Founded in January 2020, Curve Finance is a decentralized exchange that is designed for stablecoin trading. At the time of writing, this is the third-largest DeFi DEX. Curve DAO consists of multiple smart contracts connected by the Ethereum-based tool Aragon. This project has three main functions: stablecoin exchange, liquidity provider, and yield farming.
The idea of many crypto exchanges is to match buyers and sellers of various tokens. The main idea of the Curve’s performance is based on the so-called “liquidity pools” or funds locked in a smart contract. This means that they need liquidity (tokens) to provide it. At the time of writing, the platform offers 27 different pools. These pools can provide extremely high interest on deposited assets. The profit can reach as high as almost 300% per year. The liquidity provider fee is 0.04%. There is no admin fee but in the future, the fees will be decided by the DAO. Michael Egorov, the founder, and CEO of Curve, stated in an interview that they were considering the possibility to add more coins to the exchange and not only stablecoins.
Curve (CRV) is the native utility token of the platform that is designed for both governance and value accrual. It is used for governing, staking, submitting, and voting on proposals which makes Curve a fully decentralized protocol.
The maximum supply is 3 303 030 299 CRV. 5% CRV are sent to those who provided liquidity to Curve Finance before the token was launched. 5% CRV is dedicated to Curve DAO reserves, 3% is granted to the Curve employees. 30% belong to the founder and angel investors, 62% are being distributed among liquidity providers. The founder of the project Egorov accumulates most CRV tokens and is heavily criticized for this by other prominent participants of the crypto community.
This coin can be stored on any ERC-20 compatible wallet. To start your performance on the platform, you need to connect a wallet to it. The system offers to select one of eleven wallets: MetaMask, Trezor, Ledger, Fortmatic, Authereum, WalletConnect, WalletLink, Portis, Torus, Opera, Lattice.
In May 2020, Curve Finance hinted they were going to issue their own governance token, CRV. The token was launched on August 14, 2020, and its launch was followed by a scandal. On that day, an anonymous Twitter account 0xc4ad reported the launch of CRV spending about 8,000 USD to deploy the contracts that had been published on Github, front-running the efforts of the project team. For the first two hours of its existence, this token was not formally recognized. Initially, the official team was “skeptical” but then confirmed that it was an acceptable deployment with the correct code, data, and admin keys. That is why they had to adopt it and all the community participants had the opportunity to start CRV staking.
After the official recognition by the project team, a number of big crypto exchanges listed CRV. At the same time, some experts did not support the team’s decision and insisted on redeploying the contract as this situation damages the project’s reputation.
Curve has developed a pool factory where any person can deploy a pool for stablecoins. Liquidity pools are pools of tokens that sit on smart contracts. These pools have to meet some specific requirements. For one, fees should be not less than 0.04% and not higher than 0.1%. 50% of fees will be received by the Curve DAO. It is impossible to destroy the pool that was deployed once.
The Curve token owners can take part in the project’s governance. To do that, they need to lock their CRV into a voting escrow (veCRV). The longer the period of locking is, the more voting power a user has. 1,000 CRV are to be locked for a year to provide its owner with 250 veCRV. The minimum locking period is one week and the maximum locking period is four years.
This gives users a right to vote for all DAO proposals no matter how many veCRV they possess. If their voting power exceeds 2500 veCRV, they also acquire the right to create new proposals. The proposal should be posted on the governance forum and the team members will always consult on technical details.
At the time of writing, there are two types of voting that are available on the platform: signaling votes and official DAO votes. Signaling votes are non-official and are used to evaluate the interest of the audience. Official DAO vote is the only way to initiate changes in the Curve protocol.
Curve DAO Security
As Curve supports only non-volatile stablecoins, the risks of the market quick movings are lower. Curve is non-custodial and this means that the Curve team does not have access to the users’ tokens.
Curve Finance has been already audited three times: on January 31, March 6, and October 15, 2020. The first two audits were performed by Trail of Bits, a cybersecurity research and development company that hasn’t found any critical issues. The third audit was performed by Quantstamp, a company that specializes in blockchain security and delivers end-to-end blockchain solutions for the world’s largest enterprises. Their purpose was to evaluate the repository for security-related issues, code quality, and adherence to specifications and best practices.
Curve Finance offers bug bounties to those who detect errors and potential security issues. Attentive and knowledgeable users can receive up to 50,000 USD for discovering critical issues. To get your hands on the prize you should be the first one to report the vulnerability and to provide enough information about it. At the same time, the scandalous token launch has raised doubts about the admin keys’ security. The team was blamed for colluding for profit or selling out to insiders.
Curve DAO Team
Michael Egorov is the only team member who shows up in the public. He is the founder and the CEO of Curve Finance. Egorov is a Russian physicist and he became a DeFi user in 2013 buying 0.2 BTC. He moved to the US in 2014. NuCypher, a decentralized threshold cryptography network founded in 2016, was his first blockchain project. Egorov is its co-founder and CTO.