Summary: Convex Finance is a DeFi protocol that allows liquidity providers on Curve.fi to earn extra trading fees and claim boosted CRV without locking CRV themselves. Through its tokenized deposits and rewards system, Convex Finance enables users to optimize their yield generation with minimal effort and capital efficiency, making it a popular choice among those seeking to maximize their returns from staking Curve LP tokens.
Convex is currently deployed on Ethereum and Arbitrum with over $4 billion in total value locked on the platform. The Convex protocol has also issued over $440 million in rewards to Convex and CVX stakers, making it one of the highest revenue generating applications on-chain.
What is Convex?
Convex Finance is an Ethereum-based protocol that focuses on optimizing the profitability of staking and liquidity provision in various DeFi ecosystem. The platform's primary focus is on enhancing the yield generation of Curve.fi liquidity providers by allowing them to earn trading fees and claim boosted CRV without locking their CRV. Additionally, CRV stakers can also receive trading fees and a portion of the boosted CRV rewards received by liquidity providers. Convex has no withdrawal fees, and minimal performance fees are used to pay for gas, which is distributed to CVX stakers.
Convex has also expanded its offerings beyond Curve.fi, and it has adopted a similar token-locking model for FXS, the governance token of Frax Finance. The protocol offers tokenized deposits, which are minted 1:1 for each CRV or FXS locked in the platform, and users can stake these tokens to receive platform fees, CVX, and veCRV or veFXS rewards.
What is Convex Finance's Token CVX?
CVX is the native token of Convex Finance, and users can stake it to receive a share of platform fees as cvxCRV. In the future, CVX will also be used for voting on proposals to improve the platform, such as gauge weights. CVX is minted pro-rata for each CRV token claimed by Curve LP's on Convex, and the CVX/CRV mint ratio reduces every 100k CVX.
The distribution of CVX is divided into various categories, including 50% for Curve LP rewards, 25% for liquidity mining, 9.7% for the treasury, 1% for veCRV holders, 1% for veCRV holders who vote to whitelist Convex, 3.3% for investors, and 10% for the Convex team. The protocol's objective is to provide staking and liquidity provision opportunities that are more profitable, accessible, and secure to users while achieving high capital efficiency.
What are the Best Pools on Convex?
The best pools on Convex Finance will depend on a user's specific goals, risk tolerance and other preferences. However, there are some pools that have consistently provided high yield opportunities to users with minimal impermanent loss. Here are a few of the most popular and profitable pools on Convex:
- Tricrypto pool (USDT+BTC+ETH): This pool allows users to stake the three highly liquid assets: USDT, BTC, and ETH, and earn trading fees, CRV, and CVX rewards. This pool allows users to hold equal exposure to USDT, BTC and ETH while earning 13.5% APR.
- stETH pool (ETH/STETH): This pool allows users to stake stETH, which is a wrapped version of ETH that can be used to earn yield on the Lido staking platform. The stETH pool has provided the highest yields for ETH stakers at 5.4% APR.
- 4pool (DAI/USDC/USDT/SUSD): This pool allows users to stake the four highly liquid stablecoins: DAI, USDC, USDT and SUSD. This pool has provided a yield of 3.8% APR for its users with no impermanent loss.
It's worth noting that the yields of these pools can change over time, and users should always do their own research and evaluate the risks before staking their assets in any pool. Additionally, users should consider factors such as liquidity, token price stability, and the project's overall long-term potential when choosing a pool.
Who Created Convex Finance?
The team behind Convex Finance is not publicly disclosed, and the project is considered to be an anonymous team. The anonymous nature of the team is a common occurrence in the DeFi space, and it is believed to be done to avoid regulatory scrutiny and potential legal issues. That said, it is widely believed that the development community behind Curve Finance are the team deploying and maintaining the protocol.
Is Convex Safe?
Convex Finance has taken significant steps to ensure the security and safety of its users' assets. The platform has undergone multiple security audits from reputable firms, including Trail of Bits and Peckshield, to identify and address any vulnerabilities or risks. Additionally, the platform's smart contracts have been audited by Quantstamp, which is a leading provider of blockchain security services.
Despite these measures, it's essential to note that there are still potential risks involved in using any DeFi platform, including smart contract vulnerabilities, liquidity risks, and other unforeseeable events that can result in losses.
In conclusion, Convex Finance is a popular DeFi protocol focused on optimizing yield generation for Curve.fi liquidity providers and CRV stakers, with over $4 billion in total value locked. The platform offers tokenized deposits, boosted CRV rewards, and its native CVX token, enabling users to maximize their returns with minimal effort and high capital efficiency. As with any DeFi investment, users should carefully evaluate the risks and rewards associated with the platform before participating.