Curve Finance (CRV) is an exchange liquidity pool that offers traders a platform with stablecoin trading and supplemental fee income for liquidity providers. The Curve Finance Protocol is governed by the CRV token. The project was launched in January 2020. ^[1]

Overview

Curve Finance is a decentralized exchange (DEX) and automated market maker (AMM) protocol designed primarily for efficient trading of assets with similar price points, such as stablecoins and wrapped tokens. Its core innovation is the StableSwap algorithm, which combines constant sum and constant product formulas to minimize slippage and impermanent loss, making it a foundational piece of infrastructure in the decentralized finance (DeFi) ecosystem. ^[43]

The protocol is governed by the Curve DAO and its governance token, CRV. Users can lock CRV to receive vote-escrowed CRV (veCRV), which grants them voting rights on protocol governance, a share of protocol trading fees, and the ability to boost their rewards as liquidity providers. This model, known as "veTokenomics," sparked the "Curve Wars," a competition among protocols to accumulate governance power over Curve's liquidity incentives. ^[44]

Beyond its initial focus on stablecoins, Curve has expanded to include pools for volatile assets (Curve v2), a native overcollateralized stablecoin (crvUSD), and a lending-liquidating AMM (LLAMMA) that enables high loan-to-value borrowing with a soft liquidation mechanism. ^[43]

History

Curve's development began in late 2019 with founder Michael Egorov's StableSwap whitepaper, which introduced an optimized AMM formula for pegged assets. The protocol launched in January 2020, quickly outperforming generalized AMMs for stablecoin trades. ^[43]

On March 10, 2020, Curve's creators unveiled the results of their second software audit from the Trail of Bits team. The second audit focused on reviewing fixes Curve's builders had put in place in response to their first audit, with a Trail of Bits specialist ultimately concluding in a follow-up report that they "correctly fixed the reported issues." ^[3]

In August 2020, the CRV governance token and DAO contracts were deployed not by the Curve team, but by an anonymous community member, 0xc4ad, using code that had been made public for review. The Curve team verified the deployment, and the community adopted it as the official launch. The introduction of the veCRV governance system kicked off a competitive flywheel, and within a week, Curve’s TVL tripled to over $400M. ^[43]

The protocol saw significant growth throughout 2020, driven by the "DeFi Summer" and the launch of yield farming for tokens like COMP. On June 14, 2020, Curve saw $3.5 million in daily trading volume, which shot up to $23.3 million two days later. By July, weekly volume had jumped by $213 million. ^[3][4] Around late July, the protocol exceeded over $300 million in value locked, partly due to the release of yEarn's YFI token. ^[2]

In November 2020, following a community vote, Curve Finance distributed nearly $3 million in accrued fees to the platform’s Governance Token holders. ^[2]

In 2021, Curve rolled out Cryptoswap (Curve v2), extending its AMM design to volatile pairs like wETH/wBTC/USDT. It also expanded across L2s and other blockchains and launched Factory pools, enabling anyone to create new Curve markets. ^[43]

Curve reached another major milestone in 2023 with the launch of its native stablecoin, crvUSD, which introduced the Lending-Liquidating AMM (LLAMMA). This mechanism avoids hard liquidations by gradually shifting collateral into and out of stablecoins within a price range. This was followed by the launch of LlamaLend in early 2024, a lending protocol built on the same engine. ^[43]

Curve's smart contracts are written in Vyper, a Python-inspired language optimized for safety. The Curve team has actively contributed to Vyper's development. ^[7][43]

Core Concepts

StableSwap Invariant

Curve's core technology is its specialized Automated Market Maker (AMM) algorithm, known as the StableSwap invariant. It is designed specifically for assets that are pegged to each other, such as various stablecoins or different wrapped versions of Bitcoin. Unlike standard AMMs that use a constant product formula (x*y=k), Curve's formula is designed to concentrate liquidity around the peg, which significantly reduces slippage and makes trading more efficient for these asset pairs. This approach also minimizes the risk of impermanent loss for liquidity providers, a common issue in pools with volatile assets. ^[33]

Pool Types

Curve offers several types of liquidity pools, each serving a different purpose within the ecosystem. ^[34]

• Plain Pools: These are the simplest type of pools, containing two or more stablecoins. They allow for direct swaps between the assets in the pool.
• Lending Pools: These pools integrate with lending protocols like Compound or Aave. The underlying tokens in the pool are supplied to these protocols, allowing liquidity providers to earn both trading fees from Curve and additional lending interest.
• Metapools: Metapools allow for one token to be swapped against a basket of tokens from another pool (a "base pool") without diluting the liquidity of the base pool. For example, a new stablecoin could be paired with the 3CRV token (the LP token for the TriPool of DAI, USDC, and USDT). This allows new assets to tap into the deep liquidity of established pools.

In addition to Stableswap pools, Curve also has Cryptoswap pools, which use a different algorithm designed to trade volatile, uncorrelated assets like ETH and WBTC. ^[35]

Gauges and Rewards

Liquidity providers on Curve can earn rewards by staking their LP tokens in "Reward Gauges". These gauges distribute CRV tokens to stakers. The amount of CRV distributed to each gauge is determined by a weekly governance vote by veCRV holders. ^[36]

• CRV Rewards: The primary incentive for liquidity providers is the emission of CRV tokens. The rate of these emissions for each pool is decided by the DAO.
• Boosting: Holders of veCRV (vote-escrowed CRV, obtained by locking CRV tokens) can "boost" their CRV rewards from gauges by up to 2.5x. The size of the boost depends on the amount of veCRV held and the amount of liquidity provided. ^[37]
• Gauge Weight Voting: veCRV holders can vote to allocate a higher percentage of future CRV emissions to specific gauges, directing incentives towards certain pools. ^[38]
• Permissionless Rewards: Any project can add additional reward tokens to a gauge to further incentivize liquidity for their pool. ^[39]

Risks

Using Curve Finance involves several risks that users should be aware of. The platform has categorized these risks based on its different products. ^[40]

• Smart Contract Risk: As with any DeFi protocol, there is an inherent risk of bugs or vulnerabilities in the smart contracts, which could be exploited.
• Liquidity Pool Risks:
  • De-pegging: If a stablecoin within a pool loses its peg to its underlying asset (e.g., falls significantly below $1), liquidity providers could suffer losses.
  • Impermanent Loss: While Curve's model is designed to minimize impermanent loss for pegged assets, it can still occur, especially in pools with more volatile assets or during periods of high market volatility.
• Lending and crvUSD Risks:
  • Liquidation Risk: Users who borrow crvUSD or other assets through Curve Lending must maintain a healthy collateralization ratio. If the value of their collateral drops, their position could be liquidated. ^[41]
  • Oracle Risk: The lending and crvUSD systems rely on price oracles to determine the value of collateral. A malfunctioning or manipulated oracle could lead to improper liquidations. ^[42]

Automatic Market Makers

Curve has developed an AMM (Automated Market Maker) with a specific focus on assets that exhibit similar pricing characteristics, such as stablecoins or tokenized bitcoin. This design choice allows Curve to mitigate impermanent loss, reduce fees, and minimize slippage. Unlike platforms like Uniswap, which combine liquidity pools consisting of disparate assets like ETH and BTC, Curve's liquidity pools exclusively consist of stablecoins like DAI, USDC, and USDT, or solely comprise wrapped bitcoin tokens like wBTC and renBTC. ^[12]

Liquidity Pools

Liquidity pools consist of tokens held within smart contracts. For instance, if a pool is created with DAI and USDC tokens where 1 DAI is equivalent to 1 USDC, the pool would contain an equal number of tokens, let's say 1,000 tokens each (1,000 DAI and 1,000 USDC). ^[14]

When Trader 1 exchanges 100 DAI for 100 USDC, the pool would then contain 1,100 DAI and 900 USDC. As a result, the price would slightly shift downwards for USDC, encouraging another trader to exchange USDC for DAI and restore the pool to its average composition. ^[14]

Base vAPY

Curve generates revenue for liquidity providers through trading fees. When users make token exchanges on Curve or through partner platforms like 1inch or Paraswap, a small fee is evenly distributed among liquidity providers. This mechanism leads to an increase in the base vAPY (virtual annual percentage yield) as trading volume on Curve rises. Additionally, certain pools, such as Compound, PAX, Y, and BUSD, have the potential to earn interest from lending protocols by utilizing platforms like Compound or AAVE. While these pools can be more profitable during periods of high lending rates, it's important to consider the added layers of risk involved. ^[14]

All pools on Curve benefit from trading fees, and some pools offer additional incentives. By providing liquidity on Curve Finance, users can also receive CRV tokens. The amount of CRV allocated to each liquidity gauge is determined by the DAO's allocation decisions. It's worth noting that the vAPY can vary depending on the trading volume and volatility, as the fees distributed to liquidity providers are tied to the trading activity. Consequently, daily vAPYs can range from low to high based on the prevailing trading conditions. ^[14]

Curve DAO

veCRV and Governance

CRV Tokens are awarded to Curve.fi liquidity providers. There was no public sale or ICO; instead, users who had provided liquidity on Curve were awarded CRV retroactively based on the duration and amount of their contribution. ^[5][6]

The protocol introduced a novel "vote-escrowed" tokenomics model (veTokenomics). By locking CRV tokens, users receive veCRV, which grants them a share of protocol revenue and governance rights. This design proved influential, with projects like Balancer, Frax, and Pendle later adopting similar systems. ^[44]

veCRV holders receive 50% of the trading fees generated by the protocol, distributed in the form of crvUSD (previously 3CRV). Over its first five years, the DAO distributed $159.25 million in real yield to veCRV holders across 256 consecutive weeks, averaging $622,070 per week. ^[15][44]

The governance model has remained active and robust. In its first five years, the community handled 1,276 proposals with an average participation rate of approximately 46.7% and achieved quorum around 97.6% of the time. This demonstrates consistent alignment and decentralized decision-making. ^[44]

The Curve Wars

The ability for veCRV holders to direct weekly CRV emissions via "gauge weight" votes created a market for governance influence. This led to the "Curve Wars," a competition among DeFi protocols to accumulate veCRV to direct liquidity incentives toward their own pools. Protocols either locked CRV directly or used liquid lockers and aggregators like Convex Finance, Stake DAO, and Yearn Finance to gain voting power. This dynamic made CRV emissions programmable and influence over them a priced commodity, as projects began offering incentives to veCRV holders to vote for specific pools. ^[44][17]

Centralization Concerns

In August 2020, shortly after the DAO's launch, Curve founder Michael Egorov acquired 71% of the voting power by extending the lock-up period for his CRV tokens. This sparked controversy and centralization concerns, as founder rewards were substantially higher than those for liquidity providers. Egorov stated the action was an overreaction to prevent other protocols like yEarn from gaining outsized control and that he hoped his voting power would decrease over time as more users participated in governance. ^[2][7]

Curve v2

In June 2021, Curve v2 was launched. The V2 version of the protocol allowed users to swap between unpegged assets. The first pool that was launched was WETH/WBTC/USDT. Additionally, the project integrated an automated version of Uniswap V3's concentrated liquidity feature. ^[13]

Concentrated Liquidity

Concentrated liquidity provides users with the ability to select a specific price range in which they want to provide liquidity. Rather than offering liquidity across the entire price spectrum of Ethereum in the ETH/USDT pool, liquidity providers (LPs) can focus on a specific range, such as 2,000-3,000USDT/ETH, to optimize the efficiency of their liquidity, given that the ETH price remains within that range. ^[13]

Curve employs a mathematical formula to automatically concentrate the liquidity contributed by its liquidity providers (LPs) around the existing market price. The purpose is to mitigate slippage and facilitate the exchange of substantial amounts by users without causing significant disruptions to the asset's price. ^[13]

CrvUSD

CrvUSD is the stablecoin released by Curve Finance that is overcollateralized and uses AMMs to autonomously swap between the collateral and the stablecoin to keep its peg. It was deployed on the Ethereum mainnet on May 2023. ^[10]

CrvUSD derives its value from assets such as USDC, Ethereum, liquid staking derivatives like Frax's sfrxETH, and liquidity provision tokens from stablecoin pools. ^[11]

Currently, borrowing against wsteth, wbtc, sfrxETH, and ETH is enabled. Curve Finance founder Michael Egorov facilitated the initial crvUSD loan, valued at $1 million, utilizing $1.8 million worth of sfrxETH as collateral. The mechanisms mentioned in the whitepaper state that the goal is to allow the peg to be stable without keeping large amounts of Peg Stability Modules and Vaults. ^[9][11]

The Llamas

In February 2023, The Llamas was launched. The Llamas serve as the "social layer" for Curve Finance, encompassing a collection of 1111 NFTs (non-fungible tokens) representing digital identities. Their purpose is to incentivize and acknowledge positive-sum actions within the ecosystem, whether they occur on-chain or off-chain. The Llamas adopt a system similar to POAP (Proof of Attendance Protocol) to facilitate these rewards. ^[22]

The Llamas represent a combination of NFTs and badges within Curve Finance. Initially, they function as entry tokens to the social layer. Each Llama possesses distinct badges, serving as a digital reputation system. These badges have varying effects on the Llamas' yield potential. Some badges permanently boost yield, while others provide temporary boosts that decay over time. In the future, external parties will have the ability to create and deploy their own badges, similar to the Degenscore system. These badges will be implemented as ERC-1155 tokens, allowing for issuance and assignment to different NFTs. ^[22]

Curve Hack

On July 30, 2023, a significant exploit hit several DeFi protocols on Curve Finance, resulting in attackers stealing a total of $62 million worth of cryptocurrencies. The attack was linked to a vulnerability in liquidity pools on Curve, and investigations pointed to issues with Vyper, an alternative programming language for Ethereum smart contracts, as the root cause of the exploit. The vulnerability in Vyper versions 0.2.15, 0.2.16, and 0.3.0 allowed attackers to manipulate the reentrancy guard, enabling them to execute multiple calls in a single function and trick smart contracts into calculating improper balances. JPEG’d, Alchemix, and Metronome DAO suffered significant losses, with $11 million, $13.6 million, and $1.6 million stolen, respectively. ^[22][23][24]

A number of stablepools (alETH/msETH/pETH) using Vyper 0.2.15 have been exploited as a result of a malfunctioning reentrancy lock. We are assessing the situation and will update the community as things develop. - Curve Finance

$5.4 Million Recovery

On July 31, 2023, an ethical hacker, known as "c0ffeebabe.eth," managed to recover approximately 2,879 Ether (worth around $5.4 million) from the exploiter and returned it to the DeFi protocol. The hacker used a front-running bot to secure the stolen assets and return them to the rightful custodian address of Curve Finance. During this controversy, Twitter accounts impersonating Curve Finance and hack victims have been promoting a fake refund scheme to target those who lost their funds. However, the official Curve Finance account has not announced any plans for a refund. ^[16]

On August 11, 2023, Curve Finance publicly announced its commitment to compensating users affected by the recent $62 million hack via a Twitter post. At that time, approximately 79% of the pilfered funds had been successfully recovered through ongoing investigative efforts. The platform intends to conduct a fair assessment of impacted users and provide reimbursements to ensure an equitable distribution of resources. ^[18][23]

"Quick post-hack update. While 70% of funds affected by the hack last week are recovered, active investigation with regards to the rest is underway. In the meantime, we are also working on measuring the respective shares of each affected user with the goal of proper distribution"

On June 13, 2024, Curve Finance’s soft liquidation mechanism successfully managed a real-world test during a hacking attempt, but the price of its native CRV token plunged by over 28% amid the chaos. According to blockchain analytics firm Arkham Intelligence, Founder Egorov faced $140 million in liquidations due to “borrowing $95.7M in stablecoins (mostly crvUSD) against $141M in CRV across five accounts on five protocols.” ^[19]

During the peak of the hack, Egorov faced paying $60 million in annualized fees to maintain his borrowings. Arkham explained:

“This is because there is almost no remaining [[[[crvUSD] - (https://iq.wiki/wiki/crvusd)] - (https://iq.wiki/wiki/crvusd)] - (https://iq.wiki/wiki/crvusd)] - (https://iq.wiki/wiki/crvusd) available to borrow against CRV on Llamalend. Three of Egorov’s accounts already make up over 90% of the borrowed [[[[crvUSD] - (https://iq.wiki/wiki/crvusd)] - (https://iq.wiki/wiki/crvusd)] - (https://iq.wiki/wiki/crvusd)] - (https://iq.wiki/wiki/crvusd) on the protocol. If the price of CRV drops by ~10%, these positions may begin to be liquidated.”

A few hours later, Michael Egorov claimed to have repaid 93% of $10 million in bad debt from the protocol’s soft liquidation triggered earlier in the day. ^[20]

The Curve Finance team and I have been working to solve the liquidation risk issue which happened today.Many of you are aware that I had all my loans liquidated. Size of my positions was too large for markets to handle and caused 10M of bad debt. Only CRV market on http://lend.curve.fi (where the position was the biggest) was affected.I have already repaid 93%, and I intend to repay the rest very shortly. It will help users not to suffer from this situation. - he tweeted ^[21]

Recent Developments

2024 Performance

Curve Finance achieved several major milestones in 2024, strengthening its position in the DeFi ecosystem. On August 13, 2024, the protocol marked its fourth anniversary with a scheduled 16% annual reduction in CRV emissions and the conclusion of all initial token vesting. These events reduced the total CRV inflation rate from over 20% to 6%. The year also saw significant product launches, including LlamaLend in March, which expanded to three additional chains, and the yield-bearing stablecoin scrvUSD in October. In its first month, scrvUSD attracted over $20 million in deposits. Other key developments included the introduction of Curve-Lite for rapid deployment on EVM networks, major UI/UX updates, and integrations with TradFi institutions through stablecoins backed by BlackRock's BUIDL fund. The platform's user base also grew, with the number of unique users on the Ethereum mainnet more than doubling from 30,000 in 2023 to over 60,000 in 2024. ^[45]

Record Q1 2025 Trading Volume

In the first quarter of 2025, Curve Finance processed a record-breaking trading volume of $34.6 billion. This represented a 13.3% increase compared to the same period in the previous year and set a new all-time high for the platform. The number of transactions also grew, reaching 5.5 million, up from 5.2 million in the last quarter of 2024. This growth occurred despite a general downturn in the broader DeFi market. ^[24][29]

DNS Security Incidents

In May 2025, Curve Finance's website was targeted in a Domain Name Service (DNS) attack. The team warned on May 12 that its "curve.fi" domain had been hijacked in an apparent DNS spoofing attack, causing the website to point to a malicious IP address. ^[30] Users were advised to avoid interacting with the site until the issue was resolved. The protocol's infrastructure and smart contracts were not affected, ensuring user funds remained secure. ^[31] This incident was the second security issue in a week, following a brief takeover of the protocol's X account on May 5. It was also not the first time Curve experienced a DNS breach, with a similar front-end compromise occurring in 2022. ^[30][31]

L2 Development Controversy

In August 2025, a governance proposal was put forward suggesting that Curve Finance should halt all future development on Layer-2 (L2) networks and refocus its resources on the Ethereum mainnet. The proposal argued that L2 deployments were not profitable, generating a combined daily revenue of only about $1,500, compared to the $28,000 generated on Ethereum on a slow day. Data indicated that over 93% of Curve's trading fees since 2020 originated from its Ethereum pools. The proposal's author suggested that the high maintenance costs and the developers' time could be better spent on core Ethereum projects, such as increasing the adoption of the crvUSD stablecoin. The proposal recommended maintaining existing L2 operations but removing any L2-related items from the developers' future to-do lists. ^[25]

Curve founder Michael Egorov also commented on the broader L2 landscape in August 2025, stating that while scaling solutions have been evolving for years, he does not see "anything particularly special about 2025 in that regard." He suggested that the focus should remain on core protocol development and user experience rather than chasing the latest scaling trends. ^[27]

Yield Basis Project

In February 2025, it was reported that Curve founder Michael Egorov was developing a new project called Yield Basis, aimed at solving the problem of impermanent loss for liquidity providers. The project raised $5 million in a token round at a $50 million fully diluted valuation, selling 10% of its 'YB' token supply to investors. ^[28] The protocol leverages compounding leverage and 200% overcollateralization with Curve's stablecoin, crvUSD, to neutralize the risk associated with liquidity provision in DeFi. By mitigating the square root dependency in automated market maker (AMM) models, Yield Basis aims to make liquidity provision for volatile assets like tokenized bitcoin and ether more sustainable. Users of the protocol can choose to receive yield in tokenized Bitcoin or the native Yield Basis (YB) token, creating a dual-yield structure designed to self-regulate inflation based on market conditions. ^[32]

Expansion to Tezos via Etherlink

In August 2025, Curve Finance launched on Etherlink, an EVM-compatible Layer 2 blockchain built on the Tezos network. Etherlink is designed as a Tezos-native Smart Rollup, allowing it to benefit from Tezos' on-chain governance, low fees, and fast finality. The expansion was supported by Etherlink's "$3M Apple Farm Season 2" rewards program, which was created to accelerate DeFi activity on the network by prioritizing incentives for Curve pools to build stablecoin liquidity. This integration positions Curve as a foundational liquidity engine bridging the Tezos and EVM-compatible DeFi ecosystems. ^[26][46]