In 2022, the crypto market could be a vastly different landscape. In 2021, we witnessed a bull run that saw many top coins reach new all-time highs (ATH). We also saw DeFi projects steam, and NFTs become a hot new topic. So, what can we expect in 2022?
Industry experts and analysts predict many emerging cryptocurrencies to rally in 2022. Curve is one such platform. However, before we talk about Curve's potential as an investment, let us look at what it is and the factors that could make it a stellar investment.
Curve: What Is It?
Curve is an exchange protocol based on Ethereum, providing stablecoin transactions with low slippage (better price even for big trades). In that, it is similar to Uniswap. However, Curve’s algorithm is specially designed for stablecoin exchange, achieving low slippage and low handling fee (0.04%).
While providing liquidity, Curve liquidity providers can obtain transaction fees and additional benefits from other DeFi protocols, such as Compound, Yearn, Synthetix, RenBTC, etc.
Is Curve A Millionaire Maker Investment?
Curve is one of the most popular platforms in DeFi because it favours stability and composability over volatility and speculation. Its composable elements make it an interconnected hub of the DeFi ecosystem. Moreover, with the CRV token as a governance mechanism, it is a truly decentralized organization that belongs to its users.
The high yield rate on CRV is what most find appealing about Curve Finance, which has coincided with its meteoric rise to prominence. As a result, it has found favor among DeFi enthusiasts and traders alike, and the interest will likely keep growing.
Since Curve is audited, the protocol has a minimized risk for traders and investors alike. For example, the Curve DEX was audited twice, and Curve’s DAO and CRV smart contract were done three times.
As for safety, the Curve Finance protocol even has a bug bounties program with a reward of up to $50,000. So for these and many more reasons, Curve could be a millionaire-maker investment.
Factors That Could Make Curve A Millionaire Maker
1. Stable Liquidity Pools
Curve’s unique liquidity pool model has increased its reputation in the crypto community.
Curve was launched in 2020 to create an AMM exchange with low fees for traders. Meanwhile, the platform wanted to provide an efficient fiat savings account for liquidity providers.
By focusing on stablecoins, the Curve protocol allows investors to avoid more volatile crypto assets while still earning high-interest rates from lending protocols. Furthermore, compared to other AMM platforms, the Curve model is conservative in that it avoids volatility and speculation in favor of stability.
Curve makes it very easy for users to swap between two similar ERC-20 tokens, including stablecoins (such as DAI and USDC) and wrapped Bitcoin tokens like renBTC and WBTC. The Curve protocol is said to use liquidity pools for the purpose of conducting automated trading. Each pool contains specific pairs of tokens, which are therefore supported within the liquidity pool itself.
Assets in the Curve pool are stable to each other in price. Hence, trading between them causes minimal volatility. On the other hand, on AMMs like Uniswap or Balancer, the volatility is high as liquidity pools can be made up of any token.
By limiting the pools and the types of assets in each pool, Curve minimizes impermanent loss, an AMM phenomenon in which liquidity providers suffer a loss in token value relative to the market value of that token from volatility in a liquidity pool.
2. Composability: Incentivizing Liquidity Providers
The Curve protocol’s unique network architecture makes it a stellar investment option.
On an AMM exchange such as Uniswap, you can earn fees whenever a trade is carried out. On Curve, trading fees are lower than on Uniswap. Users can also earn rewards from outside of Curve with interoperable tokens.
For example, when DAI is lent out on the Compound platform, it is exchanged for a liquidity token called cDAI, which automatically accumulates interest for the holder. Holding cDAI means you have a right to withdraw DAI from Compound plus interest. Curve users can use cDAI in its liquidity pools, thus achieving a second layer of utility and potential earning from the same investment.
The ability to use Compound’s cTokens on Curve exemplifies the composability benefits in the DeFi ecosystem. And Compound is just one example of an external DeFi protocol with which the Curve protocol integrates. The protocol also integrates with Yearn Finance and Synthetix to maximize incentives for liquidity providers.
3. CRV Tokens
Buying CRV tokens now is the easiest way to become a part of Curve’s growing ecosystem.
In August 2020, the Curve protocol started its journey toward decentralized governance by launching a decentralized autonomous organization (DAO) to manage changes to the protocol. Most DAOs are controlled by governance tokens that give voting rights to holders of the coins. In this case, the Curve DAO is controlled by the CRV token.
You can buy as well as earn the CRV token through yield farming when you deposit assets into a liquidity pool and earn tokens as a reward. For example, by providing DAI to a designated Curve liquidity pool, users earn the CRV token on top of fees and interest.
Yield farming the CRV token increases the incentives to become a Curve liquidity provider. Thus, not only do users gain a financial asset, but also the ownership of a growing DeFi protocol.
Anyone with a minimum number of CRV tokens can propose updates to the Curve protocol. These updates can include changing fees, changing where fees go, creating new liquidity pools, and adjusting yield farming rewards. Holders vote to reject or accept a proposal by locking up CRV tokens. The longer the CRV token is locked up, the more voting power it has.
The DeFi hype has also played a good part in keeping Curve Finance around investors’ view. The introduction of curve DAO and token CRV has ensured extra profits for the protocol users and investors. Curve covers a diverse range of profit-bearing crypto segments like liquidity mining, yield farming, and trading.
As Curve is growing at an alarming rate, it could become a millionaire-maker asset in the future.
Read Also: Why Curve Is Going To Explode
Curve Finance has shown a pioneering spirit in the DeFi sector. The platform has even utilized its protocol to benefit others. The network provides a way to connect with other DeFi platforms using Curve pools. For example, you can find pools with Yearn Finance, Uniswap, and Compound. This approach has helped drive more adoption in the DeFi market.
For these and more reasons, Curve could become a millionaire-maker investment, making now a good time to buy CRV tokens.