DiligentDeerFundamentals of Stablecoin Mechanics & Variants
Here is what we are going to cover:Types of stablecoin mechanismsCollateral Debt Position (CDP)Rebase model for purely algorithmic stablecoinsSeigniorage model for purely algorithmic stablecoinsThis article provides a buildup for a fractional algorithmic stablecoin $FRAX. The information is basic and foundational to understanding the complex mechanics behind the stablecoin mechanisms and it is the first article in a series of articles dedicated to Frax Finance.If this simple reading layout do...
DiligentDeerVariables in Impermanent Loss mitigation models
Here is what we are going to cover:Impermanent loss mitigation mechanisms.IL mitigation variables.Liquidity depth - Slippage - Trade value correlation.This article explores the variables that need to be considered in an ecosystem of AMMs when mitigating impermanent loss. The article provides intermediatory information on the actions of traders, AMMs, arbitrageurs, LPs, and liquidity depth and their effects on net profits and losses.ContextThe main incentive for the users to supply liquidity i...
DiligentDeerDecoding the Convex-Curve Flywheel
Here is what we are going to cover:The flow diagram for the Convex-Curve flywheelThe implication of the actions on Convex financeFueling and expansion of the flywheelConvex finance is a layer above Curve finance and this article goes in-depth in explaining how value is accrued to $CVX through the Curve ecosystem as we move forward in time. The article also explores the origins of the reward and sustainability of the same. The article concludes by declaring that adding more mechanisms around c...
DeFi Researcher & Data Analyst. Working with @LlamaRisk team.
DiligentDeerFundamentals of Stablecoin Mechanics & Variants
Here is what we are going to cover:Types of stablecoin mechanismsCollateral Debt Position (CDP)Rebase model for purely algorithmic stablecoinsSeigniorage model for purely algorithmic stablecoinsThis article provides a buildup for a fractional algorithmic stablecoin $FRAX. The information is basic and foundational to understanding the complex mechanics behind the stablecoin mechanisms and it is the first article in a series of articles dedicated to Frax Finance.If this simple reading layout do...
DiligentDeerVariables in Impermanent Loss mitigation models
Here is what we are going to cover:Impermanent loss mitigation mechanisms.IL mitigation variables.Liquidity depth - Slippage - Trade value correlation.This article explores the variables that need to be considered in an ecosystem of AMMs when mitigating impermanent loss. The article provides intermediatory information on the actions of traders, AMMs, arbitrageurs, LPs, and liquidity depth and their effects on net profits and losses.ContextThe main incentive for the users to supply liquidity i...
DiligentDeerDecoding the Convex-Curve Flywheel
Here is what we are going to cover:The flow diagram for the Convex-Curve flywheelThe implication of the actions on Convex financeFueling and expansion of the flywheelConvex finance is a layer above Curve finance and this article goes in-depth in explaining how value is accrued to $CVX through the Curve ecosystem as we move forward in time. The article also explores the origins of the reward and sustainability of the same. The article concludes by declaring that adding more mechanisms around c...
DeFi Researcher & Data Analyst. Working with @LlamaRisk team.
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Here is what we are going to cover:
How Convex links to Curve
Activities on Convex finance integrating Curve
Rewards breakdown for activities.
This article goes in an easy-to-understand way in explaining different actions that a user might perform on Convex finance and the incentive mechanism around them.
If this simple reading layout doesn’t excite you, you could scroll down to consume the same content as if it were a magazine.
⚠ Disclaimer: All information presented here is my perspective and should be considered educational content. I won’t be responsible for any kind of financial profits or losses derived from your decisions. Financial and investment advice
Curve finance has a gauge mechanism where emissions are distributed in the form of native token $CRV to the respective liquidity pool gauges based on the number of votes it gets.
Curve offers a portion of transaction fees as well as $CRV emissions as rewards for providing liquidity.
The swap fees depend on the volume whereas the emissions rewards depend on the gauge votes and the user’s liquidity in a particular liquidity pool.
Total $veCRV supply: 519,322,788.2 Circulating $CRV Supply: 1,229,978,976.8 Source: www.defiwars.xyz/curve by @krayzfi
As of July 2022, Convex finance owns more than 53% of the total $CRV supply in the market. The $CRV owned by Convex is in the form of $veCRV (locked $CRV). Convex uses this $veCRV to boost the $CRV rewards for certain liquidity pools.
Every LP has a chance to earn $CRV rewards, provided that they stake their LP token in the respective gauge and these $CRV rewards can be boosted up to 2.5 times by owning enough quantity of $veCRV.
Convex uses its $veCRV holding to boost rewards for the liquidity that is routed through the Convex protocol.
Thus Convex finance provides an opportunity to stake the Curve LP tokens in the Convex protocol to get boosted $CRV rewards without owning any $veCRV.
Convex finance also provides a staking solution for $CRV; a user can stake $CRV to receive yield-bearing $cvxCRV. $cvxCRV is equivalent of $veCRV but with a greater flexibility.
$cvxCRV is a liquid token that is tradable whereas $veCRV is an illiquid token that is not tradable.
If a user deposits $CRV into Convex, that $CRV is locked forever on the platform as $veCRV, guaranteeing the increase in voting power for Convex finance.
A tokenized version of $veCRV, $cvxCRV, is returned to the user at a 1:1 rate. The peg stability for $CRV and $cvxCRV is almost 97.45%. Rewards for staking $CRV on convex i.e. converting $CRV to $cvxCRV and holding it:
You earn a share of the Convex platform fees in $CRV. (Convex charges 17% fees from the $CRV emissions generated from Convex and 10% are distributed to the $cvxCRV holders.)
You earn basically the admin fees you would have earned if you locked your $CRV in Curve.fi (50% of transaction fees accrued on Curve finance) in $3CRV.
Receive $CVX rewards (liquidity mining rewards).
$CVX is a native token that can be staked on Convex Finance to earn a share of Curve LP’s $CRV earnings in the form of $cvxCRV.
Basically, Convex finance locks the $CRV and converts them to $cvxCRV and distributes them as rewards, guaranteeing the increase in voting power for Convex finance.
$CVX can also be locked to receive $vlCVX to earn a higher portion of the platform’s revenue and be able to vote on the platform’s periodic decisions.
While staked $CVX can be withdrawn at any time, $vlCVX can only be withdrawn at the end of your lock period.
Vote-locked $CVX tokens accrue rewards (1% more than staked $CVX positions). $vlCVX is used for voting on how Convex Finance allocates its $veCRV towards Curve.fi gauge weight votes.
Locked $CVX tokens are automatically staked, earning a share of the 5% fee allocated to $CVX stakers. Additionally, vote-locked $CVX earn an additional 1% fee on top of the normal staking rewards, as outlined in the
Fee structure of Convex for Curve:
17% of $CRV rewards generated through staking Curve LP tokens are taken as fees by the Convex platform.
10% goes to $cvxCRV stakers (paid out as $CRV).
5% goes to $CVX stakers, which includes vote-locked $CVX as $cvxCRV.
1% goes exclusively to vote-locked $CVX as $cvxCRV.
1% goes to the harvest caller as $CRV.
Thank you for being here.
You can provide the same value by sharing this article with your circle.
You could even contribute/support these articles by owning one ✌.
Thank you for being here.
You can provide the same value by sharing this article with your circle.
You could even contribute/support these articles by owning one ✌.
Here is what we are going to cover:
How Convex links to Curve
Activities on Convex finance integrating Curve
Rewards breakdown for activities.
This article goes in an easy-to-understand way in explaining different actions that a user might perform on Convex finance and the incentive mechanism around them.
If this simple reading layout doesn’t excite you, you could scroll down to consume the same content as if it were a magazine.
⚠ Disclaimer: All information presented here is my perspective and should be considered educational content. I won’t be responsible for any kind of financial profits or losses derived from your decisions. Financial and investment advice
Curve finance has a gauge mechanism where emissions are distributed in the form of native token $CRV to the respective liquidity pool gauges based on the number of votes it gets.
Curve offers a portion of transaction fees as well as $CRV emissions as rewards for providing liquidity.
The swap fees depend on the volume whereas the emissions rewards depend on the gauge votes and the user’s liquidity in a particular liquidity pool.
Total $veCRV supply: 519,322,788.2 Circulating $CRV Supply: 1,229,978,976.8 Source: www.defiwars.xyz/curve by @krayzfi
As of July 2022, Convex finance owns more than 53% of the total $CRV supply in the market. The $CRV owned by Convex is in the form of $veCRV (locked $CRV). Convex uses this $veCRV to boost the $CRV rewards for certain liquidity pools.
Every LP has a chance to earn $CRV rewards, provided that they stake their LP token in the respective gauge and these $CRV rewards can be boosted up to 2.5 times by owning enough quantity of $veCRV.
Convex uses its $veCRV holding to boost rewards for the liquidity that is routed through the Convex protocol.
Thus Convex finance provides an opportunity to stake the Curve LP tokens in the Convex protocol to get boosted $CRV rewards without owning any $veCRV.
Convex finance also provides a staking solution for $CRV; a user can stake $CRV to receive yield-bearing $cvxCRV. $cvxCRV is equivalent of $veCRV but with a greater flexibility.
$cvxCRV is a liquid token that is tradable whereas $veCRV is an illiquid token that is not tradable.
If a user deposits $CRV into Convex, that $CRV is locked forever on the platform as $veCRV, guaranteeing the increase in voting power for Convex finance.
A tokenized version of $veCRV, $cvxCRV, is returned to the user at a 1:1 rate. The peg stability for $CRV and $cvxCRV is almost 97.45%. Rewards for staking $CRV on convex i.e. converting $CRV to $cvxCRV and holding it:
You earn a share of the Convex platform fees in $CRV. (Convex charges 17% fees from the $CRV emissions generated from Convex and 10% are distributed to the $cvxCRV holders.)
You earn basically the admin fees you would have earned if you locked your $CRV in Curve.fi (50% of transaction fees accrued on Curve finance) in $3CRV.
Receive $CVX rewards (liquidity mining rewards).
$CVX is a native token that can be staked on Convex Finance to earn a share of Curve LP’s $CRV earnings in the form of $cvxCRV.
Basically, Convex finance locks the $CRV and converts them to $cvxCRV and distributes them as rewards, guaranteeing the increase in voting power for Convex finance.
$CVX can also be locked to receive $vlCVX to earn a higher portion of the platform’s revenue and be able to vote on the platform’s periodic decisions.
While staked $CVX can be withdrawn at any time, $vlCVX can only be withdrawn at the end of your lock period.
Vote-locked $CVX tokens accrue rewards (1% more than staked $CVX positions). $vlCVX is used for voting on how Convex Finance allocates its $veCRV towards Curve.fi gauge weight votes.
Locked $CVX tokens are automatically staked, earning a share of the 5% fee allocated to $CVX stakers. Additionally, vote-locked $CVX earn an additional 1% fee on top of the normal staking rewards, as outlined in the
Fee structure of Convex for Curve:
17% of $CRV rewards generated through staking Curve LP tokens are taken as fees by the Convex platform.
10% goes to $cvxCRV stakers (paid out as $CRV).
5% goes to $CVX stakers, which includes vote-locked $CVX as $cvxCRV.
1% goes exclusively to vote-locked $CVX as $cvxCRV.
1% goes to the harvest caller as $CRV.
Thank you for being here.
You can provide the same value by sharing this article with your circle.
You could even contribute/support these articles by owning one ✌.
Thank you for being here.
You can provide the same value by sharing this article with your circle.
You could even contribute/support these articles by owning one ✌.
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