What is Curve Finance?
Curve Finance’s Team
How does Curve Finance Work?
5 Reasons to Invest in Curve Finance
Where to Buy Curve Finance?
Curve Finance Future Roadmap
How To Start Yield Farming on Curve Finance
Bottomline
What is Curve Finance?
Curve Finance is a decentralized exchange for trading cryptocurrency that focuses on efficient stablecoin trading. Curve’s focus on stablecoins allows investors to avoid more volatile crypto assets.
It is an automated market maker (AMM) that maintains low fees and slippage through the use of liquidity pools.
Like Uniswap, tokens can be swapped as long as there is liquidity. The main difference between Curve and other DEXes is that Curve focuses mainly on stable assets. Curve offers a large variety of stablecoins including DAI, USDT, USDC, BUSD, and TUSD.
The Curve Finance protocol also contains the Curve token known as CRV. It is mainly used to incentivise liquidity providers on their platform and to get as many users as possible involved in the governance of the protocol.
The amount of liquidity Curve provides allows other DeFi applications to use Curve pools as part of their ecosystem. Applications like Yearn Finance and Compound use Curve as a farming solution in their ecosystem.
By the end of this article, we’ll show you how you can use Curve Finance. But first, let’s look into the team behind this new DeFi solution.
Curve Finance’s Team
Michael Egorov is the founder and current CEO of Curve Finance. Prior to Curve, he co-founded both NuCypher and LoanCoin. He previously worked in LinkedIn and has earned a PhD in Physics at the Swinburne University of Technology. As a scientist and physicist, he worked on research related to quantum computing and cryptography.
Details on the rest of the team are sparse, but interviews confirm that at least five other members joined Egorov for Curve Finance. This includes two developers, Angel Angelov and Ben Hauser, and three community managers.
How does Curve Finance Work?
Curve uses the AMM protocol to facilitate trades. AMMs, or automated market makers, use algorithms to price tradable assets in a liquidity pool efficiently.
Liquidity pools use algorithms to determine the price of an asset. These liquidity pools have the AMM protocol as a smart contract to allow trades to occur without an order book. In other words, AMM trades do not require a counterparty.
An advantage of a liquidity pool is that you can buy and sell your assets at any time, even without a buyer or seller on the other side of the deal.
Similarly, Curve works by allowing people to provide liquidity to their pool. These people are known as liquidity providers. Liquidity providers on the Curve platform receive some amount of CRV for providing liquidity.
To use your CRV, you are required to lock your CRV for a certain period of time. This will give you vote-escrowed CRV or veCRV for short. The veCRV tokens will essentially give you voting power on various DAO proposals and pool parameter changes.
CRV can be staked on the platform. Users who stake their CRV will get a portion of trading fees collected by the Curve protocol. Users also have the option to boost their liquidity rewards by vote-locking their CRV.
One disadvantage of using Curve, or liquidity pools in general, is that they open up risk for impermanent loss. Liquidity pool impermanent loss occurs when the price of a token changes after you deposit them in a liquidity pool. The loss occurs on paper, when the dollar value of your token at the time of withdrawal becomes less than its amount at the time of deposit.
Similarly, as a decentralized exchange, you are at risk of slippage as well. Slippage refers to the difference in the price of an asset during the time you submit the transaction and the time the transaction is validated on the blockchain.
5 Reasons to Invest in Curve Finance
- Low Risk – Because Curve Finance focuses on stablecoins, liquidity pools avoid the risk of impermanent loss due to volatile assets.
- Liquidity Removal at user’s convenience – Curve Finance uses an AMM protocol which allows you to take out your liquidity at any time.
- CRV Staking + boost – The CRV token gives Curve users the opportunity to boost their rewards. The platform provides deposit bonuses as well for certain pools.
- DeFi Composability – The tokens you earn in Curve can be applied in various other applications in the DeFi ecosystem.
- Minimized Slippage – Curve’s trading pairs are designed to be similar enough to avoid slippage when transacting.
Where to Buy Curve Finance?
While CRV can be earned by providing liquidity to Curve pools, you can also buy it yourself. The CRV token is a popular altcoin that is listed in many of the top exchanges.
And of course, you can buy Curve Finance’s token on Zipmex using our website or mobile application.
Curve Finance Future Roadmap
The Curve Finance platform has already made a huge achievement in developing a feature-full AMM decentralized exchange.
The Curve Finance DAO will facilitate in deciding future pool parameter changes and gauge weights. These gauge weights will determine how much CRV is allotted for each pool.
They’ve recently added cross-chain support for Curve on Fantom. One other team has already announced intentions to work on bringing Curve to Polkadot.
Equilibrium, a DeFi money market, has revealed that implementation of Curve Finance will be integrated into the Polkadot network, giving it more reach.
New pools are added regularly to Curve. Recently, Curve has added the first Chainlink pool, Ironbank, SAAVE, and the multi-rewards ankrETH pool.
How To Start Yield Farming on Curve Finance
In this section, we’ll go over how you can start yield farming on the Curve platform.
- First, head to the Curve.fi – Pools page to look at the list of available Curve pools.
- Next, connect your wallet to the Curve pools platform. Curve accepts most crypto wallets including MetaMask, Frame, Trezor, and Ledger.
- If you want to start Yield Farming on Curve, you need to select a pool to provide liquidity for. The Pools page lists several pools that are currently active. Each entry has the tokens eligible to deposit below the pool name.
The Base vAPY changes daily depending on trading activity. Rewards tAPR gives you a range of how much to expect in rewards.
- Once a pool is selected, you will see a deposit interface. Curve will provide a deposit bonus for providing liquidity to tokens with a lower ratio. You have the choice to either deposit or “deposit & stake in gauge.” The latter allows you to earn CRV in rewards.
Once you click your deposit option, you will approve the transaction with your ETH wallet.
- After providing liquidity, you can earn additional CRV tokens by staking your CRV. You can accomplish this by choosing how long to lock your token in the Locker page.
Bottomline
Curve Finance focuses on stability over speculation. This makes it a very popular platform for investors with a lower risk profile who want to earn through yield farming. Competitors such as Uniswap may contain volatile liquidity pools since they allow almost any type of coin.
Curve is quickly becoming an integral part of various DeFi ecosystems and will only rise in popularity due to its promise of low-risk staking options.
