CRV is the primary token of the Curve DAO platform, which provides liquidity pools, especially for stablecoins. Through the locking mechanism, you can lock your CRV tokens and receive veCRV (vote-escrowed CRV) in return. This grants you additional privileges.
The longer you lock your CRV (from 1 week to 4 years), the more veCRV you receive.
veCRV is used for voting in Curve DAO, giving you the ability to influence key decisions regarding pool incentives and other platform changes.
Locking veCRV independently only makes sense for projects willing to commit 5-6 figure sums for 4 years. For individual investors, this isn't practical since achieving a noticeable boost requires a very large amount of veCRV.
Even for projects, it's more advantageous to purchase liquid lockers with voting rights or engage in bribes in favor of applications that own veCRV.
Locking CRV provides important advantages:
Voting in Curve DAO decisions - veCRV grants voting rights, allowing you to participate in protocol governance and influence decisions regarding liquidity pool incentive distribution.
Increased yield (boost APY) - if you provide liquidity on Curve, your veCRV increases the yield on your positions. The more veCRV you have, the higher your additional profit.
Additional incentives and rewards - veCRV holders receive a portion of the Curve ecosystem profits in the form of native yield (DEX, crvUSD) and bribes (incentives for veCRV votes for Curve pools)..
There are two significant drawbacks:
You take on the responsibility and gas costs for independently voting and collecting veCRV commissions.
Your tokens become illiquid during the lock period. You cannot sell, exchange, or use locked CRV until the lock period ends. This can be problematic for those who don't want to lose access to their assets for an extended period. This is where liquid lockers come into play.
Liquid lockers are platforms that allow users to lock their CRV tokens in exchange for receiving liquid tokens, such as cvxCRV (Convex), yCRV (Yearn), or sdCRV (StakeDAO). The main idea is that users receive liquid tokens that can be freely traded, while the liquid locker uses the locked CRV to generate additional revenue and boost positions in their application.
When you lock your CRV in a liquid locker, it uses your tokens to obtain veCRV with a perpetual lock (always extended to the maximum term of 4 years). The locker then accumulates these veCRV and manages them:
Voting in Curve DAO - liquid lockers receive voting rights through your CRV but decide how to vote themselves.
Earning yield and boost - liquid lockers use accumulated veCRV to obtain maximum yield boost in Curve pools. This boost benefits locker users who provide liquidity through their platform. In other words, you rent the locker's veCRV by adding your LP to it instead of staking on Curve DEX.
Locker fees - liquid lockers charge a fee for providing boost and managing Curve votes, which forms their revenue. This fee also includes additional income from Curve and crvUSD commissions.
Let's compare the main liquid lockers: Convex, Yearn, and StakeDAO.
Convex is one of the largest liquid lockers for CRV. Its users receive the liquid token cvxCRV in exchange for their CRV. Convex uses locked CRV to obtain veCRV, providing users with the following benefits:
High boost APY - Convex offers one of the highest yield boost coefficients, reaching 2.5x.
Liquidity - cvxCRV can be freely sold or used in other DeFi products.
Additional rewards - Convex users also receive CVX tokens, which can increase overall returns.
Disadvantages:
Users lose control over Curve voting - Convex decides how to vote for users
The liquid locker with auto-compounding aCRV currently exists through Concentrator and only on the Ethereum network. It is less popular than Yearn yCRV and asdCRV. This may cause worse peg maintaining.
Fees - a portion of income goes to covering platform and DAO fees
Auto-compounding
The aCRV liquid token from Concentrator.
The illiquid cvxCRV locker from Llama Airforce delegates the right to receive and reinvest rewards from Convex. In return, ucvxCRV token is issued. Can be withdrawn at any time. Unstaking fee is 0.5%.
Website: Convex for Curve
Yearn Finance offers CRV liquidity through the yCRV token. Yearn uses auto-compounding, automatically reinvesting rewards to increase user returns. Main advantages:
Auto-compounding - rewards are automatically reinvested, significantly increasing total yield
Flexibility - yCRV can be sold or used in other strategies provided by Yearn
Boost APY - thanks to accumulated veCRV, Yearn provides users with increased yield from participating in Curve pools
Disadvantages:
Performance fee - Yearn charges a 10% fee for auto-compounding
Voting - users lose the ability to vote directly in Curve DAO since Yearn manages this process
Website: ycrv.yearn.fi or curve.yearn.space
StakeDAO offers a liquid locker through sdCRV token and collaborates with Aladdin DAO Concentrator, enabling auto-compounding through asdCRV. Main advantages:
Network flexibility - StakeDAO supports multiple networks (Ethereum, Arbitrum, Polygon) through LayerZero
Auto-compounding - partnership with Concentrator enables automatic reinvestment of rewards
Boost APY - thanks to accumulated veCRV, StakeDAO can increase user yields
Disadvantages:
Fees - management and boost fees (e.g., 15.5% in Concentrator) somewhat reduce final yield
To obtain maximum sdCRV yield in StakeDAO, the governance token SDT is needed. Since Aladdin DAO, creator of the Concentrator application, is built on top of sdCRV, they also accumulate SDT. Through SDT token accumulation, Concentrator boosts sdCRV yield in their auto-compounder asdCRV, charging an increased fee for this service.
Website: www.stakedao.org/lockers
asdCRV: Concentrator | Curve, Convex | asdCRV
After analyzing all liquid lockers, we can conclude that auto-compounders like asdCRV from StakeDAO and Concentrator, aCRV from Convex and Concentrator, yvyCRV from Yearn provide the greatest benefit for long-term investors.
Why are auto-compounders advantageous?
Yield maximization - auto-compounding allows automatic reinvestment of income, increasing your capital over time without gas costs and time investment
asdCRV and yvyCRV offer high yield levels through constant reinvestment and efficient asset management
sdCRV and yCRV, which form the basis for auto-compounders, maintain better peg, possibly due to reinvestment or market demand
Liquid tokens can be used in DeFi as collateral in lending or LP on DEX for additional income
The StakeDAO platform, together with Aladdin DAO Concentrator, provides auto-compounding through the asdCRV token, allowing users to benefit from revenue reinvestment.
Despite Concentrator's fee of 15.5%, the final yield remains high, especially considering the flexibility of network choice (Ethereum, Arbitrum, Polygon).
vsdCRV and asdCRV are bridgable with LayerZero between Ethereum, Polygon & Arbitrum here https://www.stakedao.org/bridge
You will have 2 options for yCRV deposits: YBS (yield in crvUSD) and Auto-Compounder Vault (yield is reinvested in yCRV).
st-yCRV / yvyCRV — different names for the token with auto-compounding in yCRV.
Yearn offers auto-compounding with a lower fee — 10%.
Yearn strategies are simple to use and effective in the long term, especially for those working on Ethereum.
Both strategies allow you to choose how to use the liquid locker: providing it in LP on Curve or simply holding the token in your wallet. The difference is that asdCRV is liquid and has pools on par with regular sdCRV, while yvyCRV doesn't have liquidity pools. It's only a contract for staking yCRV.
When providing liquidity in asdCRV, don't forget to add the LP token to Convex for maximum boost. When adding liquidity in yCRV, the LP receives boost directly from Yearn.
One effective farming strategy involves obtaining CRV tokens (either through withdrawal from Binance or purchasing on a DEX) on the Arbitrum network, then depositing them into the factory-tricrypto-27 pool. This approach allows you to earn both yield on the asdCRV portion and exchange fees along with CRV farming rewards.
vsdCRV is a non-yield-bearing token that manages voting rights. When participating in the pool, we receive all tokens according to the current pool proportions.
To achieve the maximum boost for CRV rewards, we recommend depositing the created LP tokens into Convex, which currently offers the highest boost at the time of writing.
The optimal strategy involves regularly harvesting and reinvesting the earned rewards to maximize compound returns.
asdCRV is available on Pendle, so you can provide liquidity without impermanent loss, long (YT) or fix (PT) yield.
During market uptrends, some may wish to exit the DAO and lock in profits in liquid lockers, causing their peg to decline (LST price falling relative to CRV).
Is the discount during uptrends a disadvantage? Compared to completely illiquid veCRV - probably not. Consider it a liquidity discount. If you want to exit, you always have options to either sacrifice some profit and sell despite the depeg, or short the futures to lock in profit. On the other hand, if you're a long-term holder, this is an opportunity to buy LST for liquid CRV and wait for the peg to return. You'll earn more CRV, including capitalized interest for waiting.
Additional risks from using intermediary services are also present. You can take comfort in knowing that stealing your CRV is impossible since they're locked forever!
Auto-compounders asdCRV from StakeDAO and yvyCRV from Yearn represent the optimal instruments for maximizing the yield potential of your CRV tokens. Both tokens facilitate automatic reinvestment of returns and enable capital appreciation without active management. The choice between them depends on your specific requirements: StakeDAO offers multi-network solutions and collaboration with Concentrator, while Yearn provides stable strategies on Ethereum with lower fees, though the final yield remains approximately equivalent in both cases.
Of course, I have prepared a comparison table of liquid locker parameters.
Dedicated page for Curve Vaults curve.yearn.space
LST peg on Dune @Marcov / Liquid veCRV 💧🔒
defiwars.xyz - biggest veCRV holders and peg
CRVHUB - Curve DAO fees and veCRV APY
User docs and FAQ: https://resources.curve.fi/
Tech docs: https://docs.curve.fi/
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