Traversing the three rounds of bulls and bears, thrilling revival, and continuous profit: the real reason why Curve has become the "Liquidity Hub" of DeFi.

Original Title: The Journey of Curve: A DeFi Fortress Based on Liquidity, Incentive Mechanisms, and Community Building

Original author: Karl Marx OnChain, crypto KOL

Source of the original text:

Reprinted: Daisy, Mars Finance

Curve did not survive each bear market by luck.

It survives because it is built for one thing: sustainability.

From a mathematical experiment in 2019 to becoming a global liquidity pillar by 2025, Curve's development journey is an evolution of real yields, incentive alignment, and community resilience.

Let's review year by year:

2019: The birth of StableSwap (a new AMM concept)

At that time, DeFi was still in its infancy. Stablecoins like DAI, USDC, and USDT were very popular, but traders faced high slippage, and the earnings for liquidity providers (LPs) were also very low.

Michael Egorov discovered this flaw and launched StableSwap, a new AMM model that combines constant-sum and constant-product functions, resulting in slippage for stable assets approaching zero.

This is not just another DEX concept.

This is a mathematical breakthrough that brings deep liquidity and real returns to LPs.

StableSwap has become the DNA of Curve Finance: the first truly optimized AMM for stablecoin efficiency.

2020: The Dawn of Curve Finance and veTokenomics

At the beginning of 2020, Curve Finance officially launched, with a clear mission:

Providing stable returns through efficient stablecoin liquidity. However, its true innovation occurred in August 2020 with the launch of CurveDAO and the veCRV model (voting escrow mechanism), which is a tokenomics design that redefines Decentralized Finance governance.

Curve no longer rewards short-term participants, but instead incentivizes long-term collaboration:

Obtain veCRV

Vote to decide which liquidity pools receive rewards.

Obtain higher returns

This structure has built a virtuous flywheel, transforming LPs into stakeholders and initiating the legendary “Curve Wars,” where DAOs like Convex, StakeDAO, and Yearn are engaged in fierce competition for the power of veCRV.

By the end of the year, Curve's TVL exceeded 1 billion USD, solidifying its position as a pillar of Decentralized Finance liquidity.

2021: Expand Liquidity, Deepen Community

In 2021, Curve proved its scalability.

Its daily trading volume reaches 1 billion dollars, generating 400,000 dollars in fees every day, all distributed to veCRV holders.

The launch of Tricrypto (USDT/WBTC/WETH) has allowed Curve to go beyond the scope of stablecoins.

While other projects pursue unsustainable profits, Curve focuses on real returns and liquidity depth.

Each transaction creates value, and every LP gains real profits.

Meanwhile, the community is gradually maturing, governance voting is increasing, and bribery (bribes) behaviors are intensifying. The “Curve War” has turned governance into a masterpiece interwoven with economics and game theory.

Curve is no longer just a protocol, but an economic ecosystem.

2022: Bear Market Stress Test

As the 2022 bear market severely impacted “Decentralized Finance 2.0”, Curve's fundamentals were put to the test, but it performed strongly.

Even though liquidity in the DeFi space is generally depleted, Curve's StableSwap invariant system and veCRV structure still maintain a consistent incentive mechanism:

In January 2022, the TVL exceeded 24 billion USD, reaching its peak. By mid-2022, Curve still had over 5.7 billion USD in TVL.

LP earns stable fees from stable trading volumes.

Due to long-term locking, the selling pressure of CRV remains low.

Curve has also expanded its cross-chain business through Aurora, Arbitrum, and Optimism, solidifying its position as a multi-chain Liquidity standard.

As other projects vanish, Curve demonstrates economic resilience through its actions.

2023: Crisis and Community Resilience

In August 2023, Curve Finance was attacked due to a vulnerability in the Vyper compiler, resulting in a loss of approximately $73 million, affecting multiple stablecoin pools. This was undoubtedly a fatal blow for most protocols.

But Curve has made it through.

In just a few weeks, white hat hackers, partners, and veCRV holders acted swiftly. Through community coordination and negotiation, 73% of the stolen funds were recovered, which is rare in the history of Decentralized Finance.

At the same time, Curve launched crvUSD, a decentralized over-collateralized stablecoin that brings real utility and new sources of yield for veCRV holders.

Curve's community has proven that it is not only active but has also been battle-tested.

2024: Expanding the Ecosystem Flywheel

Curve has developed from an Automated Market Maker (AMM) into a complete Decentralized Finance ecosystem:

LlamaLend: Permissionless lending service that supports ETH and WBTC as collateral.

Savings crvUSD (scrvUSD): A yield-generating stablecoin that connects Decentralized Finance and TradFi.

The inflation rate of CRV has dropped to 6.35%, consolidating the long-term value of the token.

The partnership established with the BUIDL fund supported by BlackRock connects Curve's liquidity with institutional capital.

The veCRV system continues to support this growth: integrating users, DAOs, and even institutions around the liquidity engine of Curve.

2025: Liquidity, Yield and Legacy

By 2025, Curve is no longer just a DEX; it has become a pillar of DeFi liquidity.

In the first quarter, the trading volume reached 34.6 billion USD (a year-on-year increase of 13%), with over 5.5 million transactions and an average daily trading volume of 11.5 million USD. The protocol continues to generate 19.4 million USD in fees annually for veCRV holders.

crvUSD reached a historical market cap of 178 million USD, while Curve ranks second among global DEXs with a TVL of 1.9 billion USD.

Originally started as a stablecoin automated market maker (AMM) project, it has now evolved into a self-sustaining liquidity network based on mathematics (StableSwap), economics (veTokenomics), and community belief.

The secret to withstanding the test of time.

The three pillars of Curve are: the liquidity depth provided by StableSwap; the incentive mechanism provided by veTokenomics; and the resilience of the community.

As popular projects rise and fall, Curve always adheres to its core advantages: transforming liquidity into infrastructure and converting returns into lasting value.

The establishment of Curve is not for a fleeting moment, but for long-term development.