The crypto asset market is flooded with a large number of stable coins, and the destination of these stable coins has become a hot spot for investors. The trading and lock-in volume of Curve, the on-chain stable coin exchange protocol, is also one of the concerns, as Curve’s lock-in volume did not fluctuate drastically when the market sentiment was down and the lock-in volume of the on-chain DeFi protocol was plummeting, but instead, it was on the rise in June.
On June 30, according to DeBank data, Curve’s locked position volume was as high as $8.38 billion, ranking second in the DeFi market, and the assets locked on the platform were all value assets USDC, ETH, BTC, etc.
When it comes to Curve, the first thing that comes to mind is the stablecoin exchange business, but nowadays, it is not only limited to the stablecoin exchange business, but also supports the exchange of large amounts of ETH, BTC, USDT and other cross-assets. At the same time, Curve platform deploys several external DeFi protocols such as lending and aggregators, such as Compound, Yearn, etc., which becomes a bridge to connect other DeFi protocol assets on Ether.
In particular, the upgraded Curve V2 is online, which minimizes LP impermanent risk loss for liquidity providers and is more suitable for ordinary users, providing a guarantee for liquidity mining profits. the gradual upgrade of Curve has led to its evolution to a “Super DeFi protocol”.
Low-slip cross-asset exchange feature boosts Curve growth
Curve is an automated market maker (AMM) protocol that supports low slippage trading between stable assets. The protocol went live in January 2020 and is a relatively early stable asset exchange protocol on Ether.
Unlike many decentralized exchanges (DEX) that implement token swaps, Curve utilizes a specific AMM (a combination of a constant sum function and a constant product function) approach to enable low-slippage trading between any assets that are expected to be stable in price. These assets include anchor coins that anchor a certain asset, such as DAI, USDC and USDT, whose prices anchor the US dollar; renBTC and sBTC and HBTC, which anchor BTC; and rETH and wETH, which anchor ETH. Also included are pool tokens, such as the ren Pool and sbtc Pool anchored to BTC.
In Curve liquidity pools, the assets in each pool support mutual exchange because they are all anchored to the same asset. For example, the 3pool pool has DAI, USDC and USDT anchored in USD; the Y pool also has yDAI, yUSDC, yUSDT and yTUSD anchored in USD, so DAI can be exchanged with yDAI.
In January 2021, Curve started to support cross-asset exchange, i.e. mutual exchange between different classes of assets anchored, through integration and interaction with the Synthetix protocol.
Before cross-asset exchange was enabled, users could only exchange similar assets, i.e. DAI-USDC, renBTC-HBTC, rETH-wEth. After going live with cross-asset exchange, users can use DAI or USDC and exchange wBTC, sETH, etc. directly.
So what is Curve’s cross-asset exchange path?
Synthetix, a synthetic asset protocol, is an important cross-asset exchange bridge. For example, how to convert DAI to renBTC on Curve? With Synthetix, you can convert DAI to sUSD first, sUSD to sBTC, and then from sBTC to renBTC, completing the cross-asset conversion of DAI and renBTC.
You must be worried about the costs associated with so many conversion paths, especially the slippage generated by large conversions. curve officials, on the other hand, say that there is no slippage in handling seven or eight figure transactions, meaning that there is no slippage in making transactions of millions or tens of millions on Curve. With this convenience, users can make low-slippage transactions directly on the chain without having to return to a centralized exchange to exchange funds for large amounts of assets.
For Curve, attracting demand for exchange of large assets will not only increase the trading volume of the application and attract more liquidity, but also bring more transaction fees to the platform.
Curve ‘panel’ brings revenue diversity
Since Curve only trades assets with relatively stable prices, liquidity provider LPs are exposed to less risk of unpredictable losses. In addition, the platform also accesses several DeFi protocols in the liquidity pool, such as machine gun pool Yearn, lending apps Aave and Compound, and synthetic asset Synthetix, in order to enhance the returns of liquidity providers, forming a Curve-focused ‘DeFi Panel’ that provides diverse returns to LPs.
Users receive not only the transaction fees distributed by Curve when Curve provides liquidity, but also the revenue from other agreements.
Currently, the revenues available to liquidity providers on the Curve platform include transaction fees, CRV rewards, rewards given by other DeFi protocols and other external Token rewards (e.g. the sUSD pool gives SNX rewards to LP providers).
Diversified liquidity rewards allow Curve protocols to attract more idle funds from DeFi protocols, while also providing financial benefits to those DeFi protocols that build pools on the Curve platform.
In addition, Curve also accepts relevant tokens from other protocols, and liquidity providers can choose to provide liquidity to pools of funds from external DeFi protocols deployed on Curve.
For example, user Leo can convert DAI to Compound-backed cDAI, which can earn COMP revenue; and then invest the cDAI in Curve to earn transaction fee revenue from the Curve platform. At the same time, the user Leo can also convert DAI to Yearn’s yDAI and put it back into Curve. it can be said that Curve provides the bottom profit source for the pyramid of DeFi mining.
On the Curve platform, users can deposit DAI, USDC, USDT and other stable assets into these liquidity pools. Curve automatically “wraps” the deposited assets by adding a prefix in front of these assets to represent other DeFi protocols (usually lending protocols or aggregators) that interact with Curve, common prefixes include y (for aggregator Yearn), c (lending Compound), s (synthetic asset Synthetix) and a (lending Aave).
Each of these packaged assets earns interest earnings from different external agreements, and users can exchange the assets back and forth to maximize their earnings based on the high or low DeFi agreement earnings.
As of July 1, there are 39 liquidity pools on the Curve platform, each offering a different return to its liquidity provider. In this way, Curve is not only a source of profit for the underlying third-party DeFi protocol mining strategy, but also builds a bridge for other DeFi protocols to interoperate assets. This two-way mutually beneficial interaction is an example of how combinability of DeFi protocols can evolve.
Curve revenue uncertainty spawns new products
Despite Curve’s dominance in stable asset trading, the platform is not DeFi-friendly due to the number of interaction protocols involved, and YFI’s founder, AC, has stated that even as a DeFi developer, it takes time to fully understand each product on the Curve platform.
For DeFi users seeking high returns, there is a lot of uncertainty when it comes to mining on the Curve platform. This is because the LP returns offered by Curve are uncertain, even for the same pools, and are always in a floating range, rather than fixed. You can certainly increase the yield with the yield acceleration (Boost) feature on the platform, but the acceleration rate is not yet the same for different pools, as it depends on the weight of the veCRV.
On the Curve platform, you can increase Curve’s liquidity mining rewards with a vote by locking positions in CRV for veCRV. The number of veCRVs varies and so does the yield acceleration, up to 2.5 times higher. It is a question to ponder whether to lock the position to make the gain accelerate, or to take CRV and wait for the appreciation so as not to miss the coin price pull in this bull market.
Thus, new applications based on the Curve protocol have come along, either to simplify operations on Curve or to provide users with new ways to earn.
CRV Management Platform Convex
Convex (CVX) is a one-stop management platform for CRV pledging and liquidity mining, which is mainly used to simplify the process of Curve and CRV locking and pledging, and to increase the revenue of CRV holders and liquidity providers.
Convex official website
On the Convex platform, users can convert CRV into cvxCRV at a 1:1 ratio and then pledge cvxCRV to receive the usual rewards of veCRV (transaction fees + any airdrop) and, among other things, CVX tokens.
Note that the conversion of CRV to cvxCRV is irreversible. You can pledge or withdraw pledged cvxCRV tokens, but cannot convert them back to CRV, but exchanging cvxCRV for CRV may be allowed in the secondary market.
Curve Fork Project Ellipsis
Ellipsis Finance (EPS) is a low slippage exchange protocol for stable assets deployed on the Cryptocurrency Smartchain BSC, and is an officially licensed fork of Curve Finance. It currently supports the exchange of BUSD, USDC, USDT, DAI and other stable coins.
Ellipsis official website
Ellipsis will airdrop 25% of the total EPS (250 million tokens) tokens to CurveDAO users with veCRV positions on a one-year payout cycle, which takes place every week.
On the Ellipsis platform, users can provide liquidity to pools of BUSD-USDC, EPS-DAI, EPS-TUSD, etc. to receive EPS rewards. Ellipsis is an early incarnation of Curve on the BSC chain, with features that are still relatively simple and easy for users to understand and operate.
Posted by:CoinYuppie，Reprinted with attribution to:https://coinyuppie.com/low-slippage-cross-asset-conversion-helps-curve-advance/
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