Decentralized Finance (DeFi) continues to evolve, offering users innovative ways to optimize liquidity and maximize yield across multiple blockchain networks. Among the most prominent protocols in this space are Curve Finance and Convex Finance, two platforms that empower crypto holders to earn passive income through strategic staking and liquidity provision.
This guide explores how to effectively leverage both platforms—starting with adding liquidity on Curve Finance and then boosting returns via Convex Finance, particularly within multi-asset pools on the Polygon network. Whether you're new to yield farming or looking to refine your DeFi strategy, this walkthrough delivers actionable insights while maintaining alignment with security, efficiency, and long-term value.
Understanding Curve Finance: Liquidity Optimization Across Chains
Curve Finance is a leading decentralized exchange (DEX) designed for efficient trading of stablecoins and pegged assets with minimal slippage and low fees. Built on smart contract technology, it operates across major blockchains including Ethereum, Polygon, and Arbitrum, enabling seamless cross-chain liquidity.
The protocol's native token, CRV, plays a central role in governance and incentivization. Users who provide liquidity receive LP (liquidity provider) tokens, which can be further staked to earn additional rewards.
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Security Incident Overview: The 2023 Exploit
In July 2023, Curve Finance suffered a significant security breach resulting in the loss of over $50 million in digital assets. The attack exploited vulnerabilities in certain gauge contracts, prompting an urgent response from the development team and white hat hackers. While a portion of the funds was successfully recovered, the incident led to a temporary drop in CRV’s price by 22.18%.
Despite this setback, the protocol demonstrated resilience. Total Value Locked (TVL) rebounded to a record high of $2.137 billion, reflecting strong community confidence and trust in Curve’s long-term viability.
Network Distribution: Where Volume Lives
When it comes to trading volume and user activity, Ethereum remains the dominant chain for Curve Finance. It is followed by Arbitrum, which has seen rapid growth due to its low-cost Layer 2 scaling solution, with Polygon securing third place. This multi-chain presence allows users to choose cost-effective environments without sacrificing access to deep liquidity pools.
How to Add Liquidity to Multi-Asset Pools on Curve
One of the most effective strategies for generating yield involves contributing to multi-asset pools such as the CRV/TRICRYPTO pool on Polygon. These pools support a mix of stablecoins and volatile assets like WETH and WBTC, allowing diversified exposure and fee earnings from trades within the pool.
Here’s a step-by-step breakdown:
Step 1: Prepare Your Assets
Ensure your wallet contains sufficient amounts of:
- CRV
- USDC
- USDT
- DAI
- WETH
- WBTC
You’ll also need MATIC tokens to cover transaction fees on the Polygon network.
While you can deposit individual assets, Curve’s smart contracts allow you to deposit just one token—such as USDC or WETH—which will then be automatically converted into the correct proportions across all pool assets.
Step 2: Connect to Curve Finance
Navigate to curve.fi and select the Polygon network. Connect your non-custodial wallet (e.g., MetaMask) securely.
Step 3: Locate the Multi-Asset Pool
Go to the “Pools” section and search for the CRV/TRICRYPTO/WETH/WBTC pool. You can find it directly via the factory crypto pool link under Polygon.
Step 4: Deposit Liquidity
Choose the “Deposit” option. You have two choices:
- Deposit each supported asset individually.
- Deposit a single asset (e.g., USDC or WETH), letting the contract rebalance it into the required basket.
After entering your desired amount, confirm the transaction in your wallet.
Step 5: Monitor and Manage
Once confirmed, your LP tokens are issued, representing your share of the pool. You begin earning a portion of trading fees—currently yielding around 0.55% APR.
When withdrawing later, you can choose between receiving all assets in a single coin (One coin) or as a balanced distribution (Balanced amounts).
Boosting Returns with Convex Finance
While Curve offers solid base yields, returns can be significantly enhanced using Convex Finance, an Ethereum-based yield optimization platform that allows users to stake their Curve LP tokens and earn boosted rewards in CVX and CRV tokens.
Convex simplifies participation in Curve gauge voting and amplifies incentives, making it ideal for passive income seekers. With a TVL exceeding $1.805 billion, it stands as a trusted layer atop Curve’s ecosystem.
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How to Increase Yield on Convex Finance
Follow these steps to boost your returns:
1. Visit Convex Finance
Go to the official Convex website and connect your wallet (e.g., MetaMask). Ensure you're interacting with the legitimate domain to avoid phishing risks.
2. Navigate to Stake Section
Click on the “Stake” tab located in the main navigation menu.
3. Select the CRV+crvUSDBTCETH Pool
Look for the pool labeled CRV+crvUSDBTCETH, which corresponds to the Curve LP tokens from the multi-asset pool on Polygon (bridged via LayerZero or similar).
4. Deposit Your LP Tokens
Transfer your Curve LP tokens into the Convex staking pool. Upon deposit, you’ll start earning:
- Base trading fees from Curve
- Additional CRV emissions
- CVX rewards from Convex
This combination pushes effective yields upward—historically reaching as high as 16.34% APY, depending on emission schedules and market conditions.
5. Claim Rewards Regularly
You can claim your accumulated CRV and CVX tokens at any time. Some users automate claims using third-party tools or schedule regular withdrawals based on gas costs and reward thresholds.
Frequently Asked Questions (FAQ)
Q: Is it safe to stake on Curve and Convex after the 2023 hack?
A: While no system is entirely immune to risk, both Curve and Convex have strengthened their security post-exploit, with audits, bug bounties, and active white hat collaboration. Always use hardware wallets and verify URLs before connecting.
Q: Can I use only one asset when adding liquidity?
A: Yes! Curve’s smart contracts automatically rebalance single-asset deposits into the correct ratio across all pool components, simplifying participation.
Q: What are LP tokens?
A: Liquidity Provider (LP) tokens represent your share of a pool. They’re minted when you deposit assets and must be held or staked to earn fees or rewards.
Q: Why use Convex instead of staking directly on Curve?
A: Convex boosts yields by simplifying gauge voting and redistributing extra CVX incentives. It also eliminates the need for veCRV locking for most users.
Q: Are there gas fees on Polygon when using Curve?
A: Gas fees on Polygon are significantly lower than on Ethereum, but small MATIC amounts are still required for transactions like deposits, withdrawals, and claiming rewards.
Q: Can I lose money providing liquidity?
A: Yes—impermanent loss is possible if asset prices diverge significantly within the pool. This risk is higher in multi-asset pools containing volatile tokens like WETH and WBTC.
Final Thoughts
Curve Finance remains a cornerstone of DeFi liquidity infrastructure, especially for stablecoin swaps and cross-chain asset exchange. Despite facing challenges like the 2023 exploit, its recovery underscores robust community support and technical resilience.
By pairing Curve with Convex Finance, users unlock powerful yield-compounding opportunities—turning modest fee returns into substantial passive income streams. Whether you're deploying USDC or bridging WETH into multi-asset pools, understanding these mechanics empowers smarter, more profitable DeFi participation.
Always conduct independent research, assess risk tolerance, and never invest more than you can afford to lose.
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