Author: 71sim12
Source: Curve Finance Official Resources
Curve is a non custodial exchange. Its main goal is to let users and other decentralised protocols exchange stablecoins (DAI to USDC for example) through it with low fees and low slippage. Curve leverages liquidity pools (i.e. Uniswap) and liquidity (tokens) that gets rewarded by its providers.
Centralised exchanges tend to have high fees which are problematic for those trying to move from a stable coin to another. As a result, Curve.fi has become the best place to exchange stable coins because of its low fees and low slippage.
Curve exists across different chains, with several more planned. Curve's primary chain will always be Ethereum, but other sidechains have advantages including speed and cost.
All of Curve's active chains can be found in the "Networks" menu on the Curve homepage.
Liquidity pools are a mechanism by which users can pool their assets (tokens) in a DEX’s smart contracts to provide liquidity for traders to swap between currencies.
Liquidity pools are pools of tokens that sit in smart contracts. If you were to create a pool of DAI and USDC where 1 DAI = 1 USDC. You would have the same amount of tokens, let’s say 1,000 tokens (1,000 DAI and 1,000 USDC) in the pool. If trader 1 comes and exchange 100 DAI for 100 USDC, you would then have 1,100 DAI and 900 USDC in the pool so the price would tilt slightly lower for USDC to encourage another trader to exchange USDC for DAI and average the pool back.
For each trade, liquidity providers get an evenly split fee. The higher the trading volume and volatility, the higher the APRs: of course, the contrary is also true. LPs are supplied to lending protocols like Compound and iEarn so one can get extra interests on top of the trading fees. Some pools do not use any lending protocols.
Swap fees are 0.04% which is thought to be the most efficient when exchange stable coins on Ethereum. Deposit and withdrawals have fees between 0% and 0.02% depending if depositing and withdrawing in imbalance or not. If fees were 0%, users could, for example, deposit in USDC and withdraw in USDT for free. Balanced deposits or withdrawals are free.
The goals of $CRV are: