Curve DAO (CRV)

Manuel Valente

Summary

Introduction
The history of the Curve team
How does Curve work?
What are Curve tokens used for?
Tokenomics
What are Curve’s projects?
How to buy Curve?
Coinhouse's opinion

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Introduction

In the ever-evolving world of decentralized finance (DeFi), Curve Finance has distinguished itself as an essential platform for the exchange of stablecoins and tokens with similar values.
But what makes Curve so special, and what role does Curve play in this ecosystem?
Let’s dive into the world of Curve to find out.

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The history of the Curve team

Curve Finance was launched in early 2020, founded by Michael Egorov.
Prior to founding Curve, Egorov was a theoretical physicist and cryptography expert.
He is also the co-founder of NuCypher, a privacy infrastructure for decentralized applications.
However, as with many DAOs, the idea is for the organization to be progressively led by its community rather than a central team.
So, although Michael Egorov was instrumental in launching Curve, the DAO itself is designed to be run collectively by its participants.
To further involve the community and decentralize governance, Curve launched Curve DAO and its associated token, the CRV.
The CRV token serves both as a governance mechanism and as a means of obtaining rewards for users participating in the protocol. Curve DAO is a decentralized, autonomous organization that gives the community the opportunity to participate in the direction and governance of the platform.
This means that CRV token holders can vote on various proposals concerning Curve’s development, ranging from the adjustment of protocol parameters to the integration of new pools.
Any CRV token holder can submit proposals to modify the protocol, whether for technical adjustments, the introduction of new pools, changes to rewards, and so on.
Once a proposal has been submitted, it is put to the vote of CRV holders.
Depending on the weight of their vote (which can be increased by locking their CRVs for longer periods), the proposal will be accepted or rejected.
Thanks to Curve DAO, the protocol can evolve according to the needs and wishes of the community.
For example, new pools can be added, or the parameters of existing pools can be modified in response to votes.
The main aim of Curve DAO is to ensure that Curve Finance remains decentralized and driven by its community rather than by a central team or entity.
This means that, in theory, any decision concerning Curve’s future must go through the DAO and be approved by the token holders.

How does Curve work?

Decentralized exchanges all work in more or less the same way, according to the model initially created by Uniswap.
This model is based primarily on the use ofAutomated Market Makers (AMMs), which make transactions more fluid without the need for a specific counterparty for each exchange.
Rather than relying on a traditional order book, users exchange their assets via liquidity pools.
When a user wishes to make an exchange, he interacts with these pools, and the exchange rate is determined by an algorithm based on the quantities of assets in the pool.
The main advantage of this system is that it is often faster and simpler than centralized exchange systems, without the need for intermediaries.
In order to feed the liquidity pools, decentralized exchange platforms rely on external investors: in exchange for making available the tokens that will feed the pools, part of the transaction fees generated by the exchanges are redistributed to the liquidity providers, in proportion to their contribution to the pool.
It’s a passive source of income for them.
One of the best-known problems for liquidity providers is impermanent loss.
This phenomenon occurs when the value of tokens in a liquidity pool changes from when they were deposited, and this difference in value can lead to a loss for the liquidity provider.
If one of the tokens in a trading pair increases in value significantly relative to the other, the pool will tend to sell it to buy the lower-value token, in order to rebalance.
If a liquidity provider withdraws its funds during this period of imbalance, it could end up with less of the asset that has increased in value, thus making a loss. Live CRV prices.

What are Curve tokens used for?

To encourage active user involvement and reward loyalty, Curve Finance has introduced a mechanism called “boosts”.
The boosts system enables liquidity providers to receive increased rewards according to the quantity of CRV tokens they have locked (or “locked”) onto the platform.
Basically, the longer a user locks their CRV tokens, the greater the boost applied to their liquidity provider rewards.
The boost mechanism is designed to encourage users to make long-term commitments to the platform.
In return, these commitments help to stabilize and secure the protocol, while ensuring constant liquidity for exchanges.
A user’s boost level depends on two main factors: the proportion of locked CRV tokens in relation to their liquidity contribution, and the length of time these CRV tokens are committed.
Thus, liquidity providers who firmly believe in Curve’s future and make a long-term commitment can benefit from significantly increased rewards thanks to this innovative boosting mechanism. Risks The strong incentive put in place by Curve Finance to encourage users to lock their CRV tokens on the platform has a significant impact on the overall liquidity of the token on the market: a high proportion of locked CRV tokens means that the quantity of CRV available for buying, selling or exchanging on the market is reduced.
Reducing available CRV liquidity can increase token price volatility.
With fewer CRVs available on the market, even small variations in demand can lead to larger price movements than if a larger proportion of CRVs were freely exchangeable.
In the event of a market shock or crisis, the reduced ability to sell or exchange CRV quickly could pose a problem.
Users wishing to liquidate their positions could find themselves in a difficult position, especially as their tokens are locked and cannot be accessed immediately.

Tokenomics

When it launched in 2020, Curve planned to issue 2 billion CRVs over a four-year period.
The first year: 1 billion CRVs were distributed, then this quantity is halved every year, until it reaches 250 million CRVs.

KEY FIGURES

Max supply	3 303 030 299 CRV
Total Supply	2 027 632 390 CRV
Circulating Supply	893 953 883 CRV
Total Value Locked (TVL)	$1 730 000 000
MarketCap	$425 000 000
Fully Diluted Market Cap	$1 572 000 000

INITIAL ALLOCATION

Liquidity providers	62% (i.e. 1.24 billion CRV over 4 years).
Team/founders	30% (600 million CRV) with a progressive lock-in period.
Employees	3% (60 million CRV) with restrictions.
Community reserves	5% (100 million CRV) for various incentives.

It should be noted that liquidity providers are remunerated both by the commissions they earn on transactions, and by the CRVs created for the occasion, which further increases their remuneration.

TECHNICAL DATA

Transactions per second	40 (Ethereum)
Consensus mechanism	Proof of Stake (PoS): Staking
Programming languages	Solidity (Ethereum language)
Security	is based on Ethereum’s level of security
Governance	CRV token holders participate in the protocol improvement process (proposals, voting, etc.).
Bridges	N/A
Compatible wallets	Ledger, Trezor, Metamask, etc.

What are Curve’s projects?

Multi-blockchain expansion: integrating more blockchains to improve interoperability and attract more liquidity and users.
Fee optimization and trading efficiency: algorithmic improvements to reduce slippage and transaction costs, making trading more efficient.
Strengthening decentralized governance: increasing the decision-making power of CRV holders to influence key protocol decisions.
Collaboration with other DeFi protocols: development of partnerships and integration of derivative products based on Curve’s liquidity pools to diversify its offerings.
Platform enhancements: ongoing innovations to solidify Curve as one of the most robust and competitive DeFi platforms on the market.

How to buy Curve?

Go to your Coinhouse application and log in to your personal space or create your account.
Go to the buy/sell section.
Select the amount you wish to invest, and the currency of your choice (in this case CRV).
You can buy CRVs using USDT or USDC.
Once your transaction has been validated, you ‘ll find your CRVs in your wallet.

Coinhouse's opinion

Curve Finance is a major player in the burgeoning world of decentralized finance.
By skilfully addressing the problem of impermanent loss and optimizing exchanges for stable tokens and assets of similar value, Curve is positioning itself at the forefront of developments in the field of decentralized exchanges.
Thanks to its innovative approach and the active involvement of its community via the Curve DAO, the platform promises not only to meet users’ current needs, but also to adapt and evolve with the ever-changing DeFi landscape.
As the future of decentralized finance continues to take shape, it’s clear that Curve Finance will play a pivotal role, shaping and influencing trends while offering robust and efficient solutions for its users.

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