Curve Finance is a decentralized exchange (DEX) and automated market maker (AMM) protocol built on the Ethereum blockchain. It is designed to facilitate low-slippage and low-cost trading of stablecoins and other similar assets.
Curve Finance focuses on providing efficient liquidity pools for stablecoins, which are cryptocurrencies that aim to maintain a stable value relative to a specific asset, usually a fiat currency like the US dollar. By specializing in stablecoin trading, Curve aims to minimize the price impact and slippage associated with trading these assets.
The protocol achieves this by utilizing a unique bonding curve algorithm, which allows for the efficient exchange of stablecoins at close to their pegged value. The liquidity pools on Curve are designed to be stable and concentrated, providing a narrow trading spread and reducing the risk of impermanent loss, which is a potential loss incurred by liquidity providers in AMMs when the relative prices of the assets in the pool change.
