Convex Finance helped boost yield achieved $20 billion TVL (total value locked) this Sunday. A few days back, it had become the second-largest DeFi protocol based on TVL. Decentralized projects use smart contracts in place of agents for financial services like trading, borrowing and lending.
Increased Finance in the Platform
Convex launched in May 2021, and could lock only $68 million initially. It attracted $1 billion in the first month and reached $10 billion in five months. In the last two months, it has received additional liquidity worth $10 billion because of increased demand for it. Users of Convex can access liquidity. This allows them to receive fees from Curve Finance, the stablecoin exchange based on ethereum. It is the largest decentralized finance protocol with $23 billion TVL. CRV or curved tokens are given in the form of yield farming benefits to the liquidity providers of Curve Finance. These tokens can be changed into veCRV (vote-escrowed CRV). Holders of veCRV can participate in the governance of the platform, receive airdrops, and earn higher fees and rewards.
Users locking CRV for more time get more veCRV because of time-locked tokens. They earn higher platform rewards. At the same time, the liquidity locked up in the system creates opportunity expenses for users. Convex has overcome this problem by pulling together all assets of its users. This allows it to buy curved tokens and exchange them with veCRV. Liquidity providers of Convex receive maximum rewards with this mechanism. They can receive the reward benefits without locking curved tokens for a long period.
CVX, the native tokens of Convex, currently trading at the price $47, is down by 6.6%. This network is currently valued at more than $2.2 billion in terms of market capitalization.