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Convex Finance, a yield-boosting app, passed $20 billion in total value locked (TVL) on January 2, a few days after becoming the second-largest DeFi protocol by TVL, CoinDesk reported. Convex is a platform that boosts rewards for CRV stakers and liquidity providers in a simple and easy to use interface.
Convex helps users earn CRV with a better boost
On Convex, users deposit Curve LP tokens to earn Curve trading fees, boosted CRV and CVX tokens. Boost is pooled from CRV stakers so the risk of locking yourself is excluded. You can stake and earn additional CRV on top of CVX tokens and Curve trading fees. You can stake your CVX rewards back into the platform and earn platform fees.
Platform locked only $68M after launch less than a year ago
DeFi projects rely on smart contracts instead of intermediaries for financial services such as lending, trading, and borrowing. According to DeFi Llama, Convex locked only $68 million after its launch in May last year.
Eventually, it surpassed older projects. It took the platform only a month to attract $1 billion and five months to hit $10 billion. In the last two months, growing demand led to an additional $10 billion in liquidity.
Users access liquidity and earn fees
The platform makes it possible for users to earn fees and access liquidity from Curve Finance, a stablecoin exchange based on Ethereum. Curve Finance is the biggest DeFi protocol with $23 billion in TVL.
CRV up 7% in last 24 hours
CRV was trading at $6.57 at the time of writing, up 7% in the past 24 hours. The tokens of Curve DAO are issued as yield farming rewards to liquidity providers on Curve Finance. Providers can convert them into vote-escrowed CRV (veCRV). Holding these lets users get airdrops, earn higher fees and rewards, and take part in platform governance.
Convex pools user assets to buy CRV
CRV tokens are time-locked, which means users are encouraged to lock their CRV for a long time to get more rewards and more veCRV. A downside of this mechanism is that is incurs costs by locking up liquidity. To resolve this issue, Convex pools all user assets to buy CRV tokens, convert them into veCRV, and offer liquidity providers a maximum amount of rewards.