What is Curve Finance: An In-Depth Explanation

What is Curve Finance? 1.1. Automated Market Making 2. A Detailed Look at How Does Curve Finance Work 2.1. Yield Aggregation on Curve Finance 2.2. Curve …

A lot of difficult terms, huh? We’ll break them down right now, but if you want to get a deeper understanding of these mentioned concepts, I highly advise you to go and check out the related articles that I've linked to above, before continuing on with this one - this will help you understand Curve Finance much better!o, on your phone, you likely have a variety of different apps - a calendar, a calculator, Facebook, TikTok, and so on. Just like all of these are applications, dApps are kind of the same - the only difference is that dApps are decentralized, meaning, they are not owned by a single company or corporation.

Automated Market Making is a really complex financial topic, but to put it super-simple, AMMs can be seen as tools that help people perform trades (such as those with crypto) with an asset pool, instead of another person.

An example here would be this - if you have $100 worth of Ethereum, and want to trade it for an equivalent amount of Bitcoin, you could go and trade it on a traditional cryptocurrency exchange. However, what if there’s no one who wants to make that trade with you, at that time?

Well, in this case, AMMs come to the rescue - here, you can trade without issues, as long as the pool has enough funds within to support your trade.

Now, I know what you might be thinking - what does all of this crypto mumbo-jumbo have to do with Curve Finance? Well, let’s circle it back to the topic at hand.

In order for AMMs to exist, they need investors - the funds in the pools don’t appear out of nowhere, after all! As you trade and interact with the pool, you will pay fees - these fees will then be distributed to investors, as rewards for their contributions!