Market Signal

What Is Convex Finance (CVX)?

[Convex Finance] is a [DeFi] protocol that allows [Curve] [liquidity providers ]to earn a share of trading fees on Curve without [staking] liquidity there. Instead, LPs can stake with Convex and receive boosted CRV and liquidity mining rewards. This provides CRV stakers with better capital efficiency and positions Convex Finance as an important player in the [Curve wars].

Convex has entered a competitive race to obtain as much control as possible of the Curve Finance [stablecoin] exchange. The more CRV tokens a protocol has, the more influence it has over interest rates on [Curve], which is the largest [DEX] in the world by [TVL]. Consequently, the “Curve wars” are an ongoing race for influence over what is probably the most important protocol in [DeFi].

Who Are the Founders of Convex Finance?

Convex Finance was developed by a team of anonymous developers. However, unlike many [shitcoins], Convex Finance is considered one of the most important and influential protocols in decentralized finance and thus a fairly low-risk investment.

What Makes Convex Finance Unique?

Convex Finance plays a key role in the Curve wars thanks to its unique incentive structure. Its sole use case is to accumulate as much TVL as possible to achieve the protocol’s goal of controlling as big a stake of Curve Finance as it can. In other words, Convex Finance targets only CRV holders and Curve liquidity providers and does so in two ways:



1. CRV holders receive [cvxCRV] for staking the CRV.
2. Curve LPs receive boosted rewards for staking their LP tokens with Convex.

Curve Finance issues veCRV (vote-escrowed CRV) for staked CRV that liquidity providers receive as a reward. In short, veCRV are time-locked CRV tokens with boosted voting power and rewards, which are both a function of the lock-up period of the underlying CRV. You can read more about veCRV [here]. CRV rewards can go as high as 2.5X of the initial rewards, but the higher the liquidity deposited, the more difficult it is to attain the maximum rewards.

Put differently, it is nearly impossible for any one party to stake enough liquidity to attain the maximum boost, which is where Convex Finance comes in. Convex acts as a cartel that pools the assets of individual stakers and benefits from their aggregated liquidity. Even low-level investors can stake their Curve Finance LPs with Convex and receive boosted rewards that would otherwise not be attainable. They receive:



* The interest rate on their provided liquidity.
* A share of the Curve trading fees.
* The boosted rewards from Convex.
* CVX tokens

Furthermore, you can stake your CRV tokens and receive cvxCRV to receive:



* veCRV rewards
* Convex trading fees
* CVX tokens
* Airdrops going to veCRV token holders

Related Pages:

Check out [Solidly Exchange (SOLID)] — a B2B stablecoin exchange.

Check out [Redacted Cartel (BTRFLY)] — a DAO offering rewards for CRV LP tokens.

Read our [Guide to Crypto Donations].

Get the latest crypto news and latest trading insights with the [CoinMarketCap blog].

How Many Convex Finance (CVX) Coins Are There in Circulation?

CVX has a [total supply] of 100 million CVX according to the following distribution:



* 50% Curve LP rewards _Rewarded pro-rata for CRV received on Convex_
* 25% Liquidity mining _Distributed over four years. (Incentive programs, currently CVX/ETH and cvxCRV/CRV)_
* 9.7% Treasury _Vested over one year. Used for future incentives or other community driven activities_
* 1% veCRV holders _Instantly claimable airdrop_
* 1% veCRV holders who vote to whitelist Convex _Instantly claimable airdrop_
* 3.3% Investors _Vested over one year. 100% of investment funds used to pre-seed boost and locked forever(no cvxCRV minted)._
* 10% Convex Team_ Vested over one year_

cvxCRV are minted at a 1:1 ratio for every CRV staked. CVX tokens can be used to participate in proposals in the Convex Finance protocol.

How Is the Convex Finance Network Secured?

Convex was audited by MixBytes, and the results can be found [here]. Its treasury is secured by a 3 of 5 multisig consisting of the following parties:



* C2tP - Convex Finance
* Winthorpe - Convex Finance
* Charlie - Curve Finance
* Tommy - Votium
* Sam - Frax Finance

However, a [bug] in one of the [smart contracts] at the beginning of March 2022 forced the team to re-deploy the vote-locking contract and caused a price drop in CVX.