Game of Thrones NFT, SBF's new blog & Crypto predictions for 2023
Protocol of the week: Curve Finance 📈
Welcome to the 43rd edition of DeFi Fridays!
Access all the previous editions here.
101 today:
Protocol of the week: Curve Finance. 📈
Major happenings in the ecosystem. 🔰
In this week’s good reads:
Crypto predictions for 2023.
Stader Labs’ Ethereum staking litepaper.
Protocol Of The Week: Curve Finance
What is Curve?
Curve Finance is a Decentralized Exchange and Liquidity Provider built on the Ethereum Mainnet.
It is an Automated Market Maker (an AMM is an algorithm that uses mathematical formulas written in code to carry out trades in the DeFi ecosystem. It eliminates the need for an intermediary to process transactions), which specializes in trading stablecoins and other assets whose prices are closely related.
What are they doing?
They provide a cheaper alternative to trading crypto tokens as compared to other exchanges, by offering low slippage (slippage is the difference in the price of the token between initiation and completion of the transaction) and transaction fees.
They also let users provide liquidity in the ecosystem by allowing them to stake their tokens on the platform.
How are they doing it?
Protocols use a certain kind of logic to determine how many tokens will be exchanged for how many pair tokens in a liquidity pool.
The most famous one is Uniswap’s constant-product invariant: x*y=constant (the purple dashed hyperbole in the image). The problem with this invariant is that as one deviates from the center, the cost one has to bear to obtain a token gets exponentially higher.
On the other end of the spectrum is the constant-sum invariant: x+y=constant (the red dashed straight line). This gives a 1:1 return for the token pairs in a liquidity pool which is unattainable in the real world.
Curve is the first protocol to develop an invariant which lies in-between both these extremes, providing lesser fees, and greater liquidity to the user (blue line). It increases the range of the optimum trades, thereby offering a more viable solution for swapping tokens.
Learn how to navigate Curve Finance here.
Check out stats here.
We explain one DeFi Protocol every Friday:
Major News in the Ecosystem:
SBF publishes an in-depth blog about the FTX saga. ⚠
Polygon all set to launch hardfork and make network upgrades in January. 🔰
Nifty’s launches Game of Thrones NFT. 🔰
More Good Reads:
✍️Crypto predictions for 2023 by Bankless.
That’s it for today, folks. See ya next Friday. 🧢
Disclaimer: Nothing included in DeFi Fridays should be taken as financial advice.