Decentralized finance, popularly known as DeFi, has created new ways for crypto investors to generate passive income. For example, there are yield platforms that allow users to earn by being liquidity providers on a particular protocol. Convex Finance is one of those platforms. It offers users of decentralized exchange Curve an extra way of generating income.
This article will explain every aspect of Convex Finance and how you can use it to make more money.
What’s Convex Finance?
Simply put, Convex Finance is an Ethereum-based DeFi platform that offers staking rewards on decentralized exchange Curve. The protocol also serves as a yield optimizer for liquidity providers on Curve and the holders of the exchange’s native token CRV.
These holders can stake their tokens on Convex Finance to receive the DeFi protocol’s native token CVX as rewards and also earn a percentage of the earnings generated by the platform.
The Convex Finance History
Convex Finance launched in March 2021. At the time, its founders said they wanted to enhance rewards earned by Curve liquidity providers and CRV holders. The platform’s user interface is easy to understand, so you do not need guidance to navigate it.
CVX token was released last year and is now used for distributing rewards and other incentives.
In its first month of inception, Curve Finance saw a total value locked (TVL) of $68.5 million. By February 2022, the platform’s TVL had reached $21.2 billion. However, that figure has since declined to $3.8 billion. Convex Finance reports that it has distributed over $850 million in rewards to investors so far.
Convex Finance Founders
The founders of this platform have chosen not to reveal their faces but are active on Twitter, although using pseudonymous usernames.
How Convex Finance Works
As mentioned earlier, Convex Finance offers a platform that lets liquidity providers on Curve and CRV holders create an additional income stream. But what’s Curve? Unlike many decentralized exchanges, Curve only facilitates the trading of stablecoins, thus shielding traders from the highly volatile crypto market. Curve boasts less slippage and relatively low trading fees. Its ecosystem is driven by the CRV token, which investors earn after depositing various cryptocurrencies into the liquidity pool.
Convex Finance allows investors to earn in two ways: by staking or providing liquidity.
Staking: As stated before, CRV holders can stake the token for cvxCRV on Convex Finance to receive a portion of the protocol’s earnings as well as CVX tokens.
Liquidity Providers: Investors holding Curve LP tokens are allowed to stake them on the Convex Finance platform to earn more rewards.
What Makes Convex Finance Special?
The are several factors that make Convex Finance unique. For example, the platform does not require investors to lock their CRV tokens. Also, there are no fees incurred when withdrawing your earnings. Finally, Convex Finance has low performance fees.
The CVX Token
CVX is the driver behind Convex Finance’s ecosystem. Holders of this token are entitled to a share of the platform’s fees. CVX is priced at $3.53 with a market cap of $279.34 million as of June 28, according to data from CoinGecko.
CVX’s supply has been capped at 100 million. The token’s distribution is as follows: 2.5% was allocated for Airdrops, 3% to investors, 9.6% to Treasury, 11% to developers, 27% to liquidity mining, and 46.9% to Curve LP Rewards.
How to Purchase CVX
As of June 2023, several centralized exchanges have listed CVX. They include Coinbase, Kucoin, Binance, and OKX. Here is how you can buy it on Binance:
1. Register and verify your account on Binance.
2. Add crypto to your account. You can do this by buying USDT through the peer-to-peer platform on Binance.
3. Search CVX/USDT trading pair on the exchange and use your USDT balance to buy CVX.
4. After purchasing CVX, you can transfer it to a decentralized crypto wallet to start exploring the Convex Finance ecosystem.
It’s evident that Convex Finance has opened new income-generating opportunities for DeFi users. That said, we recommend you take a look at its ecosystem to determine if it is a venture that interests you.
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