Curve Finance is a decentralized application based on Ethereum and Polygon networks. It often is referred to as a DEX or an AMM
AMM is a super complex financial topic. To simplify it you can view them as tools that help people perform trades with an asset pool instead of another person.
Let’s say you have 100 LUNA and want to trade it for ETH. But no one is willing to deal with you, that’s where AMMs help. They will trade without any problem as long as you have enough funds to support your trade.
Now that you have basic on what is an AMM let’s get back to the topic of the day
For AMMs to be in existence they require investors to fund the pool. As one trades in the pool there are transaction fees which are the rewards for the investor’s contributions.
An investor contributes to the many market pools and as people trade with the pool the investor keeps on receiving rewards
How does it work?
In the beginning, I said curve finance is considered to be a DEX.
Is it a DEX or an AMM?
Surprisingly curve finance is both an AMM and a DEX for it allows you access their site and also allows you to swap the different crypto
To yield you store your cryptocurrencies in a pool and slowly begin earning income without participating in anything. And that’s the simplest way to put it
It initially was called StableSwap for it was only dealing in decentralized stablecoin swaps.
That’s all for today on the topic. Am sure you have learned quite a good deal about Curve finance or at least you have gotten the basic concept.