A big concern among blockchain traders and liquidity providers is slippage amid transactions. Cryptocurrencies just do not work as common currencies, and sometimes, despite the blockchain’s philosophy of freedom for all, processes can get somewhat complexes, and fees start to bother here and there.
Curve Finance brings a brand-new solution for the market, by improving slippage for DeFi stablecoin conversions.
HOW DOES IT WORK?
Curve Finance uses liquidity pools and bonding curves to provide highly efficient stablecoin (like DAI and USDC) trading, as well as low-risk returns for liquidity providers.
Within the platform, users are not exposed to price slippage as they usually would be on another DEXs to trade one stablecoin for another.
The platform can be compared to DEXs like Bancor or Uniswap, but with more (and remarkable) advantages. Curve Finance aims to be more efficient than any other DEX available today.
UNDERSTANDING THE PROCESS:
To understand it better, we must compare DEXs and how they work. Curve is not the pioneer in this market, but for sure is the most innovative so far.
Other DEXs like Bancor, for example, had good functionality but also had quite a bit of drawback as well.
Uniswap came and introduced interesting solutions, such as token bonding curves, liquidity pools which incentivized users to contribute, and a more user-friendly interface. It certainly played a major role when it comes to DeFi popularization, especially due to the efficiency increase.
DIG INTO IT:
Now Curve Finance has come to shake things up, similarly to Uniswap, but only for stable coins. And it is working hard to differentiate itself from competitors.
While other DEXs will have varying degrees of slippage based on two main factors (sized of the peg and market price for each stablecoin), Curve Finance can guarantee the lowest slippage available in the market regardless of these aspects.
It is well-known that the lower the amount of slippage on an exchange, the more certainty traders have that their buy-or-sell orders that will be executed at a specific price.
Curve Finance works to ensure traders smooth and calm nights of full sleep, avoiding a lot of headaches.
WHY IS IT INTERESTING FOR DEFI USERS?
Curve Finance can be especially interesting for users that want to swap stablecoins like DAI or USDC using decentralized tools. In this case, Curve can easily help to mitigate slippage.
Besides helping people that want to make highly efficient swaps, it is also remarkably useful for liquidity providers who want to earn returns on top of their interest earned through Compound (Ethereum protocol), without the need to hold more volatile assets available on the market.
Today Curve Finance is available for anyone connected on the main net, supporting stablecoins like DAI, USDT, USDC, and TUSD.
WHERE DO I SIGN TO GET STARTED?
Curve Finance has a remarkable minimalist layout, which certainly can make some people remember about their favorite 90’s NES game.
Users just need to access Curve.fi and decide what they want to do within the platform. We might notice that if you want to trade or deposit assets here, you need a web3 compatible wallet.
To trade, just click at “Buy and Sell” to input the number of tokens you want to trade for another designated token pair, and in a matter of seconds, the deal is done.
You can also provide liquidity by accessing “Deposit”, where you can choose how much of a supported stablecoin you want to deposit within the ecosystem. Processes here are quite intuitive and even beginners can have their fair share by using it.
WHO IS BEHIND THE IDEA?
It was in September 2019 that developers started to write the code. In December, the project was released.
The main person behind it is Michael Egorov, a physicist and scientist from Moscow. A blockchain veteran as well, Egorov works as NuCypher (another project based on Ethereum) CTO.
Curve Finance seems to be the great new deal when it comes to DEXs. The minimalist layout focuses on efficiency, using liquidity pools and bonding cures to provide highly efficient stablecoin trading as well as low-risk returns for liquidity providers.
Michael Egorov states that “Curve optimizes trading efficiency by focusing less on price”. It is easier because of the nature of stablecoin itself, which is less volatile. As the platform grows, it promises to be the best DEX when it comes to efficiency, and it shall happen soon.