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What is Convex Finance?

What is Convex Finance?

Learn about Convex Finance's unique platform, offering increased CRV rewards, CVX tokens, and simplified staking for a more efficient DeFi world.

Summary: Convex Finance is a DeFi platform that significantly enhances rewards for Curve.fi liquidity providers and CRV stakers without the need for locking CRV tokens. It introduces a unique system that increases capital efficiency and benefits users with trading fees, boosted CRV rewards, and CVX tokens.

Expanding beyond Curve.fi, Convex integrates with Frax and Prisma Finance, offering additional rewarding opportunities.

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What is Convex Finance?

Convex Finance boosts Curve.fi liquidity providers and CRV stakers' earnings without the need to lock CRV tokens. It's a DeFi platform that balances rewards between liquidity providers and stakers, enhancing overall capital efficiency. Users benefit from trading fees, boosted CRV rewards, and CVX tokens as liquidity mining incentives, making Convex an appealing choice for maximizing returns on Curve.fi.

Additionally, Convex simplifies CRV staking by offering a portion of the platform's enhanced CRV and extra rewards, including Curve trading fees and special rewards like liquid cvxCRV tokens. This keeps staked CRV liquid and accessible. With no withdrawal fees and only minimal performance fees, Convex provides a user-friendly experience for those looking to dive deeper into DeFi, offering increased benefits with minimal hassle.

What is Convex Finance?

How Does Convex Finance Work?

Convex Finance amplifies rewards for Curve.fi users through a straightforward mechanism catering to both liquidity providers and CRV stakers:

  • For Liquidity Providers: By staking Curve liquidity provider tokens on Convex, users earn enhanced CRV rewards without needing to lock CRV tokens themselves. They also receive CVX tokens as additional liquidity mining rewards, boosting overall earnings for participating in Curve.fi pools.
  • For CRV Stakers: Convex offers CRV holders a way to stake their tokens and earn a portion of trading fees plus boosted CRV rewards generated from the platform's activities on Curve.fi. Stakers gain liquid cvxCRV tokens, maintaining flexibility, and CVX tokens, augmenting their staking rewards.

Convex Finance simplifies participation in DeFi by eliminating withdrawal fees and minimizing performance fees. This model benefits all ecosystem participants, encouraging more efficient capital utilization and bolstering DeFi liquidity.

Other Convex Finance Integrations

Convex Finance broadens its reward-enhancing mechanisms to include Frax Finance and Prisma Finance, offering enriched opportunities for liquidity providers and stakers.

  • Frax Finance Integration: By staking FXS and FPIS tokens from Frax Finance on Convex, users enjoy enhanced rewards similar to Curve.fi participants. Depositing these tokens converts them into cvxFXS or cvxFPIS, respectively, enabling users to earn additional platform fees and CVX rewards.
  • Prisma Finance Collaboration: Convex boosts Prisma Finance LPs' rewards by utilizing locked PRISMA weights to increase PRISMA emissions. Liquidity providers staking on Convex benefit from enhanced rewards through the cvxPRISMA token, which follows a similar model to cvxFXS and cvxFPIS, providing staking incentives and CVX rewards.

Convex Finance's model promotes efficient capital utilization across these integrated platforms, streamlining participation in DeFi while minimizing fees for all users.

CVX Tokenomics

CVX is Convex Finance's own token, playing a central role in its ecosystem. By staking CVX, users earn a slice of the platform's fees in the form of cvxCRV. Looking ahead, CVX will empower holders to vote on key decisions, such as adjusting gauge weights, shaping the platform's future. CVX tokens come into existence in alignment with the CRV tokens claimed by Curve's liquidity providers on Convex, with the rate of new CVX creation slowing down after every 100k CVX minted.

The CVX distribution is thoughtfully allocated: 50% for Curve liquidity rewards, 25% for liquidity mining, 9.7% fills the treasury, 2% goes to veCRV holders (including those voting for Convex on Curve’s whitelist), 3.3% to investors, and 10% to the Convex team. This setup aims to enrich contributors, ensuring Convex remains an appealing, user-friendly, and secure platform for staking and liquidity, with high capital efficiency.

Who Created Convex Finance?

The creators of Convex Finance choose to remain anonymous, a decision not uncommon in the decentralized finance (DeFi) world. This anonymity is often adopted to sidestep regulatory attention and avoid possible legal challenges. Despite the mystery surrounding their identities, it's generally thought that the developers associated with Curve Finance are the ones diligently working on and supporting the Convex Finance platform.

Bottom Line

In closing, Convex Finance emerges as a key DeFi platform, enhancing rewards for Curve.fi users and expanding its reach with Frax and Prisma Finance. It boosts earnings for liquidity providers and CRV stakers through an efficient reward mechanism, making DeFi more lucrative and accessible. 

Convex simplifies the DeFi experience by eliminating withdrawal fees and lowering performance fees, inviting deeper engagement. With the addition of FXS, FPIS, and PRISMA tokens, Convex broadens its impact, reinforcing its position as a facilitator of enhanced rewards and streamlined participation.

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