Understanding the Benefits of Convex Finance (CVX)
Most of the decentralized finance platforms charge high gas fees and withdrawal fees. Convex finance appears to be a reasonable solution as it provides more earning opportunities for investors without having to lock their crypto tokens. Let us understand the benefits of Convex Finance (CXV).
Decentralized finance is a useful option for crypto investors who like to earn passive income. The users can lock their crypto tokens in liquidity pools to earn rewards. The problem is that the users need to lock their tokens for a set period of time to earn rewards. And they can’t get any reward if they redeem their tokens before the completion of the period.
What is Convex Finance (CVX)?
Curve finance is a decentralized exchange built on Ethereum. Convex offers higher returns through yield farming as compared to other decentralized exchanges. The platform primarily deals with stablecoins due to which users don’t have to worry about price fluctuation. And that’s why Convex also enables users to earn rewards without having to lock their digital assets.
Moreover, it offers low-performance fees and has almost zero-to-no withdrawal fees. The platform was designed with the goal of generating more liquidity for Curve finance while providing higher returns to investors.
Convex attracts investors by offering boosted Curve staking rewards and other earning opportunities. The platform gained more attention when it announced that investors don’t have to lock their tokens for years. The platform offers its native token, CVX, as a reward to the liquidity providers.
CRV token holders can also earn cvxCRV rewards by staking their CRV tokens on Convex Finance.
Benefits Of Convex Finance And Features
Convex Finance offers multiple ways to generate passive income.
Staking Curve Finance LP Tokens
Many CRV token holders are reluctant to stake their tokens in Curve Finance as they’re required to lock the tokens for almost four years. Convex Finance has waived this requirement so that everyone can generate passive income from their digital assets. The CRV token holders can add their CRV tokens to the liquidity pool to earn the boosted staking rewards.
Staking Frax Finance LP Tokens
The users can also earn rewards by staking Frax Finance LP tokens. But the platform offers additional benefits for users who commit to stake their tokens for up to three years. The average user can earn 7% of the FXS whereas the long-term stakers can earn 10% of the FXS.
Staking cvxCRV
The users can explore more earning opportunities by converting their CRV tokens into cvxCRV. The platform charges a minimal fee for converting these tokens. By staking cvxCRV tokens, the users can receive CVX rewards, receive Curve trading fees, and earn through airdrops.
Staking CVX
CVX is the native token of Convex Finance. The users can receive cvxCRV tokens as a reward by staking these tokens. The platform transfers 5% of the entire platform’s fee to the stakers. The best part is that the platform doesn’t charge any trading fees at the time of staking or unstaking CVX tokens.
Furthermore, the users can reinvest their earned rewards to generate more money or they can withdraw the rewards without any withdrawal fees.
Governance
The platform doesn’t just offer rewards for locking CVX tokens but it also provides governance rights to the users. The users need to lock their tokens for approximately 16 weeks to participate in the governance.
Convex Treasury
Convex Treasury is designed to incentivize users based on their contribution to the platform. Currently, 9.7% of the total CVX token supply is under the control of the Convex team. However, the team is intended to shift this power to community governance in the future.
Convex Finance Brief History
Convex Finance was launched following the tradition of Bitcoin because the names of its founders weren’t published in the white paper. The project was whitelisted on Curve Finance in April 2021 and it was launched in May 2021.
A huge number of CRV token holders deposited their tokens into Convex. Therefore, the platform now has a say in Curve Finance’s governance.
How Does Convex Finance Work?
Convex Finance offers simplified staking opportunities as compared to Curve. The CRV token holders can stake their tokens on Convex after depositing them on Curve Finance. Convex Finance has devised a mechanism to equally distribute rewards among token holders based on their stake in the liquidity pools.
Unlike yearn.finance, Convex directly sends rewards to the liquidity providers. The platform offers cvxCRV tokens as a reward when the users stake their CRV tokens into Convex. The users can choose to receive CRV or CVX tokens as a reward for their contribution.
Convex Finance Tokenomics
CVX is the native token of Convex Finance that is used to pay trading fees. CVX tokens are also offered as a reward to the liquidity providers. Moreover, the CVX token holders can also propose and vote for several changes within the platform.
CVX has a total supply of 100 million tokens. The convex team has secured 9.7% of the total supply in Convex Treasury that will be used for the project’s growth. 50% of the total supply will be distributed among liquidity providers over time. Similarly, the platform is going to use 25% tokens for liquidity mining over a period of four years.
With a circulating supply of 72.5 million tokens, CVX has a market cap of $230 million. It ranks among the 100 best cryptocurrencies in terms of market cap.
Conclusion
Convex Finance is an innovative decentralized exchange that offers multiple earning opportunities for crypto investors. It eliminates the need for locking up the tokens for a set period of time. The platform also offers earning opportunities for CRV token holders. Moreover, it has a zero-to-no withdrawal fee.
If you need more information about how Convex Finance works, feel free to get in touch with us.