Summary

• Convex Finance makes it easy to optimize providing liquidity on Curve and boosts CRV rewards by achieving liquidity mining en masse.

• The protocol offers two prominent ways to generate boosted rewards: by providing liquidity and by staking.

• The CVX token is the Convex platform’s native cryptocurrency. It is minted pro-rata for each CRV token claimed on Convex Finance by the liquidity providers of Curve.

Decentralized Finance allows crypto asset holders to generate passive income by providing liquidity to a decentralized automated market maker (AMM). One example is Curve Finance, a decentralized exchange (DEX) that incorporates an AMM into its protocol to allow the permissionless exchange of digital assets. Anyone can add its native CRV token to different liquidity pools and earn fees by locking up their crypto assets.

Providing liquidity to Curve Finance’s pools enables users to minimize the risk of impermanent loss because all pools are composed of assets nearly equivalent in value, such as stablecoins. Despite its benefits, Curve is quite confusing and intimidating to use for a DeFi newcomer. Convex Finance has recently grown in popularity because it addresses this problem. Convex makes it easy to optimize providing liquidity on Curve and boosts CRV rewards by achieving liquidity mining en masse.

What is Convex Finance?

Designed by a team of anonymous developers, Convex Finance is a platform that allows Curve Finance’s liquidity providers to earn boosted rewards without locking their CRV tokens. The platform charges no withdrawal fee and only minimal performance fees.

The protocol offers two prominent ways to generate boosted rewards: by providing liquidity and by staking.

By Providing Liquidity: Users can deposit Curve’s LP tokens in the Convex protocol. These liquidity providers are then paid on Curve with boosted CRV incentives because other users have also locked their CRV tokens with Convex. The boost is pooled from other CRV stakers. Essentially, Convex increases rewards by having lots of people use it.

If you were to do this whole process by yourself, you would have to first purchase Curve tokens, stake them to earn Curve LP tokens, and then become eligible for high yield. However, Convex optimizes this process by doing it en masse, generating CRV faster because more people are using it. Since you don’t manually lock up your own Curve tokens, they can be withdrawn anytime from Convex.

By Staking: If you’re not a liquidity provider, you can still use Convex to stake your CRV tokens and earn a share of boosted rewards. If you were to stake CRV tokens directly on Curve, you would earn veCRV that rewards you by sharing a portion of the Curve platform’s trading fees. Alternatively, you can stake CRV tokens on the Convex platform to earn cvxCRV tokens in return. The cvxCRV tokens provide you with the same benefits of veCRV – namely airdrops to veCRV holders and rewards from the Curve platform.

But cvxCRV tokens also grant additional rewards in the form of CVX tokens and a slice of Convex platform earnings. The catch is that staking on the Convex platform is a one-way transaction. Once you stake on Convex and convert CRV into cvxCRV, there’s no way to go back. Your CRV will have been locked into the Curve protocol and become Curve Liquidity Pool tokens, which are responsible for maximizing incentives for the entire Convex ecosystem.

What is CVX Token?

The Native Token Fueling Convex’s Ecosystem

CVX is the Convex platform’s native cryptocurrency. It is minted pro-rata for each CRV token claimed on Convex Finance by the liquidity providers of Curve. The token offers holders a share of Convex platform fees. CVX can be staked on Convex Finance to earn cvxCRV, which provides a share of Curve LP’s CRV earnings as well as a portion of the fees. As the Convex platform grows revenue, more value will be distributed to cvxCRV holders. In the future, CVX holders will also be able to vote on Convex Finance’s governance mechanism.

Tokenomics

cvxCRV (Tokenized veCRV)

• Tokenized deposits, minted 1:1 for each CRV locked in the platform.

• Stake to receive platform fees(CRV), CVX, and veCRV rewards(3Crv).

cvxFXS (Tokenized veFXS)

• Tokenized deposits, minted 1:1 for each FXS locked in the platform.

• Stake cvxFXS / FXS LP tokens to receive platform fees (FXS).

Convex Token (CVX)

• Stake to receive a share of platform fees as cvxCRV.

• In the future, CVX will be used for voting, such as gauge weights.

• CVX is minted pro-rata for each CRV token claimed by Curve LP's on Convex.

  • CVX / CRV mint ratio reduces every 100k CVX

  • CVX Mint formula/code here

Distribution

• Max Supply: 100 million

• 50% Curve LP rewards Rewarded pro-rata for CRV received on Convex

• 25% Liquidity mining Distributed over 4 years. (Incentive programs, currently CVX/ETH and cvxCRV/CRV)

• 9.7% Treasury Vested over 1 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 1 year. 100% of investment funds used to pre-seed boost and locked forever(no cvxCRV minted).

• 10% Convex Team Vested over 1 year

Understanding CVX

CVX is the native platform token for Convex Finance.

• CVX can be staked on Convex Finance to earn a share of Curve and Frax LP's CRV and FXS earnings.

• Platform fees (CRV, FXS) that would be returned to CVX stakers are first locked as veCRV and veFXS, respectively, and tokenized as cvxCRV and cvxFXS before being given to CVX stakers.

• Vote-locked CVX tokens receive additional fees from both Curve.fi and Frax Finance LPs.

Vote Locking CVX

• Vote-locked CVX is used for voting on how Convex Finance allocates it's veCRV and veFXS towards gauge weight votes and other proposals. Users must vote-lock their CVX tokens in order to participate. Vote locking requires users to time-lock their CVX tokens for 16+ weeks.

Obtaining CVX tokens

• CVX is rewarded to CRV stakers and Curve.fi liquidity pools pro-rata to CRV generated by the platform. If you are in a high CRV rewards liquidity pool you will receive more CVX for your efforts.

• CVX tokens were airdropped at launch to some curve users

Staking Curve LP Tokens

Taking your Curve.fi LP tokens and staking them with Convex Finance

Converting CRV + staking cvxCRV

Converting CRV into cvxCRV and staking it on the platform

Staking Frax LP Tokens

Staking LP tokens for use with Frax/Convex

Staking CVX

Use your CVX tokens on the platform

Convex Treasury

The Convex Treasury is given 9.7% of the total CVX supply, vested over one year. It is controlled by the Convex Multisig.

How will the treasury will be used?

CVX will be used for awarding or incentivizing actions / tokens / people / platforms that are deemed to have a positive influence on the well being of the Convex Finance platform.

Who will decide how the treasury will be used?

Currently the use of treasury funds will be at the discretion of the Convex Team. We hope to shift to a more community driven process in the future, much like Curve's Grant Council.

Concurrent Payments

• Pool incentives

• Gas reimbursement for development and deployment costs

One Time Payments

• Code arena audit for Locked CVX contract

• Planned Payments

Snapshot Donation (via Gitcoin)

• Bug Bounties

Risks

What financial risks do investors face?

Convex Finance has been built with safety and security in mind. However, there are inherent risks when interacting with any decentralized-finance smart contracts. The Covex team has vigorously reviewed it's smart contracts, and also pursued external auditors to identify potential vulnerabilities in the platform prior to launch.

Even so, the possibility of losing some or all of your funds is non-zero. Please exercise caution and work within your own risk framework when it comes to interacting with the platform.

Please see the Audits page for information on our external security audit with MixBytes. As well as review tests made via mainnet forking on within the GitHub repository.

As well as Convex Finance specific risks, users are also beholden to any risks that pertain to the Curve.fi platform and Frax Finance platform, as Convex integrates directly with them. Please also review their documentation and risk explanations before interfacing with either platform.