The Journey of Curve: A DeFi Fortress Built on Liquidity, Incentive Mechanisms, and Community Building

Author: Karl Marx OnChain, encryption KOL

Compiled by: Felix, PANews

Curve does not rely on luck to survive every bear market.

It survives because it is built for one thing: sustainability.

From a mathematical experiment in 2019 to becoming a global pillar of liquidity in 2025, Curve's development journey is an evolution of real yields, incentive alignment, and community resilience.

Let's review year by year:

2019 Year: StableSwap (the birth of a new AMM concept)

At that time, DeFi was still in its infancy. Stablecoins like DAI, USDC, and USDT were very popular, but traders faced high slippage, and liquidity providers (LPs) had low yields.

Michael Egorov discovered this flaw and launched StableSwap, a new AMM model that combines constant-sum and constant-product functions, resulting in slippage for stable assets being close to zero.

This is not just another DEX concept.

This is a breakthrough in mathematics that brings deep liquidity and real returns to LP.

StableSwap has become the DNA of Curve Finance: the first truly optimized AMM for stablecoin efficiency.

2020 Year: The Dawn of Curve Finance and veTokenomics

At the beginning of 2020, Curve Finance officially launched with a clear mission:

Provide stable returns through efficient stablecoin liquidity. But its real innovation came in August 2020, with the launch of CurveDAO and the veCRV model (voting escrow mechanism), which is a token economic design that redefines DeFi governance.

Curve no longer rewards short-term participants but incentivizes long-term cooperation:

Obtain veCRV

• Voting determines which funding pools receive rewards
• Obtain higher returns

This structure has built a virtuous flywheel, transforming LPs into stakeholders and initiating the legendary “Curve Wars,” where DAOs such as Convex, StakeDAO, and Yearn are fiercely competing for veCRV power.

By the end of the year, Curve's TVL exceeded 1 billion dollars, solidifying its position as a pillar of DeFi liquidity.

2021 Year: Expand Liquidity, Deepen Community

In 2021, Curve proved its scalability.

• Its daily trading volume reaches 1 billion dollars, generating 400,000 dollars in fees every day, all distributed to veCRV holders.
• The launch of Tricrypto (USDT/WBTC/WETH) has pushed Curve beyond the realm of stablecoins.

While other projects pursue unsustainable profits, Curve focuses on genuine yields and liquidity depth.

Every transaction creates value, and every LP earns real profits.

At the same time, the community is gradually maturing, governance voting is increasing, and bribery behaviors are intensifying. The “Battle of Curve” has turned governance into a masterpiece intertwined with economics and game theory.

Curve is no longer just a protocol, but an economic ecosystem.

2022 Year: Bear Market Stress Test

As the 2022 bear market severely impacted “DeFi 2.0”, Curve's fundamentals were tested, but it remained resilient.

Even though liquidity in the DeFi sector is generally depleted, Curve's StableSwap invariant system and veCRV structure still maintain a consistent incentive mechanism:

• In January 2022, the TVL exceeded 24 billion USD, reaching its peak. By mid-2022, Curve still had over 5.7 billion USD in TVL.
• LP earns stable fees from stable trading volume
• Due to long-term locking, the selling pressure of CRV remains low.

Curve has also expanded its cross-chain operations through Aurora, Arbitrum, and Optimism, solidifying its position as a multi-chain liquidity standard.

As other projects disappear, Curve demonstrates economic resilience through concrete actions.

2023 Year: Crisis and Community Resilience

In August 2023, Curve Finance was attacked due to a vulnerability in the Vyper compiler, resulting in a loss of approximately 73 million dollars, affecting multiple stablecoin pools. This is undoubtedly a fatal blow for most protocols.

But Curve has pulled through.

In a matter of weeks, white hat hackers, partners, and veCRV holders took swift action. Through community coordination and negotiation, 73% of the stolen funds were recovered, which is quite rare in DeFi history.

At the same time, Curve launched crvUSD, a decentralized over-collateralized stablecoin that brings real utility and new sources of yield to veCRV holders.

Curve's community has proven that it is not only active but also has been tested in real-world scenarios.

2024 Year: Expanding the Ecosystem Flywheel

Curve has evolved from an automated market maker (AMM) into a complete DeFi ecosystem:

• LlamaLend: Permissionless lending service that supports ETH and WBTC as collateral.
• Savings crvUSD (scrvUSD): A yield-generating stablecoin that connects DeFi and TradFi.
• The inflation rate of CRV has dropped to 6.35%, consolidating the long-term value of the token.
• The partnership established with the BUIDL fund supported by BlackRock connects Curve's liquidity with institutional capital.

The veCRV system continues to support this growth: integrating users, DAOs, and even institutions around Curve's liquidity engine.

2025 Year: Liquidity, Returns, and Legacy

By 2025, Curve is no longer just a DEX; it has become a pillar of DeFi liquidity.

In the first quarter, the trading volume reached 34.6 billion USD (a year-on-year increase of 13%), exceeding 5.5 million transactions, with an average daily trading volume of 115 million USD. The protocol continues to generate 19.4 million USD in fees annually for veCRV holders.

crvUSD reached a historical market value of 178 million USD, while Curve ranks second in the global DEX with a TVL of 1.9 billion USD.

Originally started as a stablecoin automated market maker (AMM) project, it has now evolved into a self-sustaining liquidity network based on mathematics (StableSwap), economics (veTokenomics), and community belief.

The secret to withstanding the test of time

The three pillars of Curve are: the liquidity depth provided by StableSwap; the incentive mechanism provided by veTokenomics; and the resilience of the community.

As popular projects rise and fall, Curve consistently adheres to its core strengths: transforming liquidity into infrastructure and converting profits into lasting value.

The establishment of Curve is not for a fleeting moment, but for long-term development.

Related reading: The Art of Uncompensated Loss Transfer, is Curve's new work Yield Basis a financial innovation or a Ponzi trap?