Convex is a platform that maximizes yield for vote-escrow DeFi investments. It simplifies managing and re-investing incentive rewards and other payouts by pooling similar investments across users.
At its core, Convex is a liquidity aggregator that pools all user CRV deposits together and stakes it to become veCRV (vote-escrowed CRV). veCRV is used for Curve governance, boosting liquidity provider (LP) rewards, and earning trading fees. CRV rewards can be boosted as high as 2.5x if the maximum amount of veCRV is applied to the deposited liquidity, though achieving this maximum reward can be very cost prohibitive for many LPs. This is where Convex comes in to play with its liquidity blackhole by allowing Curve LPs to earn trading fees and claim boosted CRV rewards without locking CRV themselves. Users deposit CRV on Convex in exchange for cvxCRV, a tokenized version of veCRV, at a 1:1 rate. This conversion is a one way street as Convex permanently locks the CRV as veCRV.
Convex has no withdrawal fees and charges minimal performance fees which are used to pay for gas and distributed to CVX stakers. Convex charges a 17% total fee on all CRV revenue generated by Curve LPs on its platform.
You can deposit CRV in exchange for cvxCRV, which can then be staked to receive 10% of all CRV revenue generated by LPs (paid out as CRV) on the Convex platform. CVX holders may also stake to receive 5% of fees (paid out as cvxCRV), with 1% exclusively going to vote-locked CVX (vlCVX).