The Curve protocol CRV and Curve DAO token form another innovative project to come from the DeFi movement and one that provides a particularly unique and well-designed concept. Improving on functionalities that DeFi platforms like Uniswap and Sushiswap have otherwise neglected, CRV focuses on providing a viable alternative solution to traditional financial platforms in the blockchain industry.
The Curve Finance platform, launched in January 2020, later released a decentralised autonomous organisation (DAO) alongside the Curve DAO token eight months later. CRV functions as the in-house token of the platform.
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What Is Curve DAO (CRV)?
The Curve platform, formally known as Curve Finance, provides traders with a decentralised exchange on which to swap digital assets. Curve aims to provide minimum price slippage between two tradable crypto assets by focusing on stablecoins or assets of similar value. Through an automated market maker (AMM) and focused smart contracts, the decentralised exchange is able to manage liquidity.
While the platform can be compared to Uniswap, in reality, it has some key differences and a much higher amount of locked liquidity. The platform and its liquidity providers are more focused on stablecoins and other coins of that nature. CRV tokens fuel the network and are a tradable asset for crypto users.
The Curve DAO provides more decentralised governance to Curve’s trading platform. The Curve protocol has grown into a well-respected financial asset within the DeFi ecosystem with its strong DeFi protocol.
Who created the Curve (CRV) protocol?
The Curve platform was created by a Russian scientist with ample experience in the crypto industry. Michael Egorov both founded the platform and acts as its CEO. He previously co-founded a crypto business focused on building privacy-oriented protocols and infrastructure, NuCypher, in 2015, as well as LoanCoin, a decentralised bank and loans network.
As of August 2020, Egorov holds 71% of the governance tokens after locking up a large amount of CRV tokens in response to yearn.finance’s increasing voting power in the Curve network. In a statement made later, Egorov admitted to “overreacting”.
How does Curve work?
Launched prior to Uniswap V2, CRV Finance operates similarly to the DeFi platform but has implemented some key differences. The decentralised exchange differentiates itself from the original AMM platform by innovating the liquidity pool trading structure and relevant smart contracts.
The Curve DAO trading platform is managed by a mathematical function called a bonding curve, which is designed to let cryptocurrencies trade for the best possible price amongst each other. Bonding curves are also used by other DeFi trading platforms, like Uniswap.
Due to the Curve DAO platform being primarily focused on stablecoins, its bonding curve is specifically focused on these pegged digital currencies and is able to trade a larger amount of stablecoins with less change in their relative prices in a liquidity pool.
Lending pools
In order for the Curve DAO platform to operate, it requires a group of users who are willing to lock up their cryptocurrencies in order for them to be traded by others. The platform provides a return on their coins plus a portion of the fees from trades when incentivizing liquidity providers.
The platform manages the coins in the liquidity pools by making them more expensive or cheaper, based on their fluctuating amounts, thereby making them more attractive to buyers and sellers using the platform.
On Uniswap, liquidity pools are based strictly on predetermined trading pairs while on Curve DAO the liquidity pools comprise multiple assets. On Curve DAO, entire liquidity pools can also be used as an asset inside another liquidity pool.
Who Are the Founders of Curve DAO?
Curve DAO was founded and launched in 2020 and is one of the latest projects in the sector of decentralized finance. The Curve DAO Token was developed and created by Michael Egorov, a Russian scientist.
Michael Egorov has experience with blockchain and cryptocurrency companies, as he co-founded NuCypher and served as its CTO. NuCypher is focused on building privacy-oriented protocols and infrastructure.
What Makes Curve DAO Unique?
The Curve DAO token is a relatively new project that has already achieved great success thanks to its utility. Curve DAO experienced serious growth in the second half of 2020, providing users with low slippage and low fees for exchanging similar stablecoins and ERC-20 tokens.
Curve DAO is unique thanks to its technology and technical capacity, which makes Curve.fi an attractive exchange in the sector of DeFi. Instead of relying on order books, Curve forms liquidity pools based on smart contracts that work as an automated market maker. Users are connected with the best routes for their exchanges, while trading of tokens and stablecoins is conducted between traders and exchange protocols. Thanks to its technology and capacity to exchange tokens and stablecoins at the best rates, Curve has become synonymous with decentralized finance.
What Gives the Curve DAO Token Value?
The Curve DAO Token derives value from its technology, technical capacity, use cases, and mainstream use, i.e., popularity among crypto users and traders. The intrinsic value of CRV and Curve.fi is defined by its technology and features that enable traders to get low slippage and low trading fees for their exchanges. The overall functionality and utility are what provide Curve DAO Token with a real-life value. Factors such as upgrades, updates, developments, an increasing number of users and other important news and events can also affect the value of CRV and define its market value.
How does a trader use the liquidity pools?
Once a trader adds liquidity to a specific pool, through stablecoins or other digital assets, the user will receive a token specific to that pool. 3pool is an example of one of the most popular liquidity pools on the Curve platform.
While the platform is known to provide trading for stablecoins, it also supports mirrored assets such as renBTC and wBTC. These assets are both built on the Ethereum blockchain and track the price of Bitcoin in a typical derivatives fashion. Since the prices are close in value they can function in the same pool and be traded using the Curve DEX.
What is the Curve DAO token (CRV)?
The CRV token is the utility token and governance token of the Curve DAO platform, providing users with governance rights, an incentive structure for fee payments, as well as providing long-term rewards to liquidity providers. CRV tokens are awarded to users based on their liquidity commitment and length of ownership.
The Curve DAO token was launched alongside the Curve DAO in August 2020. The maximum supply is 3.03 billion CRV tokens, with 62% of that being distributed to liquidity providers. The rest is allocated between employees (3%), and shareholders (30%), and a small percentage is kept for community reserves (5%). Employee and shareholder allocations work off of a two-year vesting schedule.
At the time of writing, over 531 million CRV tokens are in circulation, roughly 16% of the total supply. The market cap at the time was around $365 million, positioning the Curve DAO token network in the top 20 biggest platforms in the DeFi ecosystem.
How Many Curve DAO Tokens (CRV) Are in Circulation?
There are currently 1,252,506,855 CRV in circulation out of a max supply of 3,303,030,299 CRV CRV. Curve DAO Token has a limited supply, much like Bitcoin, the original cryptocurrency. Cryptocurrency assets often limit the total supply of tokens to create an anti-inflation mechanism, which means they may be a good store of value in the long term.
Network participants may be able to propose changes to the total supply through decentralized governance of the network. The number of coins in circulation multiplied by the current CRV price equals the market cap. The market cap ranks the crypto in comparison with its peers and determines its market share.
Other Technical Data
Curve consists of liquidity pools that are created with smart contracts hosted on Ethereum. Many liquidity pools on the Curve.fi protocol are supplied to other liquidity protocols such as Compound. That is why liquidity providers may receive additional interest aside from the trading fees paid to the Curve.fi network.
When explaining the technical anatomy of liquidity pools, it is important to note that liquidity pools are actually smart contracts that contain tokens. If you were to create a pool with two similar tokens where the comparable value of these tokens is in a 1:1 ratio, DAI and USDC for example, when someone exchanges a certain amount of DAI for USDC, the USDC balance would be decreased by that amount. Despite the fact that there is less USDC, the difference in the amount would make USDC slightly less valuable in comparison. This mechanism encourages traders to exchange USDC for DAI, which is how the value will become even.
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 protoco
What are the main features of CRV?
Curve has garnered considerable attention following its launch of Automated Market Making for stablecoins.
The launch of the DAO and CRV allowed the protocol to become profitable while also maintaining its governance model, which is based on liquidity commitments and the duration of ownership. As such, the protocol has an incentive structure that rewards long term vested investors.
The explosion of DeFi trading, especially with the most recent Chinese ban on cryptocurrencies, means that decentralised applications have a growing use-case as capital seeks to find a new home. In this regard, DEXs like Curve Finance are fairly useful.
Additionally, DeFi activities such as yield farming and liquidity mining are tailwinds for the protocol, since yield-bearing assets are highly valuable in an environment where global economies are struggling for passive returns.
Coupled with the platform’s incentive structure, diverse liquidity pools and options for users and liquidity providers, there are a fair amount of features that Curve Finance has captured, which partly explains why it is so popular.
How is the Curve DAO Token Network Secured?
Curve DAO Token is secured through regular audits of smart contracts that are used for creating liquidity pools. The smart contracts are hosted on the Ethereum network while being operated by the Curve.fi protocol.
Curve DAO Token runs on the Ethereum network, which is currently transitioning from Proof of Work to Proof of Stake. PoS is a more cost-effective and energy-efficient protocol than PoW. CRV tokens can be staked and locked for voting to enable holders to participate in network governance.
The Curve Ecosystem
Curve is a decentralized exchange (DEX) primarily focused on efficient trading of stablecoins. It’s built on the Ethereum blockchain and has expanded to other networks like Polygon, Avalanche, and Fantom.
Core Components of the Curve Ecosystem
- Curve Exchange: The primary platform for trading stablecoins efficiently. It utilizes advanced algorithms to minimize slippage and maximize capital efficiency.
- CRV Token: The governance token of the Curve ecosystem. Holders have a say in platform decisions and can earn rewards.
- Liquidity Pools: Users can provide liquidity to different stablecoin pairs to earn trading fees and CRV rewards.
- Curve DAO: A decentralized autonomous organization (DAO) that governs the Curve protocol.
Importance of Curve
Curve plays a crucial role in the DeFi ecosystem by:
- Providing efficient stablecoin trading: It offers low slippage and minimal impermanent loss for traders.
- Facilitating liquidity: By incentivizing liquidity providers, Curve ensures ample liquidity for stablecoin trading.
- Supporting other DeFi protocols: Many DeFi protocols rely on Curve for efficient stablecoin swaps.
Curve Wars
The Curve ecosystem has seen intense competition from other protocols, leading to what’s known as the “Curve Wars.” This involves various projects competing for liquidity by offering incentives to users.
How to Use Curve DAO Token
Curve DAO Token is the utility token of the Curve.fi protocol that powers the network. Curve.fi is used as an automated market maker and a decentralized exchange based on liquidity pools to allow users to easily swap tokens and stablecoins.
Curve DAO Token can be used as a governance token to take part in the voting process on the network but is also used as an incentive for network participants and liquidity providers. CRV can be traded in the crypto market, while traders may make a profit based on the difference between the buying and selling prices.
How to Choose a Curve DAO Token Wallet
As an ERC-20 token, CRV can be stored in any wallet that supports Ethereum and the type you choose will likely depend on what you want to use it for and how much you need to store.
Hardware wallets or cold wallets like Ledger or Trezor provide the most secure option for storing cryptocurrencies with offline storage and backup. However, they can require more technical knowledge and are a more expensive option. As such, they may be better suited to storing larger amounts of CRV for more experienced users.
Software wallets like Lumi provide another option and are free and easy to use. They are available to download as smartphone or desktop apps and can be custodial or non-custodial. With custodial wallets, the private keys are managed and backed up on your behalf by the service provider. Non-custodial wallets make use of secure elements on your device to store the private keys. While convenient, they are seen as less secure than hardware wallets and may be better suited to smaller amounts of CRV or more novice users.
Online wallets or web wallets are also free and easy to use, and accessible from multiple devices using a web browser. They are, however, considered hot wallets and can be less secure than hardware or software alternatives. As you are likely trusting the platform to manage your CRV, you should select a reputable service with a track record in security and custody. As such, they are most suited for holding smaller amounts of cryptocurrencies or for those making more frequent trades.
How can I buy Curve DAO tokens?
If you’d like to buy Curve DAO tokens to include in your crypto portfolio, you can do so easily through the Tap mobile app. Providing a highly secure and equally simple crypto trading platform, users can buy CRV with British Pounds or Euros, or exchange tokens for other cryptocurrencies supported on the platform such as Bitcoin or Ethereum.
Simply download the app, create an account and follow the steps to get verified through the KYC process. You will then have access to several wallets, and a much simpler crypto trading experience.
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