Introduction to Curve Finance

Curve Finance is the dominant decentralized exchange (DEX) specializing in low-slippage stablecoin swaps and pegged asset trading. As a cornerstone of DeFi, Curve's capital-efficient Automated Market Maker (AMM) design has processed over $1 trillion in volume since launch, becoming the most trusted platform for stablecoin liquidity.

Why Curve Finance Stands Out

✅ Lowest slippage for stable assets ✅ High capital efficiency with specialized AMM math ✅ CRV governance & vote-escrow model ✅ Deep liquidity across major stablecoins ✅ Base layer for DeFi yield strategies

How Curve Finance Works

1. Stablecoin-Optimized AMM

• Uses StableSwap invariant (hybrid of CPMM and CPM)
• Minimizes impermanent loss for similar assets
• Supports USD stablecoins, ETH/stETH, BTC wrappers

2. Core Pool Types

Pool TypeExampleUse CaseStablecoinUSDC/USDT/DAILow-fee dollar tradesPegged AssetswBTC/renBTCBitcoin wrapper swapsLSDstETH/ETHLiquid staking derivatives

3. CRV Token & veCRV System

• CRV: Governance token with:
  • Protocol fee sharing (50% to veCRV lockers)
  • Voting power over emissions
• veCRV: Vote-escrowed CRV (locked 1 week to 4 years)
  • Longer locks = more voting power & rewards

4. Gauge Weight Voting

• veCRV holders direct CRV emissions to pools
• Protocols bribe voters to attract liquidity

Key Features Breakdown

1. Trading & Swapping

• 0.04% base fee (lowest in DeFi for stables)
• Meta pools for new assets to bootstrap liquidity
• Multihop routing through Curve + other DEXs

2. Liquidity Providing

• APRs typically 1-10% (trading fees + CRV rewards)
• Low IL risk for correlated assets
• Deposit wrappers (e.g., Convex) boost yields

3. Advanced Functionality

• Flash loan support
• Cross-asset swaps (e.g., USDC to ETH via stETH)
• Factory pools for permissionless deployments

CRV Tokenomics

• Max Supply: 3.03 billion CRV
• Circulating Supply: ~1.2 billion
• Distribution:
  • 62% to liquidity providers
  • 30% to shareholders (team/investors)
  • 5% community reserve
  • 3% employees

Curve vs. Other DEXs

FeatureCurveUniswapBalancerFocusStablesAll assetsCustom poolsFee0.04%0.3%/0.01%0.1-1%SlippageLowestVariableMediumGovernanceveCRVUNIBAL