Yearn and Convex Are Competing for Curve Tokens

Nathan van der Heyden

Jun. 5, 2021

In the race for CRV tokens, Curve Finance investors seem to be winning whatever happens.

Yearn and Convex Are Competing for Curve Tokens

Shutterstock cover by Vasyl Shulga

Key Takeaways

Convex Finance is a new DeFi protocol offering yield farming optimization on Curve Finance's stablecoin pools.
In order to boost yields, both Convex Finance and Yearn Finance need to lock CRV tokens in Curve Finance's vesting escrow.
As a result of the battle between the two projects, CRV has jumped 59.5% in the last week.

Optimizing yield on Curve Finance’s pools is Yearn Finance’s bread and butter, but newcomer Convex Finance is gaining rapid traction as the two DeFi protocols fight for Curve’s liquidity provider tokens.

Yearn vs. Convex

In what some are calling “The Curve Wars,” DeFi protocols are battling to attract liquidity from Curve Finance (Curve) investors.

The two biggest contenders of this race to lock CRV are Yearn Finance (Yearn), a popular yield farming optimization protocol, and Convex Finance (Convex), one of DeFi’s newest protocols. Convex is offering attractive interest rates on veCRV tokens by incentivizing stakers with its own governance token CVX. DeFi users can earn veCRV by vesting CRV for an extended period of time. It is also incentivizing SUSHI holders by rewarding those who stake cvxCRV in Sushi’s cvxCRV-CRV liquidity pool. The cvxCRV token can be earned by staking CRV in Convex.

In essence, the fight between the projects centers on which one can offer the best returns on Curve’s stablecoin pools. While Yearn can’t incentivize participation with its governance token YFI, Convex can. Although Yearn provides better yield optimization, the liquidity mining rewards have seen Convex surpass Yearn’s yield on many Curve pools. This has helped the young protocol to quickly surpass $1 billion in total value locked.

2 weeks, 3 commas.

$1,000,000,000+ TVL pic.twitter.com/NDOVabZB11

— Convex Finance (@ConvexFinance) June 1, 2021

In the end, the real winners of this competition might be Curve and CRV holders. While Yearn and Convex seek to offer the best yields to their users, they often have to lock significant amounts of CRV to do so, buying it from the open market. The “Curve War” is really a war for CRV, which, no matter the outcome, benefits Curve. CRV is up 59.5% in the last week. It’s currently trading at $2.57.

Disclaimer: The author held ETH and several other cryptocurrencies at the time of writing. Yearn Finance founder Andre Cronje is an equity holder in Crypto Briefing.

Disclaimer