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Curve finance: evaluation, innovation and governance.

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Curve Finance is with no doubt a pioneer in the Decentralised Finance.

Curve Finance the Decentralised Finance

Curve Finance is with no doubt a pioneer in the Decentralised Finance. Thanks to an innovative DEX with a never before seen level of efficiency, it currently carries out transactions of about 6 billion dollars monthly and has reached the highest TVL (which represents the total value held inside its smart contracts) of any DeFi project present at the moment, exceeding even the blocked 24 billion dollars. 

Curve Finance è un aggregatore di liquidità, in altre parole è uno scambio decentralizzato che promuove la creazione di liquidità, offrendo incentivi.

It works like an Automated Market Maker system (AMM). Specially created for low-slippage trading (which occurs when the market suddenly moves in the opposite direction to your order) with constant revenues for liquidity providers (LP).

There are currently over 40 different official liquidity pools available. While it is CRV trading that represents the largest volume of the platform.

Unlike traditional decentralized stocks exchanges, which require sales orders to a certain order to match purchase orders. Curve uses market-making algorithms to strengthen the liquidity of its markets.

This makes it a fully automated AMM protocol.

Curve Finance the Decentralised Finance

Curve launches the Layer 2 Polygon solution

Curve has recently introduced the Layer 3 Polygon, capable of supporting multiple interoperable solutions and the most popular stablecoins. USDT, DAI and USDC, making the orders of magnitude of swaps cheaper than Ethereum’s L1. Where a single Uniswap operation can for instance cost as much as $100.

This implementation was create to provide sets with an alternative option. For a much cheaper resource exchange than standard Layer1 core network. And although they don’t reside on the same chain as Curve’s DAO, LP benefit from CRV token prizes.

Furthermore, through a partnership with Polygon, even Curve’s depositors on selected pools can receive MATIC token incentives. 

Curve Finance the Decentralised Finance

Alongside the introduction of Polygon, Harmony was also approve in September 2021 and was shortly. After officially launched on the Intelligent Contract Network (Harmony). Note that Harmony has allocated 2 million dollars in ONE tokens. To initiate the potential use of Curve on its platform.

As we can see, browsing the Network section of platforms, Curve cure was also launche on multiple protocols, such as xDAI, Avalanche , Arbitrum and Fantom. This expansion curve aims to become the most widely available protocol in the major DeFi ecosystems.

Curve Finance the Decentralised Finance

Curve Finance the Decentralised Finance

Thanks to these initiatives Curve was able to capitalize and even increase the average volume of trade in 2021. Becoming one of the most popular in the DEX, and  the most important DEFI protocol in terms of TVL.

As of December 31 2021, Curve’s TVL reached an impressive $23.07 billion, marking an exponential growth since the beginning of the year.

Curve Finance the Decentralised Finance

As written in a previous article, the CRV token is use to get users to vote, giving them the chance to participate in the community. And makes staking by releasing to depositors up to 50% of all trading fees generated by the protocol.

Curve’s very high TVL, compared to its volume in trade, indicates that the community evaluates very carefully the CRV token rewards. Which probably represent the most important engine of growth in terms of value.

Curve Finance the Decentralised Finance

The third-party token awards are exceedingly interesting. Thanks to partnerships with other protocols, which result in higher APY for liquidity providers. And represent a valuable competitive advantage to date.

In the example following the CURVE x POLYGON window, the exposure per pair of CURVE POOLS and APR Tokens is based on tokens’ current prices and reward rates. 

Analitics

CURVE as a post to other platforms, allows you to choose exactly what to deposit in the polls: you can even deposit a single Token. The system will balance your investment automatically in other currencies, distributing daily dividends because the Dashboard section.

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PITFALLS AND THE FUTURE

Large shares of CRV have recently been diverted to Mochi.

Mochi launched an attack on governance by executing a series of transactions that cracked CRV rewards in its favor, using a complex mechanism of yield framing: Convex Finance.

Convex is a protocol designed to maximize CRV rewards. And it is the largest holder of veCRV (token governance), with more than a third of the circulating supply of CRV.

Moreover, all the users that block Convex’s CVX token have the right to vote proportionally. On how protocol tokens are used to increase the reward rate.

Mochi therefore held a large amount of governance tokens. Which would allow them to vote on additional CRV rewards in favour of their own pool,

which would attract additional liquidity, ultimately creating a flywheel that heavily tilted CRV rewards in their favor by attracting huge amounts of liquidity onto their platform.

It all ended for the best because the protocol’s developers activated the Emergency DAO to cut Mochi’s rewards, although its aggressive strategy and the CURVE’s subsequent action of governance has parked a rather critical debate in the DeFi community

Thanks to the introduction of non-stablecoin assets trading  and integrations with L2 intelligent emerging contracts protocols, as we have seen, Curve continues in its innovation, as on the horizon other platforms undermine it, aiming for its primacy. But it is governance mechanisms and technological developments which will tell whether Curve will continue to maintain leadership and primacy.

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