Convex Finance

Convex finance is a DeFi protocol built on top of one of the largest stablecoin exchanges - Curve Finance. Convex rewards liquidity providers on Curve as well as stakers of Curve DAO tokens with bonus DeFi yield. In short terms, Convex Finance is a boosted Curve staking platform. CRV stakers and liquidity providers receive liquidity mining rewards in the form of CVX. Convex has no withdrawal fees, and the minimal performance fees are used to pay for gas and get distributed to CVX stakers.

Since Convex is heavily tied to Curve, some different assets need to be explained before CVX token itself. Curve is a decentralized exchange focusing on stablecoins. Lower volatility decreases the impermanent loss risk, making it more appealing to liquidity providers. Curve has a simple, yet effective reward structure. CRV tokens are given as yield farming rewards and are convertible into veCRV. veCRV are time-locked tokens, which can be used in several ways. Receiving airdrops, governance voting, and most importantly, boosting liquidity pool rewards.

Convex Finance utilizes the veCRV reward boosting system and applies it to all Curve LP token holders. Users of Convex basically create a shared liquidity pool. This way, the platform earns more CRV, which is then converted into veCRV. The boosts gained from veCRV are applied to all protocol participants.

The passive income users can receive from Convex Finance comes in four forms. The previously discussed boosted CRV rewards, base rate interest, small portion of Curve trading fees, and CVX tokens. CVX is gained as a reward for Convex liquidity mining.

Convex users can also stake their CRV token for cvxCRV. This conversion gives the protocol participants the following benefits:

• veCRV rewards from Curve exchange
• A slice of Convex platform earnings
• CVX tokens on top of everything else
• Airdrops to veCRV holders

The CVX token in itself is the platform's utility token, and also its governance token. It is used to receive shares of the protocol's platform fees. To do that users need to stake their CVX on the Convex Finance platform. Staked CVX will receive its portion of the fees as cvxCRV. Users can later trade out their cvxCRV through the cvxCRV/CRV liquidity pool.