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Curve Finance Liquidity Provision Guide

Curve Finance is a specialized Automated Market Maker (AMM) tailored for stablecoins and assets with similar value, enabling extremely low-slippage swaps and efficient fee generation for liquidity providers (LPs). With its smart invariants and low-risk design, Curve stands apart from generalist DEXes like Uniswap.

✅ What Makes Curve Unique?​

  • StableSwap invariant: A custom bonding curve designed for similar assets, minimizing impermanent loss and slippage.
  • Low fees: Typical swap fees are well below 0.1%, making it ideal for high-volume, stable asset trades.
  • Composable yield: Curve pools often integrate with lending protocols (e.g. Compound, Yearn), further amplifying LP returns.

🧩 How to Add Liquidity on Curve​

  1. Select a Pool
    Choose between stablecoin pools (e.g., USDC/DAI/USDT), crypto derivatives (e.g., wBTC/renBTC), or lending-integrated pools (e.g., y3pool).

  2. Connect Your Wallet
    Supported on Ethereum, Arbitrum, Polygon, and Fantom-via MetaMask, WalletConnect, or others.

  3. Deposit Tokens
    You can supply one or multiple tokens. The invariant auto-balances via internal swaps.

  4. Receive LP Tokens
    You'll receive Curve LP tokens, which are ERC‑20s representing your share. Optionally stake them in gauges to earn CRV rewards on top of swap fees.

💰 How You Earn​

  • Swap Fees: Collected with each trade, added to the pool.
  • CRV Token Rewards: Stake LP tokens in gauges to earn additional yield.
  • Composability Benefits: Certain pools generate income through yield aggregation (Compound, Yearn).

⚠️ Risks & Considerations​

1. Impermanent Loss​

  • Curve/s focus on similar-value assets significantly reduces IL compared to constant-product AMMs.
  • However, options like TriCrypto pools (e.g., wBTC/ETH/USDT) can still experience divergence losses.

2. Stable Peg Risks​

  • If a stablecoin de-pegs, LPs could take on substantial loss. Always assess pool composition and asset stability.

3. Smart Contract Risk​

  • While audited, pool logic-plus integration with external protocols-adds complexity and risk. Exercise caution.

4. Admin Key Centralization​

  • Curve retains some control via multisig keys, though those are subject to DAO governance. Liquidations or parameter changes are possible.

📌 Practical Example: stETH/ETH Stable Pool​

  • Pool Type: Stable Pool for ETH and stETH
  • Advantages:
    • Near-zero slippage
    • Low IL due to correlated assets
    • Earn swap fees, CRV incentives, and staking rewards
    • Ideal for stETH holders who want flexible liquidity access
  • Steps:
    1. Deposit ETH + stETH
    2. Claim crvLP tokens
    3. Stake in gauge
    4. Monitor earnings on swap fees + CRV

🔧 Tools & Tracking​

🧠 Key LP Takeaways​

  • Curve is a stablecoin- and yield-optimized AMM-perfect for low-risk LP strategies.
  • Ideal for LPs focused on capital efficiency and stable yield, especially grouped with lending strategy.
  • Watch for peg stability, pool composition, and reward schedules.

⏭ Next Steps​

  • Learn about impermanent loss mechanics to compare Curve vs. Uniswap:
    See our Risks guide
  • Prefer concentrated liquidity? Check out Uniswap V3
  • Prefer Solana-based strategies? Go to Solana guide