What is Curve finance and CRV?
Curve Finance is a decentralized exchange designed to provide the best possible rates when trading stablecoins. Curve uses liquidity pools much like Bancor or Mooniswap, to make the trading as efficient as possible. As with most decentralized finance (DeFi) projects, the platform also has its native governance token CRV. Below we will take a quick look at what Curve finance is, and how it has launched the CRV DAO governance wars.
How is Curve finance different?
Since Curve focuses on stablecoins trades, liquidity providers have a much lower risk because the asset is not volatile. As a result, Curve has gained a lot of traction with large institutions. Such as, Coinbase who want to ensure USDC liquidity for DeFi protocols. For example, we find the protocol’s liquidity pools integrated with Aave, Compound, Yearn Finance, and DFI Money. More recently, support for Wrapped Bitcoin implementation was added. Which has opened up even more integrations and partnerships, with teams such as REN, WBTC, and SNX.
What about this CRV token… the native token is distributed as a reward for liquidity providers, it is used for voting on platform governance. However, CRV distribution is vested which helps ensure CRV is not immediately dumped on the market. There are also rewards for locking up your CRV which resembles staking. Essentially, there are design choices to help the token price go up.
This is unlike DeFi protocols such as SushiSwap or Kimchi Finance which are seen as more risky, where the tokens distribution appears to be a never-ending flood onto the market.
- CRV distribution has led to what is called the Curve DAO Governance wars. This is where holders are continuously trying to make sure their preferred pools offer the highest level of CRV rewards. Which creates buying pressure!
What a funny looking UI… if you have never used the DeFi protocol before, you may be in for a shock. Though veteran computer programmers may find it a blast from the past. It is not the easiest UI to navigate and requires some getting used to, which could threaten further adoption.