RESEARCH REPORT ABOUT CURVE PROTOCOL

22 min readSep 11, 2020

Author: Gamals Ahmed, CoinEx Business Ambassador

ABSTRACT

This research report presents Curve Protocol. By definition, Curve is a liquidity aggregator. But in layman’s terms, it’s a decentralized exchange that promotes the creation of liquidity a crucial facet of any financial market by offering incentives.

As is the case with many other decentralized finance protocols, Curve wasn’t fully decentralized at launch, run by the Curve team, led by Michael Egorov, the founder of NuCypher with a Ph.D. in Physics.

Curve Finance makes use of liquidity pools and bonding curves to provide high-efficiency stablecoin trading and low-risk returns for liquidity providers.

With Curve, users aren’t exposed to the price slippage they would normally face on DEXs when trading from one stablecoin to another. Unlike Uniswap, Curve lends assets on Compound when they aren’t being traded and gives that interest to liquidity providers.

Curve has rapidly become a leading player in Ethereum’s decentralized finance (DeFi) ecosystem since its launch in January of 2020. Offering users a medium to earn returns on their cryptocurrency and to trade certain altcoins in a decentralized manner, Curve has rapidly become one of the largest protocols in the DeFi space, data from DefiPulse shows.

1. INTRODUCTION

Stablecoins become very popular recently: custodial USDC, USDT, BUSD, PAX, TrueUSD, as well as decentralized DAI. They however (especially decen- tralized ones) have a problem of price stability and liquidity. This is especially painful for DeFi arbitrage. For example, when MakerDAO decreased its stabil- ity fee to 5.5%, many users of Compound (which had the interest rate of 11% at the time) preferred to stay there because they’ve taken the loan in DAI, and converting between DAI and USDC is an expensive task.

At the same time, many DeFi users are willing to load their stablecoins up for lending in order to earn 5% APR, as it is much more than what traditional banking offers. They, however, would be uncomfortable giving same money to trading firms who “promise profits”.

Curve Finance makes use of liquidity pools and bonding curves to provide high-efficiency stablecoin trading and low-risk returns for liquidity providers.

1.1 OVERVIEW ABOUT CURVE PROTOCOL

Launched in Jan 2020, Curve is a blockchain-based platform for exchanging Ether-based stablecoins safely and securely. Michael Egorov, the founder of the protocol, recently told DeFi Prime that Curve is “an exchange expressly designed for stablecoins and Bitcoin tokens on Ethereum.”

Curve is one of the most interesting DeFi products to enter the space. With its groundbreaking approaches like the AMM algorithm to provide liquidity, and it’s successful avoidance of the impermanent loss problem, Curve is a project set for greater heights.

Of the many DeFi protocols in existence, Curve is one of the few to achieve true product-market fit by fulfilling a specific purpose that market participants have come to value.

Curve utilizes a market-making algorithm known as an automated market maker (AMM). A market maker is a software that buys and sells securities on behalf of a particular market, providing liquidity. At the same time, a market maker usually profits from the difference between bid-ask prices.

By employing a market-maker, Curve facilitates a faster order-matching process in its platform. This allows traders of all types (including large-volume traders) to easily swap their crypto at a very little fee and with minimal slippage.

The math behind Curve is complex, but the concept is simple.

Curve was developed as an alternative to trading stablecoins on general-purpose DEXes like Uniswap, whose algorithm isn’t optimized for such trades. The introduction of Curve created deeper liquidity and competitive prices for stablecoins. DeFi lenders could thus quickly and efficiently switch from supplying, say, USDT to USDC as the interest rates in money markets changed.

Anybody who’s been yield farming since June is already aware of Curve. Yield farmers on Compound use stablecoins like DAI or USDC, rendering Curve Finance the best place to trade one stablecoin for another as yields change.

When yEarn Finance announced liquidity mining, there was a burst of activity on Curve. This is because yEarn users had to liquidity mine with the yCRV token. yCRV is the pool token for the Curve market consisting of yEarn’s wrapped DAI, USDC, TUSD, and USDT tokens.

At the peak of the mania, Curve’s trading volumes eclipsed Uniswap, with DAI and USDC leading the way. Curve benefited from the liquidity mining burst without even issuing its own token. However, Curve’s native token, CRV, is slated for release in the coming few days.

Key Takeaways

Curve Finance began as a crypto swapping platform, offering traders low slippage trades across major stablecoins
Hype around the imminent release of the protocol’s native token has pushed the project into the spotlight
The team behind Curve are far from newcomers: It’s founder continues to work on NuCypher, an encryption protocol for smart contracts

Curve Finance began as one of the most efficient stablecoin swapping protocols in DeFi. Now, with a governance token in the works, it has become one of the most popular projects in the space.

Following the launch of various tokens like COMP, BAL, and YFI, DeFiers are eager to get their hands on Curve’s CRV token.

Due to its various integrations around the DeFi space, you may likely have used Curve without knowing it. 1inch exchange, for instance, aggregates liquidity from Curve pools to ensure that users on their platform are getting the best prices possible. Depending on the size and tokens a trader is moving, it’s likely the trade is executed through Curve.

Another integration with various DeFi lending and borrowing platforms like Aave, dYdX, and Compound, also see Curve users earn interest on top of their trading fees. So, on top of the 0.04% on fees that LPs collect, they are also earning healthy interest rates.

In many ways, Curve Finance fulfills the “Money Lego” meme by interacting with other legos in the ecosystem. Even without this composability, Curve still serves arbitrage traders better than many of its competitors.

1.1.1 CURVE AND STABLECOINS

Curve is giving opportunities to stablecoins holders to provide liquidity and earn from it, as well as traders to swap coins in a secure and safe environ.

Curve currently supports DAI, USDC, USDT, TUSD, BUSD, and sUSD. Also, it supports the BTC pairs of these coins. Exchanging between these coins is easy, efficient, and fast.

The idea of such an exchange is not new. For example, Uniswap has been doing this for years. But Curve.fi has special features, which will be mentioned in this research report.

1.1.2 IMPERMANENT LOSS

Using AMM protocols presents its own challenges. One of these is what’s known as impermanent loss (IL). IL is the loss you can incur when you hold crypto in an AMM instead

of a wallet. An IL will occur if the price of such assets diverges in any direction. The bigger the divergence, the bigger the IL.

While these losses can be impermanent, they can become permanent when the liquidity pool is rebalanced to more accurately reflect the prices in other exchanges.

On the Curve platform, though, the likelihood of either impermanent or permanent loss is effectively reduced. This is because Curve specializes in stablecoin trading. Stablecoins are less prone to the price divergence that would trigger such losses.

1.1.3 CURVE GROWS QUICKLY

The growth and rise in popularity of stablecoins is responsible for Curve.fi’s rapid growth in just a few months. Users are flocking to stablecoins because of their stability when compared to regular cryptocurrencies. Stablecoins provide the security and anonymity of cryptocurrency while providing the stability of Fiat.

Then, high fees and a great likelihood of slippage characterize centralized exchanges such as Coinbase. Curve.fi solves these problems by providing a decentralized, peer-to-peer, and safe exchange platform with minimal fees and slippage.

1.1.4 CURVE COMPETITOR

Until very recently, Curve’s only competition were other DEXes like Uniswap, Kyber, 1inch.exchange, and other similar platforms.

However, during the end of May 2020, the first real competitor to Curve emerged mStable.

mStable is a pegged asset swapping protocol that shares many similarities to Curve. It has a basket for each asset (USD, BTC, etc.) and has tokens pegged to that asset inside the basket. Both mStable and Curve serve the unique market of swapping pegged tokens for one another.

mStable claims to offer “zero slippage swaps.” This is because of the protocol’s model prices each asset in a basket against every other on a one-for-one basis. Effectively, this means 1 USDT can be swapped for 1 DAI, even if the price of a single DAI is 1.02 USDT in the open market.

Hence, prices on mStable are independent of the market, creating a ton of unique arbitrage opportunities.

Curve, on the other hand, incorporates the active market price for an asset.

1.1.5 HOW TO USE CURVE?

Simply choose the coins you want to swap to and from. It’s easy See the following figure.

The main interface on Curve actually uses multiple pools on the back end, choosing the best rate between them.

Using Curve is very simple. Like most DEX frontends, the asset swapping interface is on the homepage where users can swap between any of the seven dollar-pegged stablecoins or the three BTC-pegged tokens.

As with most DEXes, users must first approve the contract through their browser wallet, after which they can swap tokens at their leisure.

1.2 WHY CURVE?

Unlike Uniswap that does two trades which results in double the trading fees. With Curve the stablecoins trade directly between each other. Curve’s algorithm is also designed to minimize slippage. These savings are magnified as the trade gets larger.

Unlike traditional decentralized exchanges, which require sell orders at a certain order to match buy orders, Curve uses a market-making algorithm or algorithms to bolster the liquidity of its markets. This makes Curve an automated market maker (AMM) protocol.

Thus, by implementing a market maker algorithm, Curve can allow for the faster matching of orders on its platform. Egorov said that the algorithm it has implemented can make provide Curve markets with “100–1000 times higher market depth than Uniswap or Balancer”.

“The key aspect of Curve is its market-making algorithm, which can provide 100–1000 times higher market depth than Uniswap or Balancer for the same total value locked. This dynamic helps both traders and liquidity providers because fundamental returns for those are higher than on Uniswap and alike by the same factor as the market depth”.

This means that traders, even larger “power users,” can easily swap their cryptocurrency for another (as long as A CURVE POOL SUPPORTS IT) with minimal fees and slippage.

What’s interesting about Curve and other Ethereum-based DeFi protocols in its class is that anyone can provide liquidity to the market.

Where traditional market makers most often use exchange-provided assets or their own holdings to provide liquidity to a market, Curve offers any users with assets supported by its markets to provide liquidity.

Liquidity provisioning is incentivized by potential profits one can make from doing so. These decentralized liquidity pools take fees, which are then relayed to liquidity providers.

Profits one can make by depositing their cryptocurrency into a pool can vary, as it largely depends on the volume and deposits a pool sees on a day-to-day basis.

1.2.1 BENEFITS OF CURVE PROTOCOL

For users trying to swap stablecoins like Dai and USDC in a decentralized fashion, Curve is able to mitigate slippage. This is done by accommodating for new varieties of bonding curves. On top of being able to make highly efficient swaps, it’s useful for liquidity providers who want to earn a return on top of their interest earned through Compound without having to hold the more volatile assets on the market.

Curve also enables liquidity providers to make use of yTokens instead of Compound’s interest to bring in passive earnings. Instead of interest automatically accruing through Compound’s cTokens, yTokens are able to rebalance the underlying tokens to obtain the highest interest rate among a handful of other tokens while allowing the user to still hold the stablecoin itself.

2. CRV TOKEN

CRV token is the planned native token for the Curve protocol. In the beginning, the protocol was centralized, thanks to founder Michael Egorov being at the helm and controlling nearly all aspects of the platform. With the launch of CRV, the network aspires to become a completely decentralized platform. This launch is expected to happen sometime in early September.

CRV will be distributed through an incentive program instead of through an ICO. The details are not yet clear on how exactly the coins will be distributed, but a member of the Curve team wrote:

“CRV will be awarded to Curve.fi liquidity providers. There won’t be any public sale or ICO. All users who have provided liquidity on Curve will be awarded CRV retroactively from day 1 based on how long and how much they have provided liquidity to CRV for.”

This system means that those that have supplied liquidity in the past or are currently supplying liquidity to Curve pools will be allowed to claim CRV.

As of this article’s writing, the maximum supply capitalization of CRV will be 3.03 billion tokens. This supply will be distributed as follows:

61% (~1.85 billion) will go to liquidity providers. 3% (~90 million) from that 61% will be distributed to liquidity providers that were active prior to the launch of CRV.
31% (~939 million) will go to shareholders of Curve. Those shareholders are not publicly known, though they will be subject to a 2-to-4 year vesting period.
3% (~90 million) will go to employees of Curve with a two-year vesting period.
5% (~150 million) will go to a burnable reserve that will only be used in an emergency.

Although CRV will most likely launch as a token for traders looking to profit off the DeFi craze, its primary purpose is to be a governance token for CurveDAO.

CurveDAO, which is a DAO leveraging the Ethereum-based decentralized organization manager/creator Aragon, will allow CRV holders to influence the direction of the protocol with a “time-weighted voting” system. The time-weighted system gives a more experienced CRV holder more weight in decision making than a holder that is voting a proposal for the first time. This system may make it harder for rich attackers to manipulate the protocol to their advantage.

CRV will also use value capture mechanisms, locking mechanisms, and fee burn mechanisms to promote liquidity provisioning, governance participation, and holding of the cryptocurrency.

2.1 WHAT’S THE ROLE OF CRV?

CRV will play the following roles in the Curve.fi ecosystem:

For users to participate in the governance of the protocol via a time-weighted voting mechanism.
To promote various liquidity pools through a value capture mechanism.
As a locking mechanism for liquidity providers to earn value over time.
For transaction fee burning to reduce inflation.

2.2 THE CRV UTILITY

Governance with time-weighted voting
Value capture mechanism to promote certain pools
Locking mechanism to accrue rewards for long term liquidity providers
Fee burn (once enabled by governance further down the road)

2.3 TRADE ON CURVE

Before trading, you’ll have to approve Curve to interact with your DAI or USDC balance, similar to most DeFi applications.

On the exchange, select the asset you would like to convert (e.g. USDC), and the quantity (e.g. 1,000) — the exchange rate, and quantity that you will receive (including and all slippage and fees) will be displayed. The exchange rate might surprise you — that’s the power of Curve.

2.3.1 FEES

Currently the fee on all pools is 0.04% which all goes to liquidity providers. There is no admin fee. In the future, fees and pool parameters will be decided by a DAO.

2.4 CURVE AND THE LAUNCH OF THE EARLY GOVERNANCE TOKEN

The CRV token officially, yet unexpectedly, launched at 6:25 PM EST 14 aug after an anonymous user, apparently unilaterally, deployed the open-source CRV token and CurveDAO contracts on the Ethereum mainnet earlier. After a couple of hours reviewing the code to check for changes or inserted exploits, the CRV team confirmed the contracts as authentic.

Though the contract had been deployed, users subsequently discovered that wallets had been staking Curve assets and earning CRV tokens ahead of the official launch announcement. Which was not a good look, and to led to allegations of an unfair “pre-mine” among Curve users.

Since the contracts were deployed, some users started staking yCRV tokens, which represent shares of Curve’s liquidity pools, to earn CRV tokens. This led to accusations of “pre-mine” among the DeFi community.

A set number of CRV tokens get awarded in each block; if you’re the only person competing, you get all the tokens for the block. That resulted in roughly 20,000 CRV tokens being awarded to early stakers before Curve’s official announcement. Presumably, one of those wallets or more belonged to the dev who prematurely launched the token, whom the community has dubbed “Chad”.

Around 80,000 CRV tokens were reportedly pre-mined before the Curve team verified the deployed contracts. Curve was initially “skeptical,” but later found out that the deployment was with “correct code, data and admin keys”.

“Due to the token/DAO getting traction, we had to adopt it,” said Curve, adding: “The launch has happened”.

Some observers have termed the early launch of Curve’s DAO and token as “shady.” The nature of permissionless networks means anyone can deploy codes .

Crypto exchanges, including Binance, OKEx and Poloniex, have supported the unexpected launch of CRV. These exchanges are set to list the token soon.

2.5 CURVE’S CRV DISTRIBUTION

Now that the hotly anticipated CRV token has been officially released, any users that have provided liquidity to the protocol are entitled to CRV distributions retroactively calculated since the launch of the platform.

The release of the new governance token for the stablecoin swap Curve Finance DeFi platform signals another step in the propagation of distributed governance schemes throughout the DeFi ecosystem, and reveals growing expectations that such events also bring huge returns for liquidity providers.

The CRV token release will begin the transition to distributed governance administered via the CurveDAO, also launching today. Blockchain security firm Quantstamp previously audited both the CRV reward mechanism and CurveDAO.

“This is likely to be a landmark event for DeFi. It will have a ripple effect on YFI, 1inch, and other projects integrating into Curve,” Quantstamp CEO Richard Ma told Decrypt.

“I think the way Curve handled the contributions of previous Liquidity Providers is also informed by the experience of [Compound’s] COMP, which came before them,” said Ma. “This way, the [liquidity providers] who bootstrapped Curve in the early days are also rewarded retroactively.”

The total supply of 3.03b is distributed as such:

% 26 to liquidity providers
00% to shareholders (team and investors) with 2–4 years vesting
0% to employees with 2 years vesting
5% to the community reserve

The initial supply of around 1.3b (~43%) is distributed as such:

5% to pre-CRV liquidity providers with 1 year vesting
00%to shareholders (team and investors) with 2–4 years vesting
0%to employees with 2 years vesting
5%to the community reserve

The circulating supply 0 at launch and the initial release rate around 2m CRV per day.

The chart below shows the circulating supply at the end of year one should be around 750m CRV. The rate of inflation is there to help put the DAO’s control in the hands of liquidity providers on the Curve Finance protocol.

The LPs, team and shareholders vesting happens every second.

Daily inflation will originally be around 766,000 CRV per day to be received in full by liquidity providers. This mechanism for a slow shift of voting power from the team and investors to liquidity providers.

2.6 CURVEDAO

CRV tokens will be used to participate in the CurveDAO, a time-weighted voting system that grants early participants higher voting weight as the project evolves. It’s been suggested that all system fees will accrue to the DAO and be used to burn CRV at a later date. Liquidity providers are also likely to benefit from CRV rewards and a locking mechanism to favor long-term liquidity with added incentives.

Curve DAO consists of multiple smart contracts connected by Aragon. Apart from that, standard Aragon’s 1 token = 1 vote method is replaced with the voting weight proportional to locktime, as will be described below.

Curve DAO has a token CRV, which is used for both governance and value accrual.

Time-weighted voting. Vote-locked tokens in VotingEscrow

Instead of voting with token amount $a$, in Curve DAO tokens are lockable in a VotingEscrow for a selectable locktime. then the vote is both amount- and time-weighted, where the time counted is how long the tokens cannot be moved in future.

The account which locks the tokens cannot be a smart contract (because can be tradable and/or tokenized), unless it is one of whitelisted smart contracts (for example, widely used multi-signature wallets).

2.7 CURVE WITH YFI

DeFi protocol Curve locks in more than $300 million on YFI hype.

The release of YFI, yEarn’s governance token, has drawn hundreds of millions in liquidity to the Curve DeFi protocol.

In Brief

Curve.fi, a DeFi stablecoin swap protocol, has seen total locked value increase nearly 3x in under a week
The inflows are being driven by the release of YFI, a governance token for the yEarn.finance platform
Complex financial wrangling across several DeFi protocols are generating annualized yields in excess of 1,000%

DeFi total value locked is still rising, and another protocol is leading the charge, but this time might be different: Curve.fi has added more than $226 million to the total value locked in its DeFi smart contracts since Friday, rising to become the 5th most popular DeFi protocol by total value locked.

Its recent surge comes from the launch of the YFI governance token, a behind-the-scenes component of Curve that increases returns for liquidity providers using the platform. It’s another example of governance token distributions adding fuel to the DeFi frenzy.

yEarn itself automatically allocates unused liquidity between DeFi protocols Aave, dYdX, and Compound to generate returns, which have averaged around 10% on an annualized basis. Liquidity providers who contribute to Curve receive the YFI governance token for a limited window, while Curve will eventually release its own governance token.

Before the release of the YFI governance token, Curve had less than $100 million in assets locked in the protocol — it has more than $300 million locked at time of writing.

As reported by The Defiant, demand for YFI exploded for two main reasons. First, the YFI distribution model generously rewards liquidity providers, with no premine or allocation set aside for yEarn developers, giving the community unprecedented control over the future of the platform. Second, a complex routing of liquidity and earned governance tokens across multiple DeFi products is generating annualized returns in excess of 1,000% for those with the requisite knowledge and willingness to accept the risks. Notably, the model makes little provision for incentive structures for yEarn developers, upon which the continued success and functionality of the project depend.

2.8 WHAT ARE LIQUIDITY POOLS?

Liquidity pools are pools of tokens that sit in smart contracts. If you were to create a pool of DAI and USDC where 1 DAI = 1 USDC. You would have the same amount of tokens, let’s say 1,000 tokens (1,000 DAI and 1,000 USDC) in the pool.

If trader 1 comes and exchange 100 DAI for 100 USDC, you would then have 1,100 DAI and 900 USDC in the pool so the price would tilt slightly lower for USDC to encourage another trader to exchange USDC for DAI and average the pool back.

2.8.1 HOW DO I PROVIDE LIQUIDITY TO CURVE?

Curve uses cTokens, assets inside the Compound protocol, as the liquidity pool — this ensures that assets are always being put to work. You can acquire cDAI or cUSDC by supplying DAI or USDC to Compound, or by acquiring cTokens on 1inch, Paraswap, Totle or Dex.ag.

Before providing liquidity, you’ll have to approve Curve to interact with your cDAI or cUSDC balances.

Visit the Curve deposit page, and your available balances should appear. If you add all coins in a balanced proportion, you will provide coins at the current exchange Curve rate; this requires you to have all assets in your wallet. You can uncheck this feature to supply one side of the market, or a different ratio of assets, and Curve will automatically exchange them into the proper quantity (with the same low slippage & fees of the Curve exchange) — magic!

You can deposit plain stablecoins DAI/USDC/USDT/TUSD/BUSD/sUSD or their cTokens and yTokens by clicking “Deposit wrapped”

2.8.2 HOW TO CHOOSE THE RIGHT CURVE.FI POOL FOR YOU?

There are currently seven pools on Curve, the first five are stable coin pools and the last two are tokenised Bitcoin pools (Bitcoin on Ethereum).

It’s important to understand that when you provide liquidity to a pool, no matter what coin you deposit, you essentially gain exposure to all the coins in the pool which means you want to find a pool with coins you are comfortable holding.

Another important note is that all liquidity providers receive CRV regardless of what pool they contribute to.

Curve interests come from trading fees. Every time someone uses Curve to exchange stable coins, through the Curve website, 1inch, Paraswap or another dex aggregator, a small fee is distributed to liquidity providers. This is why the more volume on Curve, the higher the APY are.

Some pools (Compound, PAX, Y, BUSD) also earn interests from lending protocols. Behind the scenes, those four pools also use lending protocols (like Compound or AAVE) to help generate more interests for liquidity providers. Whilst it means those pools can be better performers when lending rates are high, it’s also worth noting it also add more layers of risks.

So all pools earn interest from trading fees, some pools also earn interest from lending and there are also two pools with incentives. sUSD and sBTC which are non lending pools have been incentivised by Synthetix and REN. As a result those two pools earn rewards in SNX for sUSD and SNX, REN, BAL for sBTC.

2.8.3 THE LENDING POOLS: COMPOUND, PAX, Y AND BUSD

The four first pools are the lending ones which means as explained above, you earn interest from lending as well as trading fees.

The Compound pool is the first and oldest. The © you see above stands for cTokens which are Compound native tokens. This means your stable coins in the Compound pool would only be lent on the Compound protocol.

The other pools are yPools which are tokens for iEarn. iEarn is a yield aggregator. You might think that Compound doesn’t always have the best lending rates and you would be right and thus the yToken balances automatically rebalance your stable coin to the protocol(s) with the better rates (Compound, Aave and dYdX). It’s free and non-custodial (as is Curve) but it is also why the yPools are considered more risky as you use a series of protocols that could themselves have critical vulnerabilities.

2.8.4 THE RISKS IN PROVIDING LIQUIDITY TO CURVE, BALANCER, AND OTHER AMMS

The main risk in using Curve and other AMM protocols is the risk of suffering from impermanent loss (IL).

Simply put, an impermanent loss is the loss one can incur by depositing cryptocurrency into an automated market maker protocol such as Curve or Balancer rather than holding those assets in a wallet. ILs appear when the prices of a token in a liquidity pool diverge.

These losses can be impermanent (hence the name). But ILs can become permanent when arbitrageurs, who have the role of balancing each pool, rebalance the pool to the price of the pooled assets on exchanges.

DeFi analyst and venture capitalist Andrew Kang shared the chart in July 2020. It shows how putting Chainlink (LINK) into a Uniswap pool strongly underperformed just holding LINK over the year prior to the publishing of the chart.

Again, this is not an issue that only pertains to Curve. Other AMMs like Uniswap and Balancer are susceptible to ILs as well.

Notably, though, the magnitude of potential ILs is naturally lower on Curve than with other AMMs due to the composition of pools: Curve is stablecoin centric while other AMM protocols allow for the trading of almost any Ethereum-based altcoin. As one DeFi commentator wrote on the matter:

“Since Curve only trades stablecoins, however, liquidity providers experience minimal, if any impermanent loss. This makes supplying liquidity on Curve in some respects more attractive than with Uniswap as returns are market-neutral.”

2.9 INCREASE CRV REWARDS BY VOTE LOCKING

Along with DAO governance and fee burning, CRV can also be locked to increase your CRV rewards on the liquidity you provide on Curve Finance.

The maximum multiplier that can be reached by vote locking is 2.5x.

There are several things to take into consideration when trying to figure out how much CRV you will need to lock to reach the maximum boost.

2.10 WHY SHOULD YOU VOTE LOCK YOUR CRV?

The liquidity gauge calculates how much your earning weight is. By locking your CRV in the voting escrow, you can boost your rewards rate to 2.5x.

This will start from 28 August.

2.11 WHAT ARE VECRV?

veCRV stands for voting escrow CRV. They are your CRV locked for voting. The longer you lock your CRV for, the more voting power you have (and the bigger boost you can reach). You can vote lock 1,000 CRV for a year to have a 250 veCRV weight.

3. THE CURVE TEAM

The Curve team is a small group of developers, community managers, and blockchain tinkerers. Some have also been working in the crypto space long before the DeFi trend .

In 6015, Curve’s founder, Michael Egorov, helped found another company called NuCypher. At the time, NuCypher was working in the broader encryption industry, helping healthcare and financial institutions keep sensitive data safe. The project was successful, and the team began workshopping its encryption software with various banks until eventually landing a $750,000 investment from Y Combinator in 2016 .

Egorov and the NuCypher team then shifted their attention to the same objectives in the blockchain sector. This led NuCypher to a decentralized redesign of its infrastructure as well as the launch of a native token, NU. They then went on to raise $4.4 million in an ICO in 2017, built two testnets, and then raised another $10.7 million in 2019 .

In 2020, Egorov started Curve Finance. Though it is still unclear the size of the team, Egorov confirmed in a Telegram conversation with Crypto Briefing that five other members join him.

These include two developers, Angel Angelov and Ben Hauser, and three community managers, “Charlie,” “Kendrick Lama,” and “Chris.” The team has been too busy to confirm too many details beyond this, however .

4. CURVE BUSINESS MODEL

Curve will be powered by a hybrid token, CRV, that will be used for both value accrual and governance. The value accrual aspect comes from:

1. demand by issuers of new coins like new stablecoins,

2. from people locking CRV tokens to amplify production of CRV, and

3. from the possibility of burning CRV for admin fees (although this mechanism probably wouldn’t come into effect anytime soon).

5. CURVE PROTOCOL COMMUNITY

Website: https://www.curve.fi/

Twitter: 24.1k followers: https://twitter.com/CurveFinance

Youtube 1.69k subscribers: https://www.youtube.com/channel/UCH8TXwmWWAE9TZO0yTBHB3A

Telegram: https://t.me/curvefi

Discord: https://discord.com/invite/9uEHakc

6.CONCLUSION

Curve Finance was launched in January 2020 by NuCypher CTO Michael Egorov, author of the protocol’s whitepaper released November 2019. In their examination of Curve, The Defiant also spoke with early investor Julien Bonteloup, who indicated the platform had raised a private seed round among industry insiders sometime after launch. These early shareholders will receive 30% of CRV distributions, but their exact identities are not publicly known.

Curve has become one of the most popular decentralized exchange protocols in recent months, capturing more than 20% of all DEX volume in June and July according to data gathered via Dune Analytics. Curve is also intertwined with yEarn.finance, Andre Conje’s DeFi brainchild whose YFI governance token has grown wildly in value following its release. yEarn.finance liquidity pools leverage Curve smart contracts to deliver high annual returns.

Curve.fi launched in January 2020 and facilitates affordable swaps between a variety of stablecoins as well as Wrapped Bitcoin and Synthetix sBTC. Curve also allocates unused

pooled liquidity to other DeFi protocols such as Compound and yEarn.finance that provide ongoing interest earnings for liquidity deposits.