Curve was originally intended for exchanging crypto, but this winter everything changed, when Convex came.
The thing with Convex actually started in the end of the summer, when Curve had begun gaining popularity and some guys decided to grab their piece of cake from that.
It all started with a creation of stablecoin focused AMM DEX, called Curve. Instead of using a book of orders (a list, where all the exchange offerings are sorted by price and liquidity) Curve uses a special price creation formula. It’s worth noticing that this formula only works with assets, that have a similar price range. So, if a USDT was worth 0.7 dollars the formula wouldn’t work between USDT and all the other one dollar stablecoins.
So Curve had that CRV governance coin, that could be exchanged into veCRV, which was then used to decide the emission percents of CRV mining. That’s when Convex appears and offers everybody staking CRV on their platform with a bonus, called cvxCRV. cvxCRV didn’t give you any privileges on the Curve platform, but it could be easily exchanged into veCRV by the cvxCRV/veCRV pool.
By performing this trick and gathering a huge audience, Convex was able to collect a third of all the CRV available in it’s vault and then successfully convert it into veCRV to usurp the voting with veCRV on Curve.
Earlier, many companies and venture funds have invested their money into Curve, what made such manipulations dangerous for the leading investment groups of the market.
Now, companies have nothing to do, but buy CVX or bribe the CVX holders to gain a small number of votes in the Curve DAO and the story doesn’t seem to end there.
FRAX, that originally was a part of the Curve pool is giving a forth of their governance token’s emission to Convex, so CVX holders manage the FRAX protocol by themselves.
That means projects are ready to become part of the Convex DAO and there might be even more waiting for us soon. We’ll see where this goes….