Convex Finance is a decentralized finance (DeFi) platform that focuses on optimizing yield farming strategies for users. It is built on the Ethereum, Polygon, and Arbitrum blockchains, and aims to provide a simplified and efficient way for users to maximize their returns through staking and liquidity provision, namely in regards to the Curve Finance platform.
Functionality and Use Cases
For Curve.fi Users
Convex allows Curve.fi liquidity providers to earn trading fees and claim boosted CRV without locking CRV themselves. Liquidity providers can receive boosted CRV and liquidity mining rewards with minimal effort. The platform has no withdrawal fees and minimal performance fees, which are used to pay for gas and are distributed to CVX stakers. CRV stakers and liquidity providers also receive liquidity mining rewards in the form of CVX.
For CRV Stakers
Convex rewards CRV stakers with a share of the boosted CRV on the Convex platform, making it an ideal destination for those who wish to stake CRV while remaining liquid. Users can earn a share of the Convex platform fees in CRV, Curve trading fees, and CurveUSD platform fees (3CRV). They also receive liquid cvxCRV, allowing anyone to exit their staked CRV position, and CVX rewards.
cvxCRV (Tokenized veCRV)
Tokenized deposits are minted 1:1 for each CRV locked in the platform. Stake to receive platform fees (CRV), CVX, and veCRV rewards (3Crv).
cvxFXS (Tokenized veFXS)
Tokenized deposits are minted 1:1 for each FXS locked in the platform. Stake to receive platform fees (FXS).
cvxFPIS (Tokenized veFPIS)
Tokenized deposits are minted 1:1 for each FPIS locked in the platform. Stake to receive platform fees (FPIS).
Convex Token (CVX)
CVX is used for voting on proposals, such as gauge weights or protocol changes. CVX is minted pro-rata for each CRV token claimed by Curve LPs on Convex. The CVX/CRV mint ratio reduces every 100k CVX.
The max supply of CVX is 100 million. The distribution is as follows:
- 50% Curve LP rewards
- 25% Liquidity mining
- 9.7% Treasury
- 1% veCRV holders
- 1% veCRV holders who vote to whitelist Convex
- 3.3% Investors
- 10% Convex Team
Platform Rewards and APY
The current APR is the net yield percentage you will get on your collateral when you are in the pool. All fees are already abstracted from this number. This yield is based on all the currently active harvests which have already been called and are currently being streamed to active participants in the pool over a 7-day period.
The projected APR is the yield percentage that is currently being generated by the pool, based on the current TVL, current Curve Gauge boost that is active on that pool, and rewards priced in USD. All fees are already abstracted from this number.
Risks and Security
Convex Finance has undergone multiple audits to ensure the security of its smart contracts. However, like any other DeFi platform, it is not entirely free from risks. Users are advised to exercise caution and do their own research before interacting with the platform.
Community and Development
Convex Finance has a strong community presence, with active discussions taking place on various social media platforms. The development team is also very responsive, frequently updating the platform based on community feedback and suggestions. The project’s code is open-source and can be found on GitHub.