Curious to learn about Curve Finance? You have landed on the right page. This article talks about Curve Finance, how it differs from other DeFi protocols and its price predictions.
Table of Contents
- Understanding Curve Finance(CRV)
- How it Differs from Other DeFi Platforms
- CRV Price Analysis
- Concluding Lines
Understanding Curve Finance(CRV)
Curve Finance was introduced by Russian physicist Michael Egorov who has been playing with DeFi protocols since 2018. Since its launch in January of 2020, it has become a leading player in the DeFi ecosystem. Egorov describes it as an exchange designed for stablecoins and bitcoin tokens on Ethereum Blockchain. It is simply a protocol that is focused on giving users a platform to swap a few specific Ethereum-based assets. The Curve is an automated market maker (AMM) protocol as it uses market-making algorithms to reinforce the liquidity of its markets, unlike traditional DEXs. This protocol offers a decentralized platform, allowing users to earn returns on their cryptocurrencies and to trade various altcoins.
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How it Differs from Other DeFi Platforms
Now you might be wondering what the key aspect of Curve is and how it differs from other DeFi protocols. Egorov focussed on its key aspect and mentioned in an interview that Curve is known for its market-making algorithm, which can provide hundreds to thousands of times higher market depth for the same total value locked, which is beneficial for both traders and liquidity providers.
Where conventional market makers use exchange-provided assets or their own holdings to supply a market with liquidity, Curve provides liquidity to any customer with assets backed by its markets. And the best part about this protocol is that it is very upfront and open about its potential risks. Its official website even suggests that it is best to research the risks involved before making a deposit. It was seen that Curve Finance’s DEX code had been inspected twice, and the CRV token contract and DAO have been reviewed three times.
The curve platform’s liquidity pool enables direct token trades among classified pairs. With its direct swap function, users have to pay lower trading fees(0.04% per transaction). Compared to other DeFi protocols, where Uniswap focuses on maximizing available liquidity, the Curve’s algorithm emphasizes more on minimizing slippage. Therefore, with the Curve, traders save more.
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CRV Price Analysis
According to the stats of October 2020, it was reported that Curve Finance processed around $2.8 billion of trades. This trading data is much higher as compared to its previous month(September 2020). It was seen that there was a spike of almost 450 percent higher than its previous record high in September 2020.
According to Coinmarketcap.com, as of September 2020, CRV is the third-largest DeFi token in the crypto space by the number of funds locked in the network. It was further mentioned that investors had locked around $1.26 billion in the CRV. Uniswap outperformed and achieved new heights with the value locked rising to $1.94 billion and Aave occupying the second spot with $1.32 billion in locked funds.
Despite its popularity, its appeal and potential are not apparent at first glance. Doubts surrounding Curve is that what’s the point to have a DeFi platform that only lets you trade assets worth the same amount.
The other concern related to this protocol is that it is highly volatile. It was reported that within three days, there was a sudden decline in prices. On 14th August 2020, prices were at an all-time high of $54.01 and went to an all-time low of $4.17 on 17th August.
But the CRV team is planning to support assets beyond stablecoins and various varieties of Bitcoin. If this is incorporated, Curve Finance could become one of the most powerful DEXs ever.