Curve DAO (CRV): The Complete Guide to Decentralized Stablecoin Swaps and DeFi Governance

Curve DAO: Everything You Need to Know

Curve DAO (CRV) is the utility token of the Curve.fi DeFi protocol for exchanging stablecoins and other ERC-20 tokens. Curve’s main goal is to connect users who want to exchange ERC-20 tokens and stablecoins with exchange protocols. Curve’s financial platform is non-custodial, which means that users are in charge of their own tokens.

Curve DAO is a decentralized autonomous organization (DAO) that governs the Curve protocol. CRV holders can participate in the decision-making process of the protocol, such as voting on proposals, setting parameters, and allocating funds. CRV holders can also stake their tokens to earn rewards and fees from the protocol.

How does it work?

Curve works by using an automated market maker (AMM) to manage liquidity pools of different stablecoins and ERC-20 tokens. Users can deposit their tokens into these pools and receive liquidity provider (LP) tokens in return. LP tokens represent a proportional share of the pool and can be redeemed for the underlying tokens at any time.

Users can also swap their tokens with other tokens in the same pool or across different pools, paying a low fee of 0.04% or less. The fee is distributed to the LPs of the pool, increasing their returns. Curve uses a special bonding curve formula that minimizes slippage and maximizes capital efficiency for stablecoin swaps.

CRV works by providing various utility and value propositions for Curve users and the broader DeFi community. Some of the main use cases of CRV are:

Governance: CRV holders can vote on proposals that affect the protocol, such as adding new pools, adjusting fees, or allocating funds. CRV holders can also delegate their voting power to other users or entities.

Rewards: CRV holders can stake their tokens in the Curve DAO smart contract and receive a portion of the trading fees and inflation rewards generated by the protocol. The rewards are paid in CRV and other tokens, depending on the pool.

Boosting: CRV holders can lock their tokens in a special contract called veCRV (voting escrow CRV) and receive a boost factor that increases their rewards from staking. The boost factor depends on the amount and duration of the locked CRV, ranging from 1x to 2.5x.

Who are the team behind it?

Curve was launched in January 2020 by Michael Egorov, a former physicist and software engineer who also co-founded NuCypher, a privacy layer for Ethereum. Egorov is the CEO and CTO of Curve.fi, leading a team of developers and researchers who work on improving the protocol.

The Curve DAO was launched in August 2020, after a community-led initiative to distribute CRV tokens to early users and LPs of the protocol. The Curve DAO is governed by a multisig contract that requires a majority of signatures from nine trusted entities, including Egorov, Aave, Synthetix, Yearn Finance, Compound, Gauntlet, Three Arrows Capital, etc.

The Curve team is also supported by several investors and partners from the DeFi industry, such as:

Polychain Capital: A leading crypto venture capital firm that invested $3 million in Curve in July 2020.

Andre Cronje: The founder of Yearn Finance, a DeFi aggregator that integrates with Curve to optimize yield farming strategies.

Kain Warwick: The founder of Synthetix, a synthetic asset platform that provides liquidity to Curve through its native token SNX.

What are the use cases?

Curve has several use cases for both individual and institutional users in the DeFi space. Some of them are:

Swapping: Users can swap their stablecoins and ERC-20 tokens with low fees and slippage on Curve, saving time and money compared to other exchanges.

Lending: Users can lend their tokens to Curve pools and earn interest from trading fees and rewards. Users can also borrow tokens from Curve pools using other protocols, such as Compound or Aave.

Farming: Users can farm CRV and other tokens by staking their LP tokens or veCRV tokens on Curve or other platforms, such as Yearn Finance or Convex Finance.

Hedging: Users can hedge their exposure to price fluctuations or volatility of different stablecoins or ERC-20 tokens by swapping them on Curve or using them as collateral on other protocols.