If you’ve heard of DeFi, then you’ve probably heard of Curve Finance or the Curve DAO token,
CRV.
Curve was launched in January 2020, and benefitted from the DeFi boom that came in the spring
of that year.
Curve’s decentralized exchange, or DEX, has an important role to play in Ethereum’s
DeFi ecosystem.
Using the platform’s automated market maker, or AMM, traders can exchange stable coins
like USDC and DAI, and other assets, like Wrapped Bitcoin and RenBTC, which follow the
price of Bitcoin on Ethereum.
Curve’s AMM ensures that you don’t need a buyer or a seller on the other side of your
order.
Even if no-one is selling on the day that you use Curve’s DEX, you can still complete
your trade!
This useful function is thanks to Curve’s liquidity pools.
Users who stake, or deposit, their tokens into Curve pools help the platform by providing
the liquidity that the AMM relies on, and they are rewarded for this service with a
percentage of the platform’s trading fees.
In some Curve pools, users can also earn trading fees from other platforms.
An example of this is the sUSD and sBTC pool, where liquidity providers can deposit stable
assets that belong to the Synthetix platform.
Users who commit to these pools can earn both CRV and also a designated share of the Synthetix
SNX token.
In fact, you may have used Curve without even knowing it!
Many other DeFi protocols, like Compound and 1inch exchange, are plugged into Curve to
take advantage of their stable coin trading markets.
Other DEXes like Uniswap have much higher room for slippage.
This is because users need to be able to trade more volatile crypto assets without suffering
repeated failed transactions.
Because Curve is trading mostly stable assets that should not be volatile, it has a slippage
basis of just 0.06%, ensuring that stable coin trades are more efficient, and that traders
get almost exactly the price they want.
Nobody wants to swap 10,000 USDT for 9,800 USDC!
Users who have engaged in yield farming will probably also have interacted with Curve at
some point or another.
Those who wish to profit from the best stable coin returns on yEarn Finance, for example,
will have used Curve through the back end of the yEarn platform.
When Curve became a Decentralized Autonomous Organization or DAO in the summer of 2020,
it also launched its own token, CRV.
Seeing as the Curve DEX already had a lot of traffic, there was a lot of hype ahead
of the release, but the CRV token price proved unsustainable and fell from $30 to $3 within
a week of becoming available.
Some investors were also unhappy about the governance and tokennomics of CRV, which led
to around 71% of the voting power being allocated to its founder, Michael Egorov.
Other than governance, the CRV token doesn’t have many additional use cases, and is used
primarily to reward users who provide liquidity to the Curve protocol.
Curve also shares the problem of high gas fees with other Ethereum-based platforms,
but have sought to address this by partnering up with the scalability solution Polygon Network
. This gives Curve users the opportunity to save on gas fees, and also to earn the Polygon
MATIC token in Curve liquidity pools.
And so long as DeFi on Ethereum continues to grow, Curve’s efficient liquidity solution
should continue to grow alongside it.
The platform is still offering new pools and trading pairs, and seeing a high volume of
user activity.
Solutions like this show that Curve is perhaps one of the best examples in the crypto space
of the ‘money legos’ ethos - platforms that can be integrated into other platforms,
to take advantage of an ever-more interconnected financial world.
If this video helped you understand Curve finance and the Curve DAO token, hit those
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