Convex Finance plays a key role in the Curve wars thanks to its unique incentive structure. Its sole use case is to accumulate as much TVL as possible to achieve the protocol’s goal of controlling as big a stake of Curve Finance as it can. In other words, Convex Finance targets only CRV holders and Curve liquidity providers and does so in two ways:

1. CRV holders receive cvxCRV for staking the CRV.
2. Curve LPs receive boosted rewards for staking their LP tokens with Convex.

Curve Finance issues veCRV (vote-escrowed CRV) for staked CRV that liquidity providers receive as a reward. In short, veCRV are time-locked CRV tokens with boosted voting power and rewards, which are both a function of the lock-up period of the underlying CRV. You can read more about veCRV here. CRV rewards can go as high as 2.5X of the initial rewards, but the higher the liquidity deposited, the more difficult it is to attain the maximum rewards.

Put differently, it is nearly impossible for any one party to stake enough liquidity to attain the maximum boost, which is where Convex Finance comes in. Convex acts as a cartel that pools the assets of individual stakers and benefits from their aggregated liquidity. Even low-level investors can stake their Curve Finance LPs with Convex and receive boosted rewards that would otherwise not be attainable. They receive:

• The interest rate on their provided liquidity.
• A share of the Curve trading fees.
• The boosted rewards from Convex.
• CVX tokens

Furthermore, you can stake your CRV tokens and receive cvxCRV to receive:

• veCRV rewards
• Convex trading fees
• CVX tokens
• Airdrops going to veCRV token holders

CVX has a total supply of 100 million CVX according to the following distribution:

• 50% Curve LP rewards Rewarded pro-rata for CRV received on Convex
• 25% Liquidity mining Distributed over four years. (Incentive programs, currently CVX/ETH and cvxCRV/CRV)
• 9.7% Treasury Vested over one year. Used for future incentives or other community driven activities
• 1% veCRV holders Instantly claimable airdrop
• 1% veCRV holders who vote to whitelist Convex Instantly claimable airdrop
• 3.3% Investors Vested over one year. 100% of investment funds used to pre-seed boost and locked forever(no cvxCRV minted).
• 10% Convex Team Vested over one year

cvxCRV are minted at a 1:1 ratio for every CRV staked. CVX tokens can be used to participate in proposals in the Convex Finance protocol.

Convex was audited by MixBytes, and the results can be found here. Its treasury is secured by a 3 of 5 multisig consisting of the following parties:

• C2tP - Convex Finance
• Winthorpe - Convex Finance
• Charlie - Curve Finance
• Tommy - Votium
• Sam - Frax Finance

However, a bug in one of the smart contracts at the beginning of March 2022 forced the team to re-deploy the vote-locking contract and caused a price drop in CVX.

Check out Solidly Exchange (SOLID) — a B2B stablecoin exchange.

Check out Redacted Cartel (BTRFLY) — a DAO offering rewards for CRV LP tokens.

Read our Guide to Crypto Donations.

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