Convex
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.
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- Documentation
- Auditors
- Please see our FAQ on experienced auditors
- Website
- Token: CVX
- Tags: Yield Aggregator
- TVL: $1.2B (Rank #28)
- TVL Ranking by Yield Aggregator: #0
- Blockchain: Ethereum, Polygon, Arbitrum, Fraxtal
- Chain TVL
- Ethereum: $1.17B
- Polygon: $4.99M
- Arbitrum: $897.5K
- Fraxtal: $820.52K
- Core protocol launched in 2021; maturity over one year minimizes technical risk as smart contracts are well battle-tested
- Top 1% by total value locked reduces risk
- Multisig wallet controls protocol upgrades
- Multisig consists of less than 4 signers, which makes the protocol more susceptible to centralization risks
- Low voting power concentration reduces risk
- No death spiral concerns
- This protocol is susceptible to risks related to yield optimizers which deploy custom strategies to automatically manage user funds
- Convex will automatically reinvest any available rewards directed to the pool to help you maximize your yield. Convex specializes in compounding rewards from the Curve and Frax protocols
How Convex works
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.
How Convex makes money
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.
How you make money on Convex
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).
