Crypto investment used to be as simple as buying a digital asset and waiting for its value to increase. However, with the development of decentralised finance, or DeFi, the game has changed. There are now projects specifically designed for risk analysis and earning interest, and Convex Finance (CVX) is one of them. The platform offers a range of DeFi-based tools to help you earn returns and grow your portfolio.
DeFi, with its decentralised architecture, is moving away from traditional financial methods. Today, there are many major DeFi projects that offer different earning opportunities, but yield protocols are more popular than others. One such protocol, Convex Finance, allows investors to provide liquidity on a platform to earn profit. It creates additional channels for Curve users to earn and maximize their profits. In this article of Zatrun.com, we will discuss what Convex is.
What is Convex Finance and How Does It Work?
Convex Finance (CVX) is an Ethereum-based DeFi platform that offers advanced staking rewards on Curve Finance exchange. The platform provides yield-optimizing services for CRV coin holders and liquidity providers on Curve Finance. Additionally, it operates at high speeds and low transaction fees to ensure maximum profitability for Curve users.
Convex enables users to withdraw their funds without requiring them to stake CRV tokens, and it minimizes expenses by charging extremely low gas fees. As a result, token holders and liquidity providers can earn more profits. The platform also features a user-friendly interface, making it easy to use for newcomers to the crypto space. Additionally, the platform has its own native token called CVX coin.
Convex Finance, founded in 2021 by an anonymous developer team, saw an impressive TVL of $68 million in its first month. The project hit a new high of $21 billion at the beginning of 2022. The platform’s native token, CVX coin, has been used for incentives, airdrops, and rewards.
Serving as a sub-protocol for Curve Finance, Convex Finance offers Curve users the ability to provide liquidity directly to the platform to receive rewards. However, the project goes a step further and provides users with a range of services that offer even greater incentives. The platform’s financial model is quite simple: to offer users a better deal for providing liquidity to Curve Finance and to attract more users. Currently, some liquidity pools in the ecosystem offer higher yields than Curve’s pools.
What is CVX Token? Is It a Good Investment?
CVX is the native token of the DeFi protocol called Convex Finance. This token enables users to benefit from various financial transactions. For example, CVX incentivises users to stake their tokens and rewards them for doing so. It also enables them to participate in the governance of Convex. As such, CVX crypto holders can vote on changes to the platform. The asset works like stocks, so when you hold CVX, you hold a percentage of the platform.
Moreover, users receive this cryptocurrency as a reward for providing liquidity to Convex. Whether you stake your tokens or provide liquidity to Convex with different crypto assets, you receive CVX as a reward and thereby increase your profits. There are several cryptocurrency exchanges where you can buy CVX. The top exchanges for this asset include Binance, KuCoin, OKX, and Coinbase.
CVX coin is currently trading at $5.92 at the time of writing. The cryptocurrency reached its all-time high of $50.02 on January 2, 2022, and has since lost value. The decline was due to bankruptcies in the general crypto market and inflation that held the global economy hostage. However, technical data and analyst comments continue to be positive for the asset.
According to an analyst, CVX coin could see a 22% price increase in the coming days. Despite seeing the lowest DeFi TVL in 22 months, Convex Finance is resisting the collapse. The project, which hosts the 6th largest TVL, has yet to reach its lowest level in terms of TVL. However, there are also analysts who say that despite these good indicators, CVX has not been able to maintain its price momentum. Therefore, investors need to review the current state of the DeFi space before making any investments.