Curve Dao (CRV) – All you need to know

What is Curve?

Curve is a cryptocurrency exchange that runs on Ethereum, and Curve DAO (CRV) tokens are the in-house currency that powers the platform. The exchange allows users to swap stablecoins: coins or tokens that are tied to the value of an underlying asset.

Traditional exchanges use something called an order book, but if this was to be used for a cryptocurrency exchange, there would be issues with liquidity due to the high volume of transactions and canceled transactions overwhelming the blockchain technology. To resolve this issue, Curve uses something called liquidity pools to ensure that trades can always be made.

Curve was founded by Michael Egorov and has quickly become one of the most popular exchanges for Ethereum-based tokens. CRV tokens have increased in value massively since Curve was launched, and a real growth moment occurred in January 2021, when Curve collaborated with Yearn Finance.

How does Curve work?

Curve works by allowing users to swap between a variety of stablecoins and assets by using liquidity pools. These pools are individually filled with pairs of stablecoins, and because the coin pairs are always ready in the pools, trades can take place immediately without the need for a conventional order book. The stablecoins are provided by people known as liquidity providers, and they are backed by the value of a fiat currency, like USD, or some kind of asset, such as gold.

Curve users can swap stablecoins with a low trading fee of 0.04%. The liquidity providers that facilitate these swaps are rewarded with CRV tokens and can redeem over 300% interest on deposited funds, and holders of CRV tokens are also able to vote on platform governance. To constantly refine the platform, Curve offers ‘bug bounties’ worth up to $50,000 to users who can find errors in their code.

Several companies now offer cryptocurrency exchanges with liquidity pools, such as Uniswap and SushiSwap. These platforms prioritise liquidity, whereas Curve focusses on stability. When users make trades on Curve, they are made through a single transaction from stablecoin to stablecoin, reducing the slippage, which is the difference between what a user expects to pay and what they end up paying. On other exchanges, all tokens and assets must be converted into Ethereum first.

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