The Curve protocol is a decentralized exchange for trading crypto assets.
Unlike Uniswap where you can swap between almost any ERC-20 token, Curve specifically focuses on stablecoins and swaps between similar assets on Ethereum.
These include DAI, USDT, USDC, GUSD, TUSD, BUSD, UST, EURS, PAX, as well as ETH, LINK, and a few tokenized BTC assets like wBTC and renBTC.
How does Curve work?
Curve uses an Automated Market Maker (AMM) protocol to perform the swaps, which works by using smart contract-enabled algorithms to efficiently price crypto assets on the exchange, which eliminates the need for counterparties.
Curve’s liquidity comes from users who deposit supported stablecoins and other crypto assets into their liquidity pools.
Those users are rewarded for doing so with a share of the trading fees, as well as extra incentives like additional token distributions.
This has led to Curve offering up one of the deepest liquidity pools in the DeFi space, giving both traders and liquidity providers benefits such as low trading fees, minimized slippage, low risk of impermanent loss, and relatively attractive risk-to-reward returns.
What is the CRV token?
CRV is the native utility token of the Curve protocol.
When a user stakes their CRV tokens into the protocol, they can participate in the token’s three main use cases:
- Collecting liquidity pool fees and rewards
- Boosting yields (using veCRV)
- Participation in Curve governance through the DAO
Every trade conducted through the liquidity pools on the exchange earns a fee, a portion of which is then distributed to staked CRV token holders in proportion to their poolshare.
Users also have the option of converting their CRV into a veCRV token, which stands for vote-escrowed CRV.
This means that it is locked into the Curve protocol for a defined period of time in exchange for governance voting benefits, as well as boosted earnings on deposits and trading fees.
Team Background:
Curve was launched in January 2020 by Russian scientist Michael Egorov after the release of his StableSwap Whitepaper in November 2019.
He had previous experience in cryptography through his work at NuCypher, which is an encryption tech company that helped keep medical and financial records safe.
The Curve protocol is controlled by the CurveDAO, a Decentralized Autonomous Organization where CRV stakers are able to propose and vote on various issues and improvements.
This can range from rebalancing pools, adding gauges to new pools, and readjusting liquidity provider rewards to name a few.
Token Supply Metrics:
- Circulating supply: 391,958,099 CRV
- Max Supply: 1,837,400,415.92 CRV
- Inflation Rate: 29.32%
- No burn mechanisms in the protocol