What Is Curve Finance (CRV)?
Also known as: Curve, CRV
In short
Curve Finance is a decentralized exchange and automated market maker (AMM) protocol designed for swapping stablecoins and similarly priced assets with low slippage; its governance token is CRV.
Curve was founded by Michael Egorov and went live in 2020. What sets it apart from general-purpose AMMs such as Uniswap is its formula called StableSwap: when the assets in the pool are priced close to each other, this formula flattens the price curve and keeps slippage low even in large swaps. For this reason, it is used for asset pairs that target the same value, such as USDC and USDT or ETH and stETH. Later versions added pools for volatile assets and a stablecoin called crvUSD.
The protocol's token economics also stand out. CRV holders lock their tokens for up to four years to obtain veCRV; veCRV is used in votes that determine which pools receive how much CRV in rewards. The competition to acquire this voting power in order to direct rewards to projects' own pools has been referred to as the Curve Wars.
Liquidity providers are exposed to the risks of smart contract bugs, an asset in the pool losing its peg (depeg) and impermanent loss. In 2023, some Curve pools were exploited because of a bug in the Vyper compiler.
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