CRV Mining Tutorial: Teach you how to use Curve to participate in liquidity mining

What is Curve

Curve is an exchange pool protocol developed based on Ethereum, providing stablecoin transactions with low slippage (good depth). The Curve algorithm is specially designed for stablecoin exchanges, which can achieve low slippage and low fees (0.04%).

While providing liquidity, Curve liquidity providers can not only obtain transaction fees, but also obtain additional income from other DeFi protocols (such as Compound, Yearn, Synthetix, RenBTC, etc.).

Currently, Curve smart contracts have passed the Trail of Bits audit. However, security audits cannot avoid all risks. Please invest with caution. If you want to participate, please invest funds that you can afford to lose.

Principle Introduction

How does Curve achieve low slippage in stablecoin transactions?

• Curve adopts the same AMM automated market maker mechanism as Uniswap, using algorithms to imitate the trading behavior of traditional market makers, with smart contracts acting as counterparties.

• Uniswap's constant product market maker model is not suitable for all types of assets, and using Uniswap for stablecoin transactions will result in a lot of losses.

• Mainstream stablecoins are all pegged to 1 US dollar. Although there are fluctuations, stablecoin exchange should be lossless in the long run. Based on this assumption, Curve invented the StableSwap market maker algorithm specifically for stablecoin transactions based on Uniswap. The curve is smoother than Uniswap and can achieve very low slippage in stablecoin transactions.

How does Curve achieve higher annualized returns?

• As long as someone trades on Curve, liquidity providers will evenly distribute the transaction fee income earned by the platform. As Curve's transaction volume increases, the annualized return will also increase.

• But more income comes from depositing liquidity funds into lending protocols such as Compound, which can earn additional interest in addition to Curve transaction fees.

• In addition, Curve will issue CRV governance tokens to reward liquidity providers.

CRV Token

Curve's governance token is CRV. CRV holders can participate in Curve's future online governance.

Token issuance

The total amount of CRV tokens is 3.03 billion, as follows:

• 62% distributed to liquidity providers

• 30% to shareholders, unlocked linearly over 2-4 years

• 3% for team members, unlocked linearly within 2 years

• 5% as community reserve

Of these, 1.3 billion CRV (43% of the total) will be distributed in the initial issuance, as follows:

• 5% distributed to early Curve liquidity providers, unlocked linearly within 1 year

• 30% to shareholders, unlocked linearly over 2-4 years

• 3% for team members, unlocked linearly within 2 years

• 5% as community reserve

The initial Curve liquidity mining ended at block height 10627591 (Beijing time: 2020.08.10 03:24:29 AM). Users who provided liquidity in Curve before this time can check their initial CRV amount at the following address: https://www.curve.fi/earlyCRV. These CRV will be unlocked linearly within 1 year.

At the beginning of the launch, the circulation of CRV is 0, and the initial release rate is about 2 million CRV per day. These 2 million CRV are mainly composed of the following:

• The CRV held by liquidity providers and team members in the initial issuance will be gradually released

• CRV rewards for subsequent liquidity providers

How to obtain CRV

As an ordinary user, there are two ways to obtain CRV:

1. Provide liquidity on Curve and earn CRV as a liquidity provider
   For specific operation methods, please see the "How to become a liquidity provider and obtain CRV" section of this article.

2. Purchase on exchanges that support CRV To learn about exchanges that support CRV, please follow Curve’s official announcement.

Anti-fraud reminder

The CRV contract was released in advance by an anonymous user, and 250,000 CRVs were pre-mined, which violated fairness.

In addition, there is a risk that the official may replace the contract later, so we need to remain vigilant and pay continuous attention.

CRV contract address: https://www.curve.fi/contracts

How to use Curve to exchange coins

1. Open the imToken app and Curve website

PS: Curve website https://www.curve.fi/

2. Click “Connect Wallet” on the Curve website, click “Show More” in the pop-up window, and then click the “WalletConnect” icon.

3. Click the QR code icon in the upper right corner of the imToken software, scan the QR code on the web page, and authorize the DApp connection on your mobile phone.

4. After the connection is successful, select the token and quantity you want to exchange in the "From" and "To" columns, click "Sell" to start the coin-to-coin exchange, and you can view the estimated transaction fee at the bottom of the page.

Click Advanced options.
You can choose a liquidity pool and customize the maximum acceptable slippage and mining fee

Slippage: It can be simply understood as the price difference, that is, the difference between the actual transaction price and the current price.

5. Click "Next" on imToken to authorize the transaction. After authorization, select "Continue to Send" and click "Next".

6. After the authorization transaction and the currency exchange transaction are successful, you can see on the asset interface that DAI has been successfully exchanged for USDT (the display effect is the same as the rightmost page screenshot in the above picture).

How to become a liquidity provider and get CRV

There are many ways to become a Curve liquidity provider. Here we introduce a relatively simple one, taking joining the Compound pool as an example.

First, follow steps 1 to 3 in the "How to use Curve for currency exchange" section and scan and authorize the Curve web connection through WalletConnect on imToken.

1. After the connection is successful, select a liquidity pool in Curve Pools. Here we take Compound as an example and click Compound.

In actual operation, if you participate, it is recommended to choose a liquidity pool with larger funds and higher yields.

2. After entering the Compound pool, click "Deposit" in the menu bar at the top of the page.

3. The Compound pool supports the deposit of stablecoins DAI and USDC, and by default all DAI and USDC in the wallet are deposited. If you want to customize the amount of stablecoins deposited in the liquidity pool, you can click "Use maximum amount of coins available" to make the X in the option box disappear and enter the custom mode.

4. After the X in the box disappears, enter the custom mode, and the DAI and USDC input boxes will change from the original dark gray to dark blue. At this time, we can manually set the number of stablecoins deposited in the liquidity pool.

5. Click Deposit to deposit, and click "Confirm" on imToken to authorize the transaction. On the Curve webpage, you can view the number and price of LP tokens (which can be understood as deposit certificates) obtained after the stablecoin is deposited into the liquidity pool, as well as the estimated mining fee.

As the mining fee has been rising sharply recently, it can be seen from the figure that a mining fee of 300 to 400 yuan is required to deposit stablecoins into the liquidity pool. Therefore, if the amount of stablecoins deposited is too small, the final income may not be able to cover the mining fee, resulting in losses. Therefore, please calculate whether your final income can cover the mining fee paid.

6. After authorization, select "Continue to send" and click "Next". After the transaction is sent, you can see two transactions waiting to be packaged in the ETH historical transaction interface, which are the authorization transaction and the transaction of converting the stable currency DAI to LP Token. After the two transactions are successful, you can view the received LP Token in the asset interface. The token name corresponding to the LP Token obtained from the Compound pool is "cDAI+cUSDC".

The above only takes the Compound pool in the Curve liquidity pool as an example. The operation methods of different pools are slightly different. Before operation, you need to do a good research to avoid misoperation.

If you are familiar with liquidity mining and want to maximize your returns, you can also deposit the LP tokens obtained after joining the Curve pool into other protocols that support liquidity mining, such as Balancer, to obtain greater returns. The specific operations are not introduced here. If you need to perform such operations, please make sure you have a full understanding of these projects and do not operate blindly.

Precautions

1. Contract risk: Although Curve has passed the security audit, it does not mean that it can avoid all risks.

2. Impermanent loss: As a liquidity provider, you need to pay attention to impermanent loss. Learn about "impermanent loss": https://zhuanlan.zhihu.com/p/141925803

3. Exchange rate risk: Be aware of the fluctuations in stablecoin exchange rates, which may involve risks.

4. Mining fee: To participate in liquidity mining in Curve, you need to initiate on-chain transactions. Since the current mining fee is relatively high, if you need to participate, the mining fee cost is also a consideration that cannot be ignored.

learn more

• Curve official website: https://www.curve.fi/

• Curve Whitepaper:
  https://www.curve.fi/stableswap-paper.pdf

• Curve blog: https://guides.curve.fi/

• Curve Official Community:
  https://discord.com/invite/9uEHakc

Risk Warning: The contents of this article do not constitute any form of investment advice or recommendations .