Whales choose Curve for altcoin swapping. What makes it so special?

The decentralized exchange (DEX) Curve, optimized for stablecoin swapping, is used the most even in the midst of crypto winter by large traders known as whales. According to Kaiko Research, Curve has experienced a significant surge in popularity over the past year, with trading volumes recently hitting record highs.

As of December, the average trade size across all stablecoin liquidity pools (A liquidity pool is an aggregate of digital assets accumulated to provide trading on a decentralized exchange.) was around $50k. At the time of the FTX crash, the average trade size on Curve V1 was as high as $200k. By comparison, rival DEX Uniswap V3 had an average transaction size of $3k to $7k across all pools. On centralized exchanges such as Coinbase, the average deal size is typically from $2k to $4k.

What is Curve (CRV)?

The Curve is a decentralized stablecoin exchange launched in 2020 that uses an automated market maker (AMM) to manage liquidity. 

The Curve has also launched a decentralized autonomous organization (DAO) with its own CRV token. The DAO uses the Ethereum-based Aragon creation tool to connect multiple smart contracts used to provide liquidity to deposited user funds. 

The launch of DAO and the CRV token brought additional profitability given the use of CRV for management, as it is awarded to users based on liquidity commitment and length of ownership.

Curve is aimed at those engaged in DeFi activities such as yield farming and liquidity mining, as well as those seeking to maximize income without risk. The platform earns by charging a small fee that is paid to liquidity providers.

The Curve DAO token (CRV) price has been rising for a month and as of December 13 is $0.638116 with a 24-hour trading volume of $45,289,153. CoinMarketCap’s current rating is #84. There are 531,583,334 CRVs in circulation and the maximum supply is 3,303,030,299 coins.

The Curve DAO token managed to break the $5 mark in early 2022. On Jan. 3, 2022, it launched a new pool with the Threshold Network token, and a day later CRV reached a price of $6.74. However, the value then steadily declined and dropped below $1 in June.

If you’re interested in swapping alternatives, you can read about the 10 best decentralized exchanges here.

Pros and cons of the Curve

Pros

• One of Curve’s main advantages is that its currency exchange mechanism is extremely simple. Its smart contract is quite simple, so maintenance and security improvements are very high. The exchange has an active team to investigate security issues.
• The Curve usually offers exchanges with much lower commissions than on other platforms.
• Token trading on Curve involves fairly low risk. Transactions consist of a single transaction with minimal attack surface.

Cons

• One of the main disadvantages of Curve is its integration with other platforms to maximize profits. Integrating with Compound, for example, puts Curve’s assets on that platform at risk. Thus, a mistake in the Compound can negatively impact the Curve and its liquidity providers.
• High reliance on very dynamic markets causes the platform’s returns to fluctuate widely. Pools with high returns attract liquidity over time and often turn into pools with low or medium returns over time.