Curve (CRV): Efficient Stablecoin Trading

SMART VALOR
 | 
Monday, January 10, 2022
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Stablecoins represent one of the most important innovations in the crypto industry. These tokens combine the decentralization and security of blockchain with the stability and convenience of fiat currencies. This addresses one of the biggest concerns of cryptocurrency users – volatility. Here Curve has stepped in to provide more stability.

The role of stablecoins is becoming increasingly important for Decentralized Finance (DeFi). This fast-growing industry promotes community-driven financial services built on blockchain infrastructures. Decentralized exchanges (DEXs) represent one of the most popular use cases of DeFi, and Curve is the largest DEX specialized exclusively on stablecoins.

What is Curve?

Curve Finance is a DEX (decentralized exchange) where users can swap stablecoins with low price slippage. It acts as an Automated Market Maker (AMM), which means it is not run by a centralized entity and thus has no order book in the traditional sense. The token swaps are possible thanks to the liquidity pools that enable liquidity providers to earn a steady return funded from the fees paid by traders.

Curve supports most popular stablecoins, including USDT, USDC, DAI, GUSD, BUSD, UST, EURS, and sUSD. Users can also trade ETH and several forms of tokenized BTC. The pools, which can include two or more tokens, are deployed by the Curve admins only, but all users can contribute to them.

Launched in early 2020, Curve has become one of the most popular DeFi protocols. As of January 2022, it is the second-largest DeFi project by total value locked (TVL) with over $15 billion.

While some might consider Curve's focus on stablecoins as a limitation, it actually allows it to kill the competition in this niche. The pools enable traders to conduct large trades with low slippage and fees, thanks to a unique formula that works exclusively for stablecoin pairs.

The CRV Token

Curve has a proprietary token with the ticker CRV, which acts as the governance token of the Curve DAO, the decentralized autonomous organization that runs on the protocol. Besides its status as a governance medium, the token is used to pay fees. It is distributed among liquidity providers on Curve, with the rate decreasing annually.

The total CRV supply is capped at 3.03 billion tokens, the greatest portion (62%) being distributed to liquidity providers. The rest of the supply is divided as follows: 30% to shareholders, 5% to the community reserve, and 3% to employees.

Curve DAO Token to USD Chart.

Curve DAO Token to USD Chart. Image via Coinmarketcap

Curve uses trade fees to compensate liquidity providers. Currently, the standard fee on all pools is 0.04%, half of which goes to liquidity providers and another half to veCRV holders (the CRV locked for voting on CurveDAO).

Thus, higher demand for Curve services benefits the token price, which currently trades at $5.04, hitting the YTD peak at the end of November at over $6.30.

Given that Curve is one of the leading DEXs by TVL and is here to stay for the years to come, the CRV token seems to have a bright future and thus represents a great investment opportunity.

Sign up on SMART VALOR to invest in CRV and join the DeFi revolution!