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Curve Finance Review 2023: Features, Pros & Cons
Swen Keller
- URL: https://curve.fi
- Headquarter: Switzerland
- Year Founded: 2020
- Platform App: Web
- No. of Cryptos: 80+
- Fiats Available: Not Supported
- Withdraw Method: Crypto
- Payment Method: ERC-20 tokens
Curve Finance Review: Our Opinion
Curve Finance is a popular decentralized cryptocurrency exchange and decentralized crypto platform that offers a cost-effective and arguably efficient way to trade stable assets and ERC tokens by using liquidity providers to create liquidity pools and algorithmic market-making techniques.
Curve Finance also succeeds in ensuring low slippage, high liquidity and transaction fees. That said, Curve Finance is best for fit advanced users looking away from centralized exchanges. Beginners will find the platform hard to navigate.
An Overview of Curve Finance
Founded by Michael Egorov, Curve Finance is a decentralized crypto exchange for stable assets (similar to Uniswap) on the Ethereum network that uses liquidity pools to offer users an efficient trading experience and supplemental fee income for crypto investors. Curve Finance is a component of other decentralized apps like Yearn Finance and Compound.
Due to its focus on stablecoins, the exchange can offer traders low slippage, while providers of liquidity also enjoy almost no impermanent loss.
Unlike traditional exchanges that match up a buyer and seller for a trade, Curve Finance utilizes liquidity pools. So to achieve a usable exchange volume, Curve Finance requires a high volume of liquidity (available token) and to facilitate this it offers rewards to investors for providing liquidity to the exchange.
Curve Finance exchange is non-custodial, which means that Curve Finance developers cannot access your tokens. The platform’s liquidity pools are also not upgradeable, which assures users that the logic securing their funds won’t change overnight.
Curve Finance is governed by the CRV token. The governance token is awarded to liquidity providers on Curve Finance and there was no public ICO or Sale. Every user that has provided liquidity on the exchange has received CRV retroactively from the first day depending on how long and how much they had provided liquidity to CRV.
Also, as with most decentralized exchanges, Curve Finance has a DAO, where users can vote if they have vote-locked their CRV. Users that attain a voting power of 2,500 veCRV can create new proposals on Curve’s DAO. There is also no minimum voting power to vote on Curve DAO.
The exchange also supports USDC, DAI, BUSD, USDT, TUSD, and many more.
Pros
- Low fees
- No KYC verification required
- Low spillage rate and high liquidity
- It has a native token
- Users can earn passive income on their crypto assets via yield farming
Cons
- Limited payment and withdrawal methods
- No education in decentralized finance
- Not suitable for beginners
Key Features of Curve Finance
CRV Token
The Curve Token is the utility token of Curve Finance and it is one of the key features of the DeFi platform. The token was launched on the 13th of August 2020. The main purpose of the CRV token is the incentivization of liquidity providers on the Curve Finance platform.
The major incentive for CRV is it boosts the rewards on provided liquidity which facilitate low slippage on the platform. The token is also an incentive designed to get as many users as possible in the governance of the Curve Finance protocol.
CRV has 3 major uses on the Curve Finance platform: boosting, voting, and staking. To unlock all 3 uses, the token holder is required to vote to lock their CRV to get a vote-escrowed CRV (veCRV). VeCRV is CRV locked for a while. The longer the lock duration, the more veCRV the user will receive.
Let’s take a brief look at the 3 uses of the token on the Curve Finance platform.
Boosting
CRV can boost a user’s reward on provided liquidity. Users who vote lock their CRV enjoy a boost of up to 2.5x on the liquidity they provided.
Staking
CRV token holders can lock their tokens for some time and receive trading fees from the Curve protocol. The Curve Finance community introduced a 50% admin fee on all trade fees. The fees are used to buy 3 CRV and distribute them to the users who staked their tokens.
Voting
CRV holders who vote lock their tokens have the opportunity to participate in the governance of the protocol. Once a token holder locks their VeCRV, they automatically have the right to vote on various pool parameters and DAO proposals. Users can lock their tokens for a minimum of one week and a maximum of 4 years.
The total supply of CRV is 3.03B CRV but the current circulating supply at the time of writing is 795,275,765.24 CRV. 62% of the token is distributed to investors for providing liquidity, 30% to shareholders with 2 to 4 years vesting, 3% to employees with 2 years vesting, and 5% to the community reserve.
Currently, 44.57%(639,360,184.65) of all circulating CRV are locked. The average lock time is 3.55 years.
CRV can be purchased on centralized and decentralized cryptocurrency exchanges like SushiSwap, Binance, DigiFinex, BTCEX, etc.
Curve DAO
The Curve DAO is the governance of the Curve DeFi protocol. To participate in the DAO and vote on all DAO proposals, users must vote-lock their CRV.
There is no minimum voting power required to vote in the DAO but only those who reach a voting power of 2,500 veCRV can create a new proposal. Users who stake long voting escrow have more stake and more voting power.
As already stated token holders can vote-lock their tokens unto the Curve DAO to receive veCRV. Vote locking boosts the user’s CRV rewards and gives them access to vote in governance. While users can lock their tokens for as long as 4 years, the weight of the veCRV gradually decreases as the expiration of the lock period approaches.
Also, while the user’s voting power applies to all gauges, they may produce different boosts. The boosts produced are based on how much liquidity the user is providing and how much total liquidity the liquidity pool holds.
The vote locking of tokens by other users does not affect your boost. Your boost will remain at what it was when you applied.
As already stated, not all DAO members can create a proposal. Only those who have reached a voting power of 2,500 veCRV can do so. Users who wish to create new proposals are required to draft the proposal and post it on the governance forum. Users are encouraged to do proper research to ascertain the possibility of the proposal and they must also ensure that the proposal is in the interest of the community.
Users who wish to submit proposals to the DAO must follow the guidelines below:
- Ensure that the proposal can be understood by non-technical members of the DAO
- Layout in detail why the proposal matters to the protocol
- Explain in detail why the proposal should be considered by the DAO
- Include the CIP number when applicable
- Be patient and engage with interested people
Cryptocurrencies Available on Curve Finance
There are about 17 liquidity pools on Curve Finance where users can swap tokens between many stablecoins and assets. Token swaps on Curve Finance can be done between paired stablecoins and wrapped tokens.
Some of the available stablecoins and cryptocurrencies available on Curve Finance include Bitcoin, Ethereum, Chainlink, Binance USD, Tether, USD Coin, True USD, FRAX, DAI, synthetic USD, wrapped Bitcoin, wrapped Ethereum, staked Ether, etc.
Curve Finance also supports the pooling of any ERC20 token. The pools can be created using the factory smart contract.
Curve Finance Review: Fees
The Curve Finance protocol offers lower trading fees on average when compared to a lot of similar options. The fee charged by Curve Finance on all liquidity pools is 0.04%. Users that provide liquidity receive 50% of the fees paid and veCRV holders receive 50%. So basically when you swap stable assets on Curve Finance you’ll pay 0.04%.
Users that have staked CRV can claim trading fees by going to Curve Finance website and searching for the green Claim button within the section labeled “veCRV 3pool LP claim” at the end of the screen.
That said, here is a comprehensive look at all trading fees.
- Swap fees: 0.04%
- Deposit fees: No charge if balanced, otherwise you’ll have to pay 0.02% in trading fees
- Withdrawal fees: No charge if balanced, otherwise you’ll have to pay 0.02% in fees
Curve Finance Review: Payment Methods
Depending on the liquidity pool you’re depositing in you’ll need one or multiple stablecoins for payment. For example, if you’re depositing into the Y pool you can deposit DAI, USDC, TUSD, and USDT. That said, Curve supports Ledger, MetaMask, Coinbase Wallet, Trezor, Fortmatic, WalletConnect, Torus, and Portis.
Curve Finance Security
When compared to other DeFi platforms, Curve Finance is one of the most trusted decentralized exchanges. Curve Finance’s core smart contracts and the DAO contracts have been audited by Trail of Bits. The latter has also been audited by mixBytes and Quantstamp.
The audits, however, do not eliminate the risks users that provide liquidity are exposed to when they join a liquidity pool.
That said, the platform has had its fair share of malicious attacks. In August 2022, Curve experienced a front-end DNS cache poisoning on its Web2 website. This resulted in the loss of about $570,000 of investors’ funds.
The Defi protocol was susceptible to the attack because of the weakness of the domain that hosted the protocol’s front-end UI. It used DNS instead of ENS.
The hackers redirected Curve users to a copy of the decentralized platform where users were asked to approve a malicious contract. Once the contracts were approved, the hackers gained access to the user’s wallets and stole their stablecoins.
Curve Finance responded swiftly to the attack and advised users to immediately revoke any smart contract that had been approved within the period. Users were also advised to use Curve exchange until the issue with Curve.fi was fixed.
Shortly after the announcement, Curve’s operators announced via Telegram that the issue had been identified and fixed. The protocol also employed the necessary security measures to ensure that such attacks do not happen again.
That said, users are also encouraged to ensure that they secure the private keys of their wallets to ensure the security of their funds. Curve admins do not have special keys to users’ assets and cannot recover any funds sent to the wrong address.
Curve Finance Staking Rewards
Users who stake their CRV tokens receive 50% of all trading fees. This is due to a community-led proposal to align rewards between liquidity providers and governance participants (veCRV holders).
Staking your CRV tokens also offers users governance participation. Curve Finance also offers rewards via yield farming that allows users that contribute to liquidity pools to earn interest on staked stablecoins. You can receive this interest with one or multiple stablecoins.
Supported Countries
Curve Finance is a decentralized crypto exchange, which means that it can be accessed by anyone from anywhere. All that is required is an Ethereum-compatible wallet. Anyone from around the world can provide liquidity and increase the overall volume of the platform.
Opening a Curve Finance Account
Curve Finance is a decentralized crypto exchange. This means it does not require the typical account opening process where you’ll have to sign up with your email or mobile number and input personal details.
Rather, all you need to start using the platform is go to https://curve.fi and then click the Connect your Wallet button to transfer your assets.
Once that’s done you can begin trading on the platform.
Trading Experience on Curve Finance
Executing trades on Curve Finance works quite similarly to other decentralized exchanges.
You just need to go to curve.fi and choose the network for your ERC-20 token of which Curve Finance offers over 6 options including Polygon, Kava, Avalanche, Ethereum, etc.
Once that’s done, you can click the Connect Your Wallet button and transfer your assets. Then you can click Swap.
The trading experience is complex and is best for advanced traders, not crypto novices.
Curve Finance Customer Support
Curve Finance has a variety of resources that can help users troubleshoot and fix common problems. The platform has a dedicated Telegram channel where customers can seek help. Curve users can also check the Discord support channel (https://discord.gg/rgrfS7W) for support related to the platform.
Customer Satisfaction
The Curve Finance decentralised exchange checks all the major boxes for users. While support is limited to just the Telegram and Discord channel, it has a helpful community of users who are always willing to proffer solutions to any problem.
Does Curve Finance Offer Education?
Curve offers a knowledge base via resources.curve.fi, however, this resource focuses on helping newbies who wish to have a deeper understanding of how to use the platform effectively. It does not offer education on general Defi world.
Is Curve Finance Right For You?
The Curve Finance exchange is right for you if you’re looking for a decentralized exchange that offers low slippage and trading fees.
It’s also best for you if you’re searching for a yield farming exchange that allows you to earn passive income in your assets with minimal risk.
Final Thoughts
Curve Finance offers crypto investors an excellent opportunity to earn interest on their ERC-20 assets by providing liquidity. LP rewards can even be boosted if you hold veCRV which offers an additional benefit of governance participation. Curve Finance is primarily suitable for advanced crypto traders as navigating the platform as well as executing trades for newbies is difficult.
Our extensive analysis of the Decentralized Exchanges doesn’t stop here. You can also read about our Biswap Review as an alternative to Curve Finance or, alternatively, you can check out our full list of the best decentralized crypto exchanges.
FAQ
Most frequent questions and answers
Curve Finance’s core smart contracts have been audited by Trail of Bits. The Curve DAO smart contracts have also been audited by MixBytes, Trail of Bits, and Quantstamp.
That said, it’s important to note that audits do not eliminate risk as aside from the inherent risks associated with the Curve contract (as with all smart contracts), participating in a pool as a liquidity provider introduces systematic risk for every token in the liquidity pool. Despite the risk, Curve Finance has been in operation for more than 2 years with billions held in liquidity pools and is amongst the most trusted protocols in the decentralized space.
CRV tokens like other digital currencies are highly dependent on the growth of its native platform – the Curve Finance exchange.
Curve Finance is popular as it focuses on stable assets, which enables investors on the platform to avoid volatile digital currencies while earning interest from lending protocols.
In comparison, to other similar exchanges, Curve is conservative as it avoids speculation and volatility to achieve stability.
We always try to provide the most accurate information available, and make sure our team follow through.
If you want to know more about our Crypto Exchanges Review Methodology follow the link below
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