Thread by @the_alphatrades

@CurveFinance $CRV — A decentralized exchange #DEX bridging value across the #DeFi industry

If you're using decentralized lending platforms, you're likely using Curve indirectly.

Thread 👉

Quick facts 1:

Curve Finance is a DEX built on #Ethereum.

Purpose: Efficient #cryptocurrency trading & high annual percentage rates (APR) for liquidity providers (LPs)

Core product: Community-governed DEX

Curve Finance is the powerhouse of #DeFi aggregator @iearnfinance

Curve's daily trading volume: $1B+

Total locked value (TVL): $7.88B+

Competing w/ @AaveAave as the most valuable DeFi platform.

@CurveFinance
Sector: Decentralized Exchanges, non-custodial
Category: Financial
Token Type: ERC-20
Token Usage: Vote

Emission Type: Inflationary, decreasing inflation rate, capped supply

(Cred: @MessariCrypto)

@CurveFinance
- Core team of 5, based in Switzerland

cryptobriefing.com/defi-project-s…

- Unique bonding curve — low slippage & high APR for LPs

- V2 — Volatile asset pools using a dynamic peg; Similar liquidity depth to @Uniswap, but w/o the active mgmt:

curve.fi/files/crypto-p…

@CurveFinance
- LPs' high vol of #crypto deposits w/ significant lock-ins from @iearnfinance & @ConvexFinance signals a strong market demand for $CRV & the DEX's rewards.

The @CurveFinance team takes security & risk seriously w/ multiple audits completed:

curve.fi/risks
&
curve.fi/audits

Whitepapers:

curve.fi/whitepaper

@CurveFinance comprises several liquidity pools containing cryptocurrencies of equal value.

- 7 of the pools center around #stablecoins &
- 2 w/ wrapped (or "tokenized") Bitcoin:

https://twitter.com/DeFiRate/status/1271224293452472320?s=20

&

https://twitter.com/renprotocol/status/1404844419203928065?s=20

$CRV pools are churning out impressive returns to LPs,

Better than any yield you can get from #TradFi

How?

@CurveFinance uses deposited funds to provide liquidity to other #DeFi protocols, i.e., @compoundfinance or @AaveAave

curve.fi/compound/faq

@CurveFinance pools provide liquidity to @compoundfinance & generate interest,

Then pass interest to LPs,

Along w/ a portion of trading fees from the Curve platform, &

A % of $CRV tokens.

Yearn.finance is a top participant in @CurveFinance, utilizing the platform to swap stablecoins between Curve liquidity pools to pursue the highest yields.

https://twitter.com/bantg/status/1408913930144010242?s=20

Quick History of @CurveFinance 1:

- Brainchild of Russian physicist @newmichwill, a crypto veteran who got involved initially in 2013 and developed #NuCypher, a fintech company specializing in encryption:

nucypher.com

Quick History of @CurveFinance 2:

In 2019, Egorov began building an alternative DEX (StableSwap) after feeling that @Uniswap could use some improvements, and that project culminated into Curve Finance.

curve.fi/stableswap-pap…

History @CurveFinance 3:

May 2020 Launch of its governance token, $CRV, marked @CurveFinance's transition into a decentralized autonomous organization (DAO) built w/ @AragonProject

poweredby.aragon.org

$CRV governance token launch captured a market cap larger than $BTC

Curve's Edge:

It's all about the LPs.

High-interest yields are everything for @CurveFinance, & LPs enjoy greater time-based voting power depending on how much liquidity they provide.

@newmichwill holds a significant portion of the total supply, which has raised criticism from other AMM legends, such as Yearn.finance creator @AndreCronjeTech, over the DAO's decentralization.

decrypt.co/39599/curve-fo…

The good news about $CRV governance is that LP voting power is somewhat nerfed compared to other community-governed #DEXs & protocols.

As more $CRV is released, the more decentralized the DAO will become.

https://twitter.com/iearnfinance/status/1298271178742575106

@CurveFinance's incredibly low slippage is thanks to its unique bonding curve and high volume of #crypto deposited by LPs, who utilize the platform for very large transactions.

Case in point, this $192M swap from $USDT to $USDC cost under $100 in fees:

https://twitter.com/bneiluj/status/1382605175488180226

To better understand Curve's market fit requires a basic understanding of Automated market makers (AMMs).

academy.binance.com/en/articles/wh…

AMMs = 3 parts:

1. Liquidity providers who supply tokens to liquidity pools,
2. Liquidity pools consisting of token pairs,
3. Programmed mathematical formulas that determine token prices in liquidity pools.

coinmarketcap.com/alexandria/glo…
&
coinmarketcap.com/alexandria/glo…

AMMs rely on traders to move liquidity around, helping to close the price gap between the pools & the broader market.

AMMs face 3 challenges:

High fees,

slippage,

& impermanent loss

coinmarketcap.com/alexandria/glo…
&
coinmarketcap.com/alexandria/glo…

Curve's AMM is designed for low slippage while giving LPs reliable fee revenue.

Curve pairs similar assets like #stablecoins & other pegged assets in its liquidity pools, meaning impermanent loss is less problematic because asset prices don't vary much.

gemini.com/cryptopedia/cu…

All the asset pairs in each Curve pool gravitate towards the same prices, so the chances of any token in the pool sliding off balance is low.

Trade-off: It's not as flexible as @Uniswap, where users can create liquidity pools w/ any pair of tokens they wish.

@CurveFinance also keeps fees extremely low due to the small fluctuations between stablecoins & tokenized asset pairs,
attracting traders who want to avoid slippage in fees, even w/ large trades.

Fees are very low on Curve due to the low slippage.

Curve uses incentives from other protocols via auto-lending idle funds, earning interest.

Via protocols like @AaveAave, @CompoundFinance, & @synthetix_io, combining its fees w/ the interest rates & rewards from lending.

@AaveAave @compoundfinance @synthetix_io Pt 2. 👇

https://twitter.com/the_alphatrades/status/1411807664699490304?s=20

Pt 3. 👇

https://twitter.com/the_alphatrades/status/1411810835249434626?s=20