DeFi Portfolio In Focus: Curve Finance $CRV Review
Launched in January 2020, Curve Finance is a decentralized exchange for trading stablecoins. Unlike traditional custodial exchanges where users need to deposit their assets, buy and sell through a centralised order book model and then (hopefully) withdraw their coins from the exchange back to their wallet, Curve is a non-custodial Automated Market Maker (AMM) that allows traders to swap between stablecoins directly via their Ethereum wallet at a flat fee of 0.04%.
Using Liquidity Pools deployed via smartcontracts on the Ethereum blockchain, all swaps are enabled to be decentralized, trustless and know-your-customer (KYC) free. Curve's initial offering were swaps between various USD pegged stablecoins but the platform has since added tokenised BTC coins, interest bearing USD coins and most recently, Euro stablecoins into the mix.
In the twelve months to date since launch, the growth in the total value of assets deposited into Curve Finance has been huge and currently sits at an eye-watering $2.623 billion dollars.
Liquidity providers (LPs) are incentivized to deposit their stablecoins by receiving their share of all trading fees from the pool. Behind the scenes, coins deposited into the pools are supplied to the Compound lending protocol or to yearn.finance which generates further yield for LPs . On top of all that, other projects often partner with Curve and provide additional LP rewards themselves to bootstrap liquidity for their own pools and the Curve protocol itself, distributes its own token, CRV, to LPs.
The CRV DAO
The Curve Finance protocol operates as a Decentralised Autonomous Organisation (DAO) where eligible holders of the governance token, CRV, can submit and vote on proposals for the future management of the protocol. The CRV governance token was launched in August 2020 under somewhat mysterious circumstances, when an anonymous user spotted the CRV contracts on the teams github page and took it upon themselves to launch the token unilaterally.
Conspiracy theorists may say this was the intention all along to ensure that from day one the CRV token, and the finance protocol itself, were sufficiently decentralised to avoid the crosshairs of regulators. Speculation aside, after a short period of limbo the team simply confirmed the DAO and governance token was live and since then, Curve DAO has continued to operate as one of the key protocols underpinning the DeFi ecosystem on Ethereum.
As you can see, the launch timing of CRV was unfortunately only a few weeks before the 2020 DeFi Summer was over. After the summer of course, comes the fall and true to its season, the 2020 DeFi Fall saw huge corrections across the entire market up until year end. But just like 2016 saw the first real increase in ICO's before the 2017 boom, maybe 2020 was a sign of things to come. In late December 2020, CRV to USD flipped bullish and has rallied 350% to date. A strong addition to the DeFi-Buzz portfolio.