What is Convex Finance?
Convex Finance is a decentralized finance (DeFi) protocol designed to optimize yield farming for Curve Finance's liquidity providers and CRV token stakers. Launched in May 2021 by an anonymous team, Convex Finance allows users to earn boosted rewards from their Curve LP tokens and CRV staking without locking up their CRV tokens directly on Curve.
Convex enhances the earnings potential for both Curve liquidity providers and CRV stakers by pooling their assets and converting them into veCRV. This pooled approach allows Convex to maximize reward boosts for all participants, regardless of the size of their individual stakes. Liquidity providers earn additional rewards in the form of Convex's native token, CVX, alongside the usual CRV rewards and a portion of trading fees from Curve.
The platform also supports staking CVX tokens to earn a share of the platform's earnings, derived from both CRV and FXS liquidity pools. By staking CVX, users receive cvxCRV or cvxFXS tokens, which entitle them to rewards from Curve and Frax platforms. Additionally, CVX holders can participate in the governance of Convex Finance by vote-locking their tokens, enabling them to influence the allocation of veCRV and veFXS towards different gauge weights and proposals.