Curve Finance revolutionized stablecoin trading with its StableSwap algorithm. By optimizing for assets that should trade at similar prices, Curve achieves minimal slippage and maximum efficiency for stable pairs.
The StableSwap Innovation
Curve’s hybrid formula combines constant product with constant sum:
- Near-zero slippage for similarly-priced assets
- 100x more efficient than Uniswap for stablecoins
- Ideal for: USDC/USDT, stETH/ETH, WBTC/renBTC
The veCRV Model
Curve pioneered vote-escrow tokenomics:
- Lock CRV tokens for up to 4 years
- Receive veCRV (voting power)
- Longer locks = more voting power
- Vote on which pools receive CRV rewards
The Curve Wars
Protocols compete to accumulate veCRV to direct rewards to their pools, spawning an entire ecosystem (Convex, Votium).
Key Takeaways
- StableSwap optimizes for similarly-priced assets
- veCRV pioneered vote-escrow tokenomics
- The “Curve Wars” show governance power’s value
- Critical infrastructure for DeFi composability