Curve Finance is a decentralized exchange that operates using automated market-making (AMM) protocols. The project focuses on assets that are either steady or have a similar value when traded. Thanks to this design, users can trade with less price slippage than on other decentralized exchanges like Uniswap or Sushiswap.
Who created Curve Finance?
Curve’s creator and CEO are Michael Egorov. He is a Russian scientist with a long history in the Bitcoin business. He co-founded NuCypher, a crypto company that develops privacy-oriented infrastructure and protocols, in 2015.
In reaction to yearn.finance’s growing voting strength in the network, Egorov locked up a large amount of CRV tokens in August 2020. In the process, he received 71 percent of the governance tokens.
How does the protocol work?
Curve Finance is a decentralized exchange (DEX) akin to Uniswap and Sushiswap. It was released before the release of Uniswap V2 and had some internal differences. On Uniswap, liquidity pools must always have a token pairing however on the Curve DEX; a pool can contain numerous assets or be utilized as an asset within another pool.
In effect, this implies that anybody who adds liquidity (stablecoins and assets) to a pool will earn a token from that pool, such as 3pool – the protocol’s most famous LP.
Users can exchange mirrored assets in addition to stablecoins. For example, wBTC and renBTC are Ethereum-based assets that monitor the price of Bitcoin. Because their value generates from an underlying asset, these two assets are known as derivatives (in this case, BTC). Because the prices are comparable, the Curve DEX may pool them and exchange them.
Curve effectively does traditional finance’s role without the discriminatory hurdles to the entrance.
What is the CRV token?
Curve Finance’s CRV coin’s introduction was in August 2020 alongside Curve DAO. The coin serves as a governance token and an incentive structure for fees, as well as a long-term revenue method for liquidity providers or LPs.
CRV tokens have a total supply of 3.03 billion, with the bulk (62%) going to liquidity providers (LPs). The remaining supply divides between owners and employees, holding a tiny portion for community reserves. The allocations for shareholders and employees with a two-year vesting timetable in mind made.
The token had no pre-mine, and the tokens unlock for stage holders. Currently, there are roughly 427 million tokens in circulation.
What are the main features of CRV?
Following the advent of Automated Market Making for stablecoins, Curve has received much attention.
With the introduction of the DAO and CRV, the protocol became profitable while still keeping its governance model, which is based on liquidity promises and ownership duration. As a result, the protocol features a compensation structure that favors long-term investors.
Decentralized applications are seeing an increasing use-case as capital seeks a new home, especially in light of China’s recent ban on cryptocurrencies. DEXs, such as Curve Finance, are very helpful in this sense.
DeFi activities like yield farming and liquidity mining are also positive for the protocol because yield-bearing assets are in great demand in a world where passive returns are scarce.
Curve Finance includes a lot of characteristics, which partly explains why it is so popular, including an incentive structure, multiple liquidity pools, and options for consumers and liquidity providers.
Putting it all together
Overall, Curve Finance is a popular, liquid, and dependable decentralized financial (DeFi) protocol. In reality, at the time of publishing, the protocol was the top DEX on defipulse, with over $11.3 billion in locked liquidity. As decentralized finance spreads, the flood of collaborations, liquidity pools, and general usefulness is undoubtedly a positive for the enterprise.
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