this is the main goal of the project, and it can be considered to be highly responsible and attractive to those who plan to use it as functional cash. The project is based on the idea that the value of other currencies is based on their actual usage and acceptance as a medium of exchange.
To date, three different value proposals have been published on the Convex website. Each of these values were calculated using the same methodology based on the CVX token being used as a store of value (SoV), and all three of them were stable for periods ranging from 12 to 20 months. This project was the first of its kind, since we had not seen stable cryptocurrencies that function as SoVs before.