// GLOSSARY -- DEFI

What is Curve Finance?

1 min read Updated

Curve Finance is a DEX optimized for stablecoin and pegged-asset swaps, using a specialized AMM formula that provides extremely low slippage for trades between similarly-priced tokens.

WHY IT MATTERS

Curve solved a specific problem: trading between stablecoins (USDC ↔ USDT ↔ DAI) with minimal slippage. Its StableSwap formula concentrates liquidity around the 1:1 peg, enabling millions in swaps with negligible price impact.

This makes Curve critical infrastructure for stablecoin liquidity, liquid staking token trading (stETH ↔ ETH), and any same-peg asset swaps. Curve V2 extended to volatile pairs using concentrated liquidity.

The CRV token and vote-locking mechanism (veCRV) created the 'Curve Wars' — protocols competing for CRV votes to direct liquidity incentives to their pools.

FREQUENTLY ASKED QUESTIONS

Why is Curve better for stablecoins?
Its StableSwap formula assumes tokens are near the same price, concentrating liquidity around the peg. This provides 10-100x lower slippage than standard AMMs for stablecoin pairs.
What are the Curve Wars?
Protocols compete for veCRV votes that direct CRV incentives to specific pools. More incentives attract more liquidity. Convex Finance aggregates CRV to amplify voting power.
Can I use Curve for non-stablecoins?
Yes. Curve V2 pools handle volatile pairs. But Curve's core advantage is pegged-asset trading — for volatile pairs, Uniswap V3 concentrated liquidity is often more competitive.

FURTHER READING

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