Curve Wars

The Curve Wars is a term used to describe the ongoing competition among various protocols for liquidity and influence within the ecosystem.[1]


Curve Wars is the competition for yield through the acquisition of veCRV, aiming to influence the allocation of rewards to pools providing liquidity. veCRV stands for vote-escrowed CRV, a non-transferable variant of the CRV asset representing CRV tokens locked for voting in the Curve DAO. veCRV symbolizes voting power and is generated only when the CRV token is locked or staked. veCRV token holders also receive rewards from the Curve ecosystem, but they are distributed over four years.

In the ecosystem, CRV, Curve’s native token, is awarded to liquidity providers contributing to each pool. As liquidity becomes scarce in the Curve pool, intense competition unfolds among protocols to attract the majority of liquidity providers. This competition prompts different protocols to offer incentives in exchange for votes, aiming to gain control of Curve governance by influencing the voting decisions of veCRV token holders. [2][3][4]

Creation of Curve Wars

The Curve Wars began at some point in 2020. Curve Wars is an emergent phenomenon arising from the intricate dynamics of the ecosystem. However, several key factors and actors contributed to its inception and development.

  • Curve Finance's
    The structure of Curve's native token, , and its , veCRV, played a crucial role. By allowing users to lock up CRV to earn veCRV and gain voting rights on various platform parameters, Curve incentivized competition for liquidity and influence within its pools.[7]
  • Early DeFi Players
    Some of the first movers in the DeFi space, like () and (SpartacusSwap), experimented with strategies to influence Curve pools and earn yields. Their activities laid the groundwork for further competition and the emergence of dedicated platforms like later on.[8]
  • Competitive Landscape
    The burgeoning DeFi space naturally saw competition for user funds and trading volume. Platforms like , , and others began utilizing Curve pools to offer their own yield-generating strategies and attract liquidity.
  • Technological Advancements
    The development of tools and protocols like vote-escrow systems and strategies further fueled the competition for Curve's liquidity and veCRV control. Platforms like leveraged these advancements to optimize veCRV acquisition and offer attractive yield opportunities to users.[9]

DeFi Protocols involved in Curve Wars

The notable competitors seeking to entice Curve token holders into locking their CRV on their platforms include:

  • ($SDT) is a that focuses on acquiring and managing veCRV on behalf of its token holders.
  • ($YFI) offers its own set of strategies for earning veCRV and maximizing yields on Curve.
  • ($CVX) is one of the most prominent players in the Curve Wars, Convex Finance offers various strategies for locking up CRV and earning veCRV. The Curve Wars are primarily unfolding on the Convex protocol, as it offers one of the highest Return on Investments (ROIs) on CRV and controls the majority—more than 40%—of veCRV tokens. Consequently, it holds the most decision-making power in the Curve ecosystem, determining how Curve’s rewards are distributed. [2][4]


Voting power

Participating as a in the Curve Wars can offer advantages, largely because of the considerable rewards available. Owning the CRV token automatically provides entry to the veCRV asset, and having veCRV allows stakers to gain influence over how funds are distributed among different liquidity pools. [2]

Earning Rewards

Platforms like , , , and others actively pursue liquidity, consistently providing rewards and incentives to (LPs) who stake their veCRV tokens on their platforms. This strategy allows these platforms to create the liquidity essential for their operations. In exchange, LPs and stakers receive cvxCRV tokens, which are both tradable and transferable, especially in the case of Convex Finance. [2]

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Curve Wars

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February 5, 2024


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