Checking the working of Curve Finance- a DeFi platform

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Curve Finance is a decentralised exchange (DEX). Although similar to other DEXs such as Uniswap and Balancer Curve Finance focuses on the exchange of stablecoins, such as USDC or DAI, and on wrapped versions of assets like wBTC or tBTC.

DeFi is an abbreviation for decentralized finances. If you are an active crypto trader then apart from the crypto wallets, exchanges, and Decentralized applications (dApps), you might also heard of DeFi. The crypto market is expanding day-by-day that even some people are considering their professional careers in this field. However, several factors play a crucial role in adding pace to the trade and investment activities and one such important aspect associated with the crypto trade is DeFi.

People are not that familiar with this concept and its functioning. Thus, to introduce you to this concept, we have prepared this read. This information is concerned with Curve Finance, a DeFi body in the crypto market.

What is a Curve Finance?

Curve Finance is a decentralized finance platform that emerged to uplift the trade activities of investors by offering them great options to trade with. Or in simple words, we can define DeFi as a financial ecosystem that is built on blockchain technology. The platform is specially engaged in stablecoins. As the platform is engaged in stablecoins, it offers crypto traders an extremely low slippage fee. With the involvement of stablecoins, the exchange lets the investors trade at the best prices.

There is a vast list of the pairs offered by the platform and some of them are DAI, USDC, USDT, TUSD, BUSD, sUSD, and BTC as well. Moreover, investors experience a light-fastening and efficient trade while engaging in the listed pairs.

The working of the Curve Finance

To facilitate crypto transactions, Curve Finance uses the AMM protocol. Automated Market Makers briefly called AMM, with the employment of the algorithms lead to efficiently quote tradable assets into the liquidity pools. Furthermore, this technology works on two major components and they are:

Liquidity pools: A place where liquidity is offered by the investors for stablecoins or other tokens supported by the platform.

A module: A module is required for exchanging and lending stablecoins.

The above-covered two components come together to create a mechanism to aid in an easy trade of the stablecoin. Moreover, it also gives a way to earn money from their investments. The trade of digital assets via AMM is done through the liquidity pools, instead of directly exchanging them between the buyer and the seller. In return for providing liquidity to the pool, liquidity providers earn a fee.

Curve finance staking is an alternate way through which investors can earn passive income by locking the eligible funds for a determined time period.

Final Words

Curve finance staking because of its stability and composability has become one of the most popular platforms in DeFi. The elements that compromise this platform make it an interconnected hub of the DeFi ecosystem. In a nutshell, we can conclude that this platform offers investors a new cheaper, safer, and more direct token exchange alternative. Moreover, this DeFi platform cuts down the high transaction fees and simplifies the exchange of digital assets directly through a single transaction only.