Curve Wars

4 min readApr 19, 2022


What is CRV and why is it so valuable? Here’s a guide.

In this Article:

  • What is Curve Finance
  • Vote-locking and veCRV
  • How vote-locking aligns incentives
  • Convex

Curve Finance

@CurveFinance is a decentralized exchange for Stablecoins. Its TVL is around $20B. CRV is Curve Finance’s governance token.

Curve works because of its decentralized AMM. This AMM is special because it deploys a StableSwap invariant model that’s effective and allows for low-slippage cross market exchanges. Curve also uses a vote-locking (ve-tokenomics) model that allows users to vote on the future token emissions.

Liquidity providers can deposit stablecoins into pools and earn trading fees. Pools require liquidity so that Stableswap (swap mechanism) can operate optimally. Incentives for LP’s are given via the liquidity mining program. Essentially you earn CRV for depositing CRV.

CRV is valuable because it allows holders to claim 50% of Curve’s trading fees and influence the allocation of further issued CRV. The more CRV you have now, the more CRV you stand to get in the future. CRV is the scarce resource over which the Curve Wars are being fought.

Vote-locking and veCRV

Within Curve there is a governance vote on which Liquidity Pools (LP) receive the daily CRV emissions. veCRV allows governance over the pools which make up the protocol. CRV can be locked to receive veCRV. More veCRV voted in an LP bring proportionally higher rewards in the form of emissions.

veCRV stands for voting escrow CRV. It is non-transferrable. veCRV can be locked for a period of for 1 to 4 years at 0.25 to 1 conversion rate. Vote-locking CRV for 1 year gives you 0.25 veCRV. A user’s veCRV balance decays linearly over time.

How vote locking aligns incentives

Vote locking aligns incentives of token holders with Curve’s incentives.

From Curve’s perspective, vote locking causes CRV tokens to be taken out of the circulating supply for a period of time. This lowers supply driving up price and market cap. Moreover, veCRV is non-transferrable, so vote-lockers are committed to their position for the duration of the lock.

CRV holders benefit from vote-locking as well. They gain additional trading fees.

Since September 2020, 50% of all trading fees on Curve are distributed to veCRV holders. These trading fees are disbursed in the form of Curve’s 3pool LP tokens, where the 3pool consists of DAI, USDC, and USDT.

Certain Curve pools disburse rewards to LPs vs CRV tokens. This is on top of trading fees. These rewards are determined by gauge weights. Gauge weights are voted on by veCRV holders. Participants can allocate percentages of their veCRV holdings to various pools. The sums of the veCRV balances allocated to each pool determines their gauge weights.

About 633K CRV is emitted daily to distribute to LPs. This 633K CRV is split across the Curve pools in proportion to the pools’ gauge weights.

veCRV, and by extension CRV, is valuable because it grants the power to allocate more CRV

veCRV can also give you a “boost” of up to 2.5x on the pools you are LPing for.

As an LP, you could maximize your rewards by:

  1. depositing into the liquidity pool,
  2. staking the LP token on Curve
  3. locking up a sufficient amount of CRV as veCRV. Calculate this at
  4. Vote on the gauge weight for the pool containing your deposited liquidity to get a maximum of 2.5x boost for your share of CRV.


Under Curve’s model, whales benefit the most. They have a lot of capital at their disposal, so they are more likely to have enough veCRV to put themselves in a position to farm more CRV.

Convex’s token vlCVX aims to solve this. vlCVX attempts to capture the power of governance of CRV emissions and introduce segregation between governance and returns on veCRV. Convex has done this by monopolizing/winning the Curve Wars. Over 40% of veCRV is held by Convex.

On Convex, LPs enjoy CRV emissions boos of around 1.7x. They also earn their share of trading fees. Moreover, they don’t have to hold and veCRV.

CRV holders without liquidity can offer their governance voting power to Convex. They get cvxCRV in return. They’re able to earn the veCRV rewards + additional revenues. cvxCRV can also be exited back into CRV via secondary markets, like the CRV-cvxCRV pool on Curve, Sushiswap, and Uniswap.

On Curve:

  • LP without veCRV: you earn basic trading fee for the specific LP and 1x CRV emission.
  • veCRV without LP: you earn 50% trading fee of all LP revenue on Curve.
  • LP with veCRV: you earn basic trading fee for the specific LP, up to 2.5x CRV emission and 50% trading fee of all LP revenue on Curve

On Convex:

  • LP: you earn basic trading fee for the specific LP, ~1.7x CRV emission, and CVX.
  • cvxCRV: you earn 50% trading fee of all LP revenue on Curve, 10% of all LP revenue on Convex, and CVX.




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