Convex Finance (CVX) is a DeFi protocol on Ethereum designed specifically for Curve Finance to help users boost their staking yield, primarily for CRV stakers and Curve's liquidity providers, focused on earning additional boosted interest rewards on CRV tokens and Curve transaction fees.
Before introducing Convex, it is important to understand the mechanics of Curve Finance, where liquidity providers, or LP token holders, receive a 0.02% transaction fee, and staking LP tokens allows for liquidity mining for CRV rewards. On top of that, users can stake and lock CRV token to receive veCRV credential tokens, governance rights and more liquidity mining rewards, which means “Boost". Boost is a CRV multiplier, depending on the amount of CRV staked and the length of the locking period (up to 2.5x).
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.
If you would like to stake CRV, Convex lets users receive trading fees as well as a share of boosted CRV received by liquidity providers. This allows for a better balance between liquidity providers and CRV stakers as well as better capital efficiency.
Convex has no withdrawal fees and minimal performance fees which is used to pay for gas and distributed to CVX stakers.
CRV stakers and liquidity providers also receive liquidity mining rewards in the form of CVX.
CVX serves for both staking rewards and governance token in Convex ecosystem. Utilities are listed below.
- Stake to receive a share of platform fees as cvxCRV.
- In the future, CVX will be used for voting, such as gauge weights.
- CVX is minted pro-rata for each CRV token claimed by Curve LP's on Convex.
- CVX / CRV mint ratio reduces every 100k CVX
- CVX Mint formula/code here
Convex's tokenomics consist of three tokens: cvxCRV (tokenized veCRV), cvxFXS (tokenized FXS) and CVX.
In Curve, if the liquidity provider does not stake CRV and only participates in liquidity mining, it will only receive 0.02% of the platform fee and liquidity mining revenue. However, in Convex, the liquidity provider does not need to hold or lock in CRV tokens to receive:
- Curve platform fee (0.02%)
- More CRV liquidity mining rewards (receive 90% of total mining rewards)
- CVX bonus
- Other liquidity mining rewards (SNX, PNT, BOR, LDO, etc.)
Curve platform transaction fee are rewarded in the form of 3CRV, the LP token of Curve 3Pool.
On Curve, CRV holders who only staked without providing liquidity will only receive governance rights and 50% of the management fee. However, if a CRV holder stakes CRV tokens in Convex, he/she will receive:
- Governance rights
- Partial CRV liquidity mining bonus (receive 10% of the total mining bonus)
- 50% of the platform fee (3CRV)
- CVX Reward
- Curve Platform Airdrop Bonus
Convex Finance was created in April 2021 by a group of anonymous founders.
Convex for Curve fee
There is a 17% total fee on all CRV revenue generated by Curve LP's on our platform.
- 10% goes to cvxCRV stakers. This is paid out as CRV.
- 5% goes to CVX stakers, which includes vote-locked CVX. This is paid out as cvxCRV.
- 1% goes exclusively to vote-locked CVX. This is paid out as cvxCRV.
- 1% goes to the harvest caller. This is paid out as CRV.
Convex for Frax
- 10% of all FXS earnings will be distributed to cvxFXS LPs as FXS
- 7% of all FXS earnings will be distributed to vlCVX holders, as cvxFXS
- 1% of the combined 17% fee is then taken for harvest caller.