Curve Finance's governance token (CRV) has an unusual design: to earn maximum yield from Curve LPs and gain governance voting power, you must lock CRV in exchange for veCRV (vote-escrowed CRV) for up to 4 years. The longer you lock, the more veCRV you receive. veCRV provides: boosted CRV rewards on your LP positions (up to 2.5x), governance votes on which pools get more CRV incentives, and a share of Curve trading fees. Convex aggregates this power at scale.
How Convex Works: CRV Boosting Without Locking
Convex's mechanism: users deposit Curve LP tokens into Convex. Convex holds massive amounts of veCRV (locked CRV), which it uses to boost all depositors' CRV rewards. Instead of each individual needing to lock CRV for 4 years, Convex pools the locking — everyone benefits from Convex's aggregate boost. Convex takes a performance fee (about 16% of CRV rewards) to compensate CVX stakers and the protocol.
cvxCRV: when CRV is deposited into Convex, it's locked as veCRV and users receive cvxCRV — a liquid token representing their locked CRV contribution. cvxCRV can be staked for rewards (CRV + CVX + 3CRV trading fees) or traded on Curve's cvxCRV/CRV pool. The peg between cvxCRV and CRV is maintained by arbitrage but sometimes breaks when there's excess selling pressure.
vlCVX (vote-locked CVX): CVX holders can lock their tokens for 16 weeks to receive vlCVX — which grants voting rights in Convex's gauge weight votes. vlCVX holders determine which Curve pools Convex's veCRV votes for. This is where 'Curve Wars' bribes are received — protocols pay ETH/tokens to vlCVX holders in exchange for voting for their pool's gauge weights.
- ✓CRV boosting: Convex uses pooled veCRV to boost all depositors' CRV rewards
- ✓No personal locking required: users get maximum boost without 4-year lockup
- ✓cvxCRV: liquid representation of deposited CRV — can be traded or staked
- ✓vlCVX: 16-week locked CVX that grants Curve gauge vote direction power
- ✓16% performance fee: Convex takes portion of CRV rewards for CVX stakers
- ✓Convex's veCRV: Convex controls 40%+ of all veCRV — dominant governance force
The Curve Wars: Bribe Economy
Curve gauge weights determine how much CRV goes to each liquidity pool per epoch. Pools with more CRV incentives attract more liquidity — important for stablecoins and pegged assets that need deep liquidity (Frax, LUSD, various LSTs). Protocols need their pools to receive high gauge weights. Since Convex controls massive gauge voting power, protocols bribe vlCVX holders to vote for their gauges.
Bribe platforms (Votium, Hidden Hand): protocols deposit ETH, their own tokens, or other incentives as bribes per vlCVX vote in their direction. Votium aggregates these bribes and distributes them proportionally to vlCVX holders who vote in the protocol's direction. A protocol might offer $1M in bribes to move $10M worth of CRV incentives to their pool — rational if the liquidity improvement creates more than $1M in value.
The wars in context: MakerDAO, Frax Finance, Lido, Rocket Pool, and dozens of other protocols spent tens of millions in bribes at peak Curve Wars intensity (2021-2022). The bribing economics — pay a fraction, receive a multiple in CRV incentives — created an entire ecosystem of governance-driven DeFi competition.
- ✓Gauge weights: determine CRV distribution per pool — more = more liquidity
- ✓Bribing protocols: pay ETH/tokens to vlCVX holders for gauge vote direction
- ✓Votium/Hidden Hand: bribe aggregation platforms — distribute to voters
- ✓Bribe ROI: protocols typically pay $0.10-0.30 per $1 of CRV incentives received
- ✓MakerDAO, Frax, Lido: major bribe spenders at Curve Wars peak
- ✓Ongoing: bribe economy continues at lower intensity as DeFi matured
Frequently Asked Questions About Convex Finance
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