Convex Finance (CVX) — a protocol for maximizing Curve returns

DeFi tools allow ordinary users to receive financial services for exchanging, lending, and moving cryptocurrencies between networks and to become liquidity providers themselves.

Users have taken a particular liking to Yield Farming. This is a way of earning money where users contribute their assets to DeFi services — for example, decentralized exchanges (such as Uniswap) or lending platforms (such as Aave) — and are rewarded in cryptocurrency.

However, not all platforms are equally beneficial for income farming. The developers noticed that on the Curve platform, the revenues of liquidity providers were not high enough. To remedy this situation and increase users' profitability, the Convex Finance protocol was created.

What is Convex Finance?

Convex Finance is a DeFi protocol created to optimize the liquidity pools of Curve, one of the most popular platforms for trading stablecoins. The main goal of Convex Finance is to maximize the profitability of liquidity providers on Curve and improve the platform's usability.

Curve Finance is a decentralized exchange based on the Automated Market Maker (AMM) model. Curve's AMM platform is one of the top 20 most extensive DeFi protocols on the market, and the amount of blockchain assets (TVL) blocked in it reaches $1.8 billion. Although Curve's AMM platform initially specialized in trading stablecoins, the list of supported cryptocurrencies was later significantly expanded.

Convex Finance was initially launched in May 2021 based on the leading blockchain platform Ethereum, but the developers later added other networks such as Fraxtal, Polygon and Arbitrum.

According to the March 2025 DeFi Llama monitoring service, Convex Finance is among the top 50 most extensive DeFi protocols in the cryptocurrency market by total blockchain value, which, as of March 2025, is almost $867 million. Moreover, Ethereum accounts for almost 97% of all Convex Finance liquidity — $838 million. In the Ethereum ecosystem, the Convex Finance platform ranks 21st regarding TVL.

According to this indicator, Convex Finance is slightly inferior to DeFi protocols, which are well-known in the Web3 environment:

SUN on Tron,
Meteora on Solana,
as well as the multichain Solv Protocol and Renzo.

Convex Finance's role in managing Curve

Previously, liquidity providers used veCRV tokens — a locked-down "version" of Curve's native AMM platform token (CRV) — to increase returns. However, this approach led to the Curve team taking control of a large portion of the CRV tokens, violating decentralized platform administration (DAO) principles. This incident has been dubbed the Curve Wars.

Previously, Curve platform users used unique veCRV tokens to increase their profitability. These are locked native tokens of the Curve platform, CRV, which give owners additional benefits.

However, because of this approach, the Curve team began to control the majority of CRV tokens, which violates the principles of decentralized platform administration (DAO), when all users, not just developers, make decisions. This situation became known as the Curve Wars (Curve Wars).

The Convex Finance DeFi protocol was developed to give users back control of the Curve ecosystem. After the launch of Convex Finance, more users who owned management tokens were given a voice in managing the Curve ecosystem.

However, as a result, the Convex Finance platform became a participant in the Curve wars, as its team has about 40-50% of veCRV tokens concentrated in its hands between 2022 and 2023. Due to this, the Convex Finance team greatly influenced the Curve ecosystem's management.

Convex Finance token

The CVX native token was released in April 2021, a month before the release of the Convex Finance platform itself. Initially, CVX tokens were distributed to veCRV holders and those who whitelisted the Convex Finance contract on Ethereum.

CVX is both a service token and a management token. The native token of the Convex Finance platform is used for:

Protocol Administration (DAO);
Rewards for Curve Finance native token holders;
Generating revenue for staking.

CVX native token holders can participate in Convex Finance's DeFi protocol management like CRV token holders on Curve's AMM platform. To gain voting rights and the ability to participate in Convex Finance's governance, users need to lock their CVX tokens. In return, they receive vlCVX LP tokens, just as with veCRV tokens on Curve.

New CVX tokens are generated when users withdraw their CVX tokens from the blockchain, reducing their concentration in the hands of the Curve team. However, CVX tokens will stop being generated once they reach the cap of 100 million. According to data from the CoinMarketCap monitoring service for March 2025, the maximum CVX token issuance was almost reached.

As of the same period, the CVX token rate is $2.25, and its market capitalization is $222 million — according to this indicator, the asset ranks 180th among cryptocurrencies.

The value of the CVX token reached its all-time high (ATH) at $62 in January 2022, despite the general correction in the cryptocurrency market. Currently, the CVX price is 96% below the ATH level.