Curvance is a modular protocol designed for optimized liquidity management in the decentralized finance (DeFi) space. It allows users to collateralize assets, leverage their positions, and earn rewards across multiple blockchain networks. Curvance supports various blockchains, including Ethereum, Arbitrum, Optimism, Polygon zkEVM, Base, Blast, and Monad. The protocol aims to provide a seamless and efficient way for users to manage their liquidity and maximize their returns.

Importance of liquidity management in DeFi

Liquidity management is crucial in DeFi as it ensures the smooth functioning of decentralized applications (dApps). Adequate liquidity allows users to execute trades efficiently, reduces price volatility, and enhances the overall user experience.

In DeFi, liquidity is the lifeblood of financial services, enabling platforms to offer lending, borrowing, and trading services. Efficient liquidity management attracts more users and developers, driving innovation and growth within the DeFi ecosystem. DeFi protocols would struggle to function without sufficient liquidity, leading to a less stable and inefficient market.

What is Curvance?

Source: Curvance website

Curvance is a modular protocol designed to optimize liquidity management in the decentralized finance (DeFi) space. It allows users to collateralize assets, leverage their positions, and earn rewards across multiple blockchain networks. The primary purpose of Curvance is to provide a seamless and efficient way for users to manage their liquidity and maximize their returns.

Key Features and Functionalities

Modular architecture

Curvance employs a modular architecture, which means it is composed of various independent components that work together to provide its functionalities. This design allows for flexibility and scalability, enabling the protocol to adapt to different use cases and integrate with other DeFi protocols seamlessly.

Multichain support

Curvance supports multiple blockchain networks, including Ethereum, Arbitrum, Optimism, Polygon zkEVM, Base, Blast, and Monad. This multichain support ensures that users can access Curvance’s services across different blockchain ecosystems, enhancing interoperability and providing more opportunities for liquidity management.

Optimized liquidity management

Curvance is designed to optimize liquidity management by allowing users to collateralize their assets, leverage their positions, and earn rewards. The protocol introduces innovative mechanisms to ensure efficient use of capital and maximize returns for users. By providing a unified platform for liquidity management, Curvance aims to simplify the process and make it more accessible to a broader audience.

One-click deployment

Curvance offers a one-click deployment feature, making it easy for users to set up and start using the protocol without needing extensive technical knowledge. This feature simplifies the onboarding process and allows users to quickly access Curvance’s services.

Security first

Curvance adopts a security-first approach to safeguard its users and manage external risks. The protocol is built from the ground up to limit common attack vectors, such as flash loans and re-entrancy attacks. Curvance employs comprehensive security measures, including unit, integration, and fuzz tests, to uncover system complexities and potential issues.

Curvance Architecture

Curvance employs a modular architecture, which means it is composed of various independent components that work together to provide its functionalities. This design allows for flexibility and scalability, enabling the protocol to adapt to different use cases and integrate with other DeFi protocols seamlessly. The modular approach ensures that each component can be developed, tested, and upgraded independently, reducing the risk of system-wide failures and enhancing overall performance.

Components and their roles

The Curvance architecture consists of several key components, each with a specific role:

1. Collateral Manager: This component handles the collateralization process, allowing users to lock their assets as collateral. It ensures that the collateral is securely stored and accurately valued.

2. Leverage Engine: The leverage engine enables users to leverage their positions by borrowing against their collateral. It calculates the maximum leverage available based on the collateral value and manages the borrowing process.

3. Reward Distributor: This component is responsible for distributing rewards to users based on their participation in the protocol. It calculates the rewards earned and ensures timely distribution.

4. Multichain Connector: The multichain connector facilitates interactions between Curvance and multiple blockchain networks. It ensures seamless cross-chain transactions and interoperability.

5. Security Module: The security module implements various security measures to protect the protocol and its users. It includes features such as audits, oracle systems for pricing accuracy, and mechanisms to prevent common attack vectors.

Benefits of the modular design

The modular design of Curvance offers several benefits:

1. Flexibility: The modular architecture allows Curvance to adapt to different use cases and integrate with other DeFi protocols seamlessly. Each component can be customized and upgraded independently, providing greater flexibility.

2. Scalability: The independent nature of the components ensures that the protocol can scale efficiently. As the user base grows, individual components can be optimized and expanded without affecting the entire system.

3. Security: The modular design enhances security by isolating different functionalities. This reduces the risk of system-wide failures and makes it easier to identify and address potential vulnerabilities.

4. Efficiency: Each component is designed to perform specific tasks, ensuring optimal performance. The modular approach allows for efficient resource allocation and reduces the complexity of the overall system.

Curvance Liquidity Market

The Curvance liquidity market is designed to provide users with a platform to borrow, lend, and manage their assets efficiently. It allows users to collateralize their assets, leverage their positions, and earn rewards. The liquidity market ensures that there is sufficient liquidity available for users to execute their transactions seamlessly.

How liquidity is managed

Liquidity in the Curvance market is managed through a combination of collateralization, leverage, and reward mechanisms. Here is a detailed explanation of how each aspect contributes to liquidity management:

• Collateralization: Users can collateralize their assets to access liquidity. By locking their assets as collateral, users can borrow other assets without selling their original holdings. This process ensures that there is always sufficient collateral backing the borrowed assets, maintaining the system’s stability. The protocol uses oracles to provide accurate and up-to-date price information for the collateral, ensuring that it is valued correctly.
• Leverage: Curvance allows users to leverage their positions by borrowing against their collateral. This means that users can amplify their exposure to certain assets, potentially increasing their returns. However, leveraging also comes with risks, as the value of the collateral must be maintained above a certain threshold to avoid liquidation. The leverage engine calculates the maximum leverage available based on the collateral value and manages the borrowing process.
• Reward Mechanisms: Curvance incentivizes users to participate in the protocol by offering rewards. Users can earn rewards for providing liquidity, borrowing, and participating in governance. The reward distributor calculates the rewards earned and ensures timely distribution. These rewards encourage users to contribute to the liquidity pool, enhancing the overall liquidity of the market.
• Interest Rates: Interest rates in the Curvance liquidity market are determined by the supply and demand of assets. Higher demand for borrowing leads to higher interest rates, while higher supply of assets leads to lower interest rates. The protocol uses dynamic interest rate models to adjust rates based on market conditions, ensuring that the rates are fair and reflective of the current market environment.
• Liquidation: Liquidation occurs when the value of the collateral falls below a certain threshold. The protocol automatically liquidates the collateral to repay the borrowed amount and maintain the stability of the system. This process helps to protect the protocol from bad debt and ensures that lenders are repaid. Liquidation penalties may apply to incentivize borrowers to maintain their collateral ratios.
• Collateral Caps: Collateral caps are limits set on the amount of a particular asset that can be used as collateral. This helps to manage risk and ensure the stability of the liquidity market. By capping the amount of each asset, the protocol can prevent overexposure to any single asset and reduce the impact of price volatility on the system.
• Bad Debt Socialization: In the event of bad debt, the protocol socializes the debt across all users to minimize the impact on any single user. This ensures the stability and resilience of the liquidity market. Bad debt socialization spreads the risk and helps to maintain the overall health of the protocol, protecting users from significant losses.

Benefits for users and the ecosystem

• Access to liquidity: Users can access liquidity without selling their assets, allowing them to maintain their positions and benefit from potential future gains.
• Optimized returns: By leveraging their positions and earning rewards, users can maximize their returns on their assets.
• Risk management: The protocol’s automated mechanisms, such as liquidation and collateral caps, help to manage risk and ensure the stability of the liquidity market.
• Interoperability: The multichain support and integration with other DeFi protocols enhance the overall ecosystem and provide users with more opportunities for liquidity management.
• Security: The protocol’s security-first approach ensures that users’ assets are protected and that the system operates efficiently.

How Curvance Works

Source: Curvance Documentation

Collateralization

Collateralization in Curvance involves locking up assets as collateral to access liquidity. Users can deposit their assets into the protocol, which securely stores and values them. The collateral value determines the amount of liquidity users can borrow. The process ensures that there is always sufficient collateral backing the borrowed assets, maintaining the system’s stability.

Curvance supports a variety of collateral types, including popular cryptocurrencies and stablecoins. The protocol categorizes these assets based on their risk and volatility. By supporting a wide range of collateral types, Curvance provides users with flexibility and options to choose the assets they prefer to use as collateral.

Leverage

Curvance allows users to leverage their positions by borrowing against their collateral. The leverage engine calculates the maximum leverage available based on the collateral value and manages the borrowing process. Users can amplify their exposure to certain assets, potentially increasing their returns. The protocol ensures that the leverage is managed efficiently to minimize risks.

Leverage offers several benefits, including the potential for higher returns and the ability to maintain exposure to multiple assets. However, it also comes with risks. If the value of the collateral falls below a certain threshold, the protocol may liquidate the collateral to repay the borrowed amount. This process helps to protect the protocol from bad debt and ensures that lenders are repaid. Users must carefully manage their leverage to avoid liquidation and potential losses.

Reward mechanisms

Curvance incentivizes users to participate in the protocol by offering various types of rewards. These rewards include interest earned on deposited assets, governance tokens, and additional incentives for providing liquidity and participating in governance. The rewards are designed to encourage users to contribute to the liquidity pool and enhance the overall liquidity of the market.

Rewards in Curvance are distributed through a unified interface called the CVELocker. This system works in collaboration with the VeCVE smart contract. Rewards are distributed biweekly and accumulate for each user, allowing them to claim rewards whenever they want. The protocol ensures that rewards are distributed fairly and transparently, providing users with an incentive to continue participating in the ecosystem.

Curvance Multichain Architecture

Curvance employs a multichain architecture, which means it operates across multiple blockchain networks. This design allows Curvance to leverage the unique features and capabilities of different blockchains, providing users with a more versatile and robust platform for liquidity management. The multichain architecture ensures that Curvance can support a wide range of assets and interact with various DeFi protocols, enhancing its overall functionality and reach.

How it enables cross-chain interactions

Curvance’s multichain architecture enables seamless cross-chain interactions by using a multichain connector. This component facilitates transactions and data exchange between different blockchain networks. It ensures that users can move their assets and interact with DeFi protocols across multiple chains without friction. The multichain connector also ensures that the protocol maintains consistency and accuracy in asset valuation and transaction processing across blockchains.

Benefits of the multichain approach

1. Enhanced Interoperability: The multichain architecture allows Curvance to interact with various DeFi protocols and blockchain networks. This enhances the overall interoperability of the protocol, providing users with more opportunities for liquidity management and asset utilization.

2. Increased Liquidity: By operating across multiple blockchains, Curvance can tap into the liquidity pools of different networks. This increases the overall liquidity available to users, ensuring that they can execute their transactions efficiently and at competitive rates.

3. Diversification of Risk: The multichain approach allows users to diversify their assets across different blockchains. This reduces the risk associated with relying on a single blockchain and provides users with more options for managing their assets.

4. Optimized Performance: Different blockchains offer unique features and capabilities. By leveraging the strengths of multiple blockchains, Curvance can optimize its performance and provide users with a more efficient and reliable platform for liquidity management.

5. Scalability: The multichain architecture allows Curvance to scale more effectively. As the user base grows, the protocol can expand its operations across additional blockchains, ensuring that it can handle increased demand without compromising performance.

Multichain Gauge System

The Multichain Gauge System is a mechanism designed to measure and manage the distribution of rewards and incentives across multiple blockchain networks. It allows liquidity providers to stake their assets and earn rewards based on their contributions to the liquidity pools. The gauge system ensures that rewards are distributed fairly and transparently, encouraging users to provide liquidity and participate in the ecosystem.

How it works across multiple chains

The Multichain Gauge System operates across multiple blockchain networks by leveraging cross-chain communication protocols. Here is how it works:

1. Staking: Liquidity providers can stake their assets in the gauge system on any supported blockchain. The staked assets are locked in the protocol, and the user’s contribution is recorded.

2. Cross-chain Communication: The gauge system uses cross-chain communication protocols like Wormhole to synchronize data and transactions across different blockchains. This ensures that the user’s staked assets and rewards are accurately tracked and managed, regardless of the blockchain they are on.

3. Reward Calculation: The gauge system calculates rewards based on the user’s contribution to the liquidity pools. The rewards are determined by factors such as the amount of staked assets, the duration of staking, and the overall performance of the liquidity pool.

4. Reward Distribution: Rewards are distributed to users through the gauge system. Users can claim rewards on any supported blockchain, providing flexibility and convenience.

Benefits for liquidity providers and users

1. Fair Reward Distribution: The gauge system ensures that rewards are distributed fairly based on the user’s contribution to the liquidity pools. This incentivizes users to provide liquidity and participate in the ecosystem.

2. Cross-chain Flexibility: The Multichain Gauge System operates across multiple blockchains, allowing users to stake their assets and earn rewards on any supported network. This provides users with more options and flexibility in managing their assets.

3. Enhanced Liquidity: By incentivizing liquidity providers, the gauge system helps to increase the overall liquidity in the ecosystem. This ensures that users can execute their transactions efficiently and at competitive rates.

4. Transparency and Security: The gauge system uses transparent and secure mechanisms to track and manage staked assets and rewards. This builds trust among users and ensures the integrity of the protocol.

5. Interoperability: The cross-chain functionality of the gauge system enhances interoperability within the DeFi ecosystem. It allows users to move their assets and interact with DeFi protocols across multiple blockchains seamlessly.

Wormhole: The Bridge Enhancing Curvance’s Multichain Capabilities

Wormhole serves as a critical infrastructure component within the Curvance ecosystem, acting as a bridge that facilitates seamless asset transfers across different blockchain networks. This interoperability is essential for Curvance’s multichain liquidity management strategy, allowing users to move assets freely and take advantage of diverse DeFi opportunities.

The relationship between Wormhole and Curvance is symbiotic. While Wormhole provides the necessary cross-chain functionality, Curvance leverages this capability to enhance its platform’s reach and efficiency. Users benefit from the combined strengths of both protocols: Wormhole’s robust cross-chain connections and Curvance’s innovative liquidity solutions.

Wormhole architecture includes several key components that work together to facilitate secure and efficient cross-chain interactions. These components are Verifiable Action Approvals (VAAs), the Guardian Network, and the Automatic Relayer.

Verifiable action approvals (VAAs)

VAAs are the core mechanism used by Wormhole to ensure the integrity and authenticity of cross-chain messages. A VAA is a signed attestation of an observed message from the Wormhole core contract. When an action occurs on one blockchain, the Wormhole protocol generates a VAA, which is then signed by the Guardian Network. This signed VAA serves as proof that the action has been observed and verified, allowing it to be executed on the target blockchain.

Guardian network

The Guardian Network is a decentralized network of nodes responsible for observing and verifying cross-chain messages. Guardians monitor the Wormhole core contracts on various blockchains and generate VAAs for observed actions. The network ensures the security and reliability of the Wormhole protocol by requiring a majority of Guardians to sign each VAA. This decentralized approach prevents any single point of failure and ensures that the system remains secure and trustworthy.

Automatic relayer

The Automatic Relayer is a component of the Wormhole protocol that facilitates the delivery of VAAs to their destination blockchains. Relayers are off-chain processes that listen for VAAs published by the Guardian Network and relay them to the target chains. The Automatic Relayer ensures that VAAs are delivered efficiently and securely, without compromising the integrity of the messages. There are different types of relayers, including client-side relayers, specialized relayers, and standard relayers, each with advantages and use cases.

• Client-side Relayers: These rely on user-facing front ends, such as web pages or wallets, to carry out the cross-chain process. They are cost-efficient and do not require backend infrastructure but may involve manual steps for users.
• Specialized Relayers: These are purpose-built components that relay messages for specific applications. They can perform off-chain computations to optimize gas costs and provide a smoother user experience.
• Standard Relayers: These are decentralized relayer networks that can deliver arbitrary VAAs. They reduce the need for developers to maintain relayers but may be less gas-efficient as all calculations are done on-chain.

Curvance Supported Chains and Ecosystem

Curvance supports a wide range of blockchain networks, ensuring users can access its services across different ecosystems. The supported blockchains include:

• Ethereum: The most widely used blockchain for DeFi applications, known for its robust smart contract capabilities.
• Arbitrum: A Layer 2 scaling solution for Ethereum that offers faster and cheaper transactions.
• Optimism: Another Layer 2 scaling solution for Ethereum, designed to improve transaction throughput and reduce costs.
• Polygon zkEVM: A Layer 2 scaling solution that uses zero-knowledge proofs to enhance security and scalability.
• Base: A blockchain network designed for high-performance and low-cost transactions.
• Blast: A blockchain network focused on providing fast and efficient transactions.
• Monad: A blockchain network that aims to offer high scalability and interoperability.

Curvance Testnet

Source: Curvance Medium

The Curvance Testnet is a crucial phase in the development of the Curvance protocol. It allows users to test the platform’s features and functionalities in a controlled environment before the mainnet launch. The testnet aims to identify and resolve any issues, gather user feedback, and ensure the protocol’s stability and security. By participating in the testnet, users can experience the Curvance platform firsthand and contribute to its improvement.

How to participate

• Sign Up: Visit the Curvance Testnet invite page and sign in to confirm the ownership of your wallet address. No token approvals are required for this process.
• Claim Roles: Eligible users must claim their roles or hold a Galxe OAT before the snapshot time to participate in the testnet.
• Access the Testnet: Once registered, users can access the Curvance Testnet through the provided link. Follow the instructions to start testing the platform’s features.
• Provide Feedback: Users are encouraged to provide feedback on their experience, report any issues, and suggest improvements. This feedback is valuable for the development team to enhance the protocol.

Requirements for participation

• Wallet Address: Users must have a valid wallet address to sign up for the testnet.
• Galxe OAT: Eligible users must hold a Galxe OAT before the snapshot time to participate in the testnet.
• Internet Access: A stable internet connection is required to access and interact with the Curvance Testnet.

Curvance Token (CVE) Tokenomics

Source: Curvance Documentation

The total supply of Curvance Token (CVE) is fixed at 420,000,069 CVE. This fixed supply ensures no additional tokens can be minted, providing a predictable and stable token economy. The distribution model of CVE tokens is designed to ensure a fair and balanced allocation among various stakeholders. The total breakdown of token allocation is as follows:

• Treasury - 14.5% [60,900,010]: 25% will be vote-locked on TGE (Token Generation Event), in the CVE locker.
• Team - 13.5% [56,700,009.32]: Vested over 4 years and released monthly, 25% will be vote-locked on TGE, in the CVE locker.
• Seed Raise 6% [25,200,004.14]: Vote-locked on TGE, in the CVE locker during the vesting period (1 year).
• Early Backers Raise - 1% [4,200,000.69]: Vote-locked on TGE, in the CVE locker during the vesting period (1 year).
• Gauge Emissions - 59% [248,850,040.88]: Over a minimum of 15 years.
• Incentivized Testnet + Beta Boosted Emissions Community Incentive Program - 4% [15,750,002.59].
• Initial Pool Liquidity - 2% [8,400,001.38]: LBP 5 days before beta launch conclusion, LBP funds will be paired with DAO treasury tokens as protocol-owned liquidity.

Use cases and benefits

• Governance: CVE tokens play a crucial role in the governance of the Curvance protocol. Token holders can participate in the decision-making process by voting on proposals that affect the protocol’s development and operations. This decentralized governance model ensures that the community has a say in the future direction of Curvance.
• Staking: Staking CVE tokens allows users to earn rewards by locking their tokens in the protocol. Stakers contribute to the security and stability of the network by participating in the consensus mechanism. In return, they receive a portion of the protocol’s revenue and additional incentives.

Curvance Protocol Risks

Like any DeFi protocol, Curvance is exposed to various risks that could impact its stability and security. These potential risks include:

• Smart Contract Vulnerabilities: Bugs or vulnerabilities in the smart contracts could be exploited by malicious actors, leading to loss of funds or disruption of the protocol.
• Oracle Manipulation: Inaccurate or manipulated price feeds from oracles could result in incorrect valuations of collateral, leading to improper liquidations or other issues.
• Liquidation Risks: Rapid price fluctuations could trigger liquidations, potentially causing significant losses for users.
• Cross-chain Risks: Operating across multiple blockchains introduces additional complexities and risks, such as inconsistencies in data synchronization and potential vulnerabilities in cross-chain communication protocols.

Security measures in place

Curvance has implemented several security measures to mitigate these risks and ensure the safety of users’ assets:

• Multiple Audits: The protocol undergoes regular security audits by reputable firms to identify and address potential vulnerabilities in the smart contracts.
• Invariant Development: Curvance has collaborated with security experts to develop and test invariants, which are properties that must always hold true in the protocol. This helps uncover system complexities and potential issues.
• Dual Oracle System: To ensure pricing accuracy, Curvance uses a dual oracle system that fetches data from multiple sources. This reduces the risk of oracle manipulation and ensures reliable price feeds.
• Comprehensive Testing: The protocol employs a comprehensive security toolkit, including unit, integration, and fuzz tests, to uncover system complexities and potential issues. This rigorous testing process helps identify and address vulnerabilities before they can be exploited.
• Automatic Relayer: The Automatic Relayer ensures efficient and secure delivery of cross-chain messages, reducing the risk of inconsistencies and vulnerabilities in cross-chain communication.

How users can mitigate risks

Users can take several steps to mitigate risks when using the Curvance protocol:

• Stay Informed: Keep up-to-date with the latest developments and updates from the Curvance team. This includes being aware of any potential vulnerabilities or issues that may arise.
• Diversify Assets: Avoid putting all assets into a single protocol or collateral type. Diversifying assets across different protocols and collateral types can help reduce the impact of potential losses.
• Monitor Collateral Ratios: Regularly monitor collateral ratios to ensure they remain above the required thresholds. This can help prevent liquidations and potential losses.
• Use Secure Wallets: Ensure you use secure wallets to interact with the Curvance protocol. This includes using hardware wallets and enabling additional security measures, such as two-factor authentication.
• Participate in Governance: Engage in the governance process by voting on proposals and staying informed about the protocol’s development. This allows users to have a say in the future direction of Curvance and contribute to its security and stability.a

Curvance Fundraising Journey

Curvance successfully raised $3.6 million in a seed funding round on December 5, 2023. This funding round was crucial for developing and expanding the Curvance protocol, providing the necessary resources to enhance its features and functionalities.

The seed funding round attracted investment from over 20 DAOs and developers. These investors bring valuable expertise and resources to the Curvance ecosystem, supporting its growth and development.

Curvance Future Plans

Curvance has several exciting features and updates planned for the near future. These include:

• Enhanced User Interface: Improvements to the user interface to make it more intuitive and user-friendly.
• Expanded Multichain Support: Adding support for additional blockchain networks to enhance cross-chain interoperability.
• Advanced Security Measures: Implementing new security features to further protect users’ assets and ensure the protocol’s stability.

Planned improvements

Curvance is continuously working on improving its protocol to provide a better experience for its users. Some of the planned improvements include:

• Optimized Gas Fees: Reducing gas fees to make transactions more cost-effective for users.
• Improved Oracle Systems: Enhancing the accuracy and reliability of price feeds from oracles.
• Scalability Enhancements: Implementing solutions to improve the protocol’s scalability, allowing it to handle higher transaction volumes.

New functionalities

Curvance is also introducing new functionalities to expand its offerings and provide more value to users. These new functionalities include:

• Yield Farming: Introducing yield farming opportunities to allow users to earn additional rewards by staking their assets.
• Gasless Auto Compounding: Offering gasless auto compounding positions that eliminate maintenance and boost yields.
• One-Click Deployment: Simplifying the onboarding process with one-click deployment features.

Conclusion

Curvance is a groundbreaking protocol designed to optimize liquidity management in the DeFi space. With its modular architecture, multichain support, and innovative features, Curvance provides users with a seamless and efficient platform for managing their assets, leveraging their positions, and earning rewards. The protocol’s security-first approach and comprehensive risk management measures ensure the safety and stability of users’ assets.

Curvance’s integration with various DeFi protocols and blockchain networks enhances its functionality and interoperability, offering users more opportunities for liquidity management. By providing a user-friendly and secure platform, Curvance has the potential to significantly impact the DeFi space and contribute to the growth and evolution of decentralized finance.