Meta Digest

Convex Finance Surpasses DeFi Staples in Current $20B Total Value Locked

Source: Zapper

Convex Finance’s total value locked terms have surpassed DeFi giants like AAVE and MakerDAO. It is making a major impact in the world of DeFi as it hits the second spot as the largest DeFi protocol.

During the weekend, the stablecoin yield optimizer reached a total value locked of $20 billion for the first time and now secures around $21.3 billion. It sits just behind Curve Finance, which holds the highest liquidity in DeFi protocol, with only more than $24 billion.

Following this current leap, Convex carries more value than AAVE and MakerDAO – two advanced DeFi projects that piloted with Ethereum and are frequently dubbed as “blue chips” of the industry. 

Convex taking on the job with Curve has created a way for liquidity providers to earn the most they possibly can on Curve’s stablecoin pools.

Curve’s native token, CRV, gives token holders a right on a portion of the trading fees and staking rewards in addition to the voting power in the protocol’s governance. Holders of CRV tokens are required to lock up their investments for a maximum of four years as part, or rather in accordance with the mechanism called vote escrow.

Curve is a project that has been around since DeFi first started to gain popularity on Ethereum, but Convex falls under the newer group of projects called “DeFi 2.0.” It piloted in May of 2021 and made value by allowing holders of CRV gain high liquidity mining rewards with no extensive locking periods. 

That means CRV holders and Curve liquidity providers can deposit their tokens via Convex to earn some serious money. The protocol’s eruptive growth over the last eight months is thanks in part because of this incentive system. 

Apart from Convex, established DeFi projects such as Yearn.Finance and StakeDAO have pursued liquidity from CRV holders competing with Convex by rendering incentives to gain appeal for CRV holders to lock their tokens. On the other hand, Dopex Finance has enabled a way for market participants to profit from option vaults. 

This type of competitive environment has been called the “Curve Wars.” It is where projects contend to secure that their Curve Pools attain more CRV rewards. 

Convex has gained an advantage from the current growth of their total value locked. Lately, it is trading up to 115.9% in the last 4 weeks and is at $48.05. 

Opinions expressed by Meta Digest contributors are their own.

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