◎ Summary of the main functional L2 protocols Curve/Convex Convex Finance: Curve by the sliceĬonvex is the first functional L2 of Curve other projects preceded it (yveCRV and sdveCRV) but they were not as synergistic with Curve and therefore only marginally successful. To lose you on the way, I propose you this map which summarizes the main actors of the Curve/Convex ecosystem:
It’s a dense and colorful adventure, but as is often the case with my articles, I’m offering you a summary of my research on the subject: enjoy your reading! So we start with Curve’s Functional L2s, then Convex’s (itself a Curve L2), then borrowing services to leverage the many sources of return offered by the entire Curve ecosystem, and we’ll finish with the CRV/CVX protocol-whales. This is an image to describe this trend of multiplication of supports used to interact with Curve/Convex.īe careful not to confuse the term with “true L2s” / scaling L2s: the term in its original sense to describe a new chain that inherits the security of its parent while allowing for higher transaction throughput and more moderate costs. In this article, I’m going to talk about “functional L2”, or simply Curve or Convex L2. That’s why this article proposes to review the CRV and CVX wars by visualizing and detailing the whole ecosystem that has developed around these two protocols. Paladin’s Warden is proposing a protocol that helps liquidity providers on Curve maximize their returns and perhaps achieve the desirable 2.5x bonus by borrowing the capacity of veCRV tokens (provided by others) paid directly in CRV.īut there are so many other subtleties and interactions to keep in mind in order to understand the relevance of the strategies deployed by the different projects, DAOs and protocols to win the Curve Wars. Nevertheless I think there is still room for other approaches that start from the source (CRV) and they are starting to emerge. The balance between CRV and CVX tends to hold, despite frequent swings: lately, the pendulum seems to swing more towards CVX. It should be kept in mind that despite the computable equivalence between CVX and CRV (1vl CVX controls about 4.8 veCRV - source), the two tokens have different tradeoffs as described above. I won’t go back to the basics of the separation between the two tokens here, that’s a matter for an entire article if you’re new to the subject: ⚔ CRV wars: understanding the race to accumulate the ability to influence the Curve Finance protocol Since then, many projects are trying to offer a synergistic brick with the Curve/Convex behemoth. However, Convex is not the only project that tried to realize this vision: there was also Yearn, which has now capitulated: Yearn’s Curve vaults are essentially through Convex, which is now more profitable. Convex Finance has become a “functional L2” of Curve: a second layer that brings new features and a different set of tradeoffs. So to extract the utility of CRV, CVX is a credible and more flexible alternative, which is why most DAOs focus on this token. Flexibility: CVX can be used to its maximum capacity by committing 16 weeks + 3 days (vlCVX) while CRV requires up to 4 years of commitment (1 CRV = veCRV).Yields: 4-5% in cvxCRV + potential bribe yields if capacity is not used (or the protocol also use bribes).Boosts LP Curve: ability to build liquidity via votes on Curve gauges.More specifically, DAOs seem to prefer CVX to CRV, which represents a more favorable trade-off: Thus, the race to accumulate CVX and CRV has become primarily a game for DAOs or whales. To assume a strategic position on CRV or CVX, one must now be able to support an investment of several tens of millions of dollars. The infrastructure around Curve has become much denser with the arrival of Convex of course, but also Votium, Union Llama Airforce, Concentrator, CCRV, Lendflare, Warden, and many other protocols still in development. The game and the fight around CRV and CVX tokens have changed in scope since my last article describing the original Curve Wars, now almost primitive.
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