How to use Curve Finance – A Beginner’s step-by-step guide

Curve Finance is one of the most important DeFi protocols and the largest Decentralized Exchange by Total Value locked as of March 2022. Curve Finance, also known as Stableswap, is an AMM DEX specializing in exchanging stablecoins or other digital assets where their prices should be of equal value. It allows you to trade any ERC-20 tokens using an Automated Market Maker protocol (AMM) instead of the standard order book found in Centralized Exchanges. This is a Curve Finance Guide. It will teach you how to use Curve Finance, exchange assets, become a liquidity provider, and earn rewards.

You can find Curve Finance on eight different Blockchain Networks. The list includes Ethereum, Arbitrum, Optimism, Avalanche, Gnosis, Fantom, Polygon, and Harmony. By the time you read this guide, you might be able to use Curve on other networks as the team is constantly improving their product and rolling it out to new networks. Due to the high fees on Ethereum Network, I will use Avalanche Network in this guide. However, the process is applicable to all networks.

Prerequisites

To use Curve, you will need to have your Metamask wallet set up on Ethereum, Avalanche, or the corresponding network on which you intend to use Curve. In addition, you will require to have some tokens of the native currency used on the network. These tokens are needed to pay gas fees for each transaction. For example, you must have ETH in your wallet for Ethereum, AVAX for Avalanche, ONE for Harmony, etc.

Metamask is not the only non-custodial wallet you can use. Other non-custodial wallets you can use include Coinbase Wallet, Trust Wallet, and any other wallet that supports WalletConnect. However, for this guide, we use Metamask.

To set up Metamask, you can follow the guides below:

NetworkNative TokenNetwork ProfileMetamask Guide
Ethereum$ETHEthereum NetworkHow to set up Metamask on Ethereum
Avalanche$AVAXAvalanche NetworkHow to set up Metamask on Avalanche
Polygon$MATICPolygon NetworkHow to add Polygon to Metamask
Metamask Set-up Guides

Finally, the other pre-requisite is to have the tokens you want to swap in your wallet. If you’re going to exchange DAI for some other stablecoin such as USDT, or USDC, you need to have DAI in your wallet. Similarly, if you want to exchange wBTC for renBTC you need to have wBTC in your wallet.

How to trade on Curve

how to use curve - how to trade on  curve
How to trade on Curve Finance

Step 1: Select Network

Click on the upper right of the screen and select the network you want to use. If you are not already on the network you want to use and change, Metamask will prompt you to switch the network. Click Switch Network on Metamask.

Step 2: Select the tokens you want to trade

In the middle of the screen, Curve has four boxes that you need to use to specify the trade you would like to execute. On the screen above, we are swapping or trading 1 $DAI for 1 $USDC.

  1. Select the token you want to sell.
  2. Specify the amount of tokens you want to sell.
  3. Select the token you want to buy.
  4. Curve Protocol will show you the amount of tokens you are going to buy, based on the exchange rate at a given time.

Step 3: (Optional) Select a liqudity pool

In certain situations, you may not find the tokens you wish to trade by default, and you will have to select the pool corresponding to the pairs you want to trade manually. This is usually the case for custom pools. Pools that are created by 3rd parties as anyone can create its own tokens, pair them with other tokens, create and deposit liquidity on Curve.

To do that, you go down the screen where you find the Curve Pools and select the pool you wish to use. Once you choose the pool, then the process will be the same. Go back to Step 2 and select the tokens you wish to trade.

Step 4: (Optional) Select the Max Slippage and Gas Price

These two options are for advanced users. If you don’t know what you are doing, don’t touch them. You might see different options depending on the network you are using. Here is a small description of how to use these two options:

Max Slippage

Slippage is the price difference in the percentage you wish to accept, in case price changes from the one Curve showed you in Step 2. For example, in the screenshot above you see that I will exchange 1 $DAI for 1 $USDC. By the time I sent the transaction, other people could have traded on the exchange, causing the pool balance and prices to change. Instead of getting 1 $USDC, I might end up with 0.995 $USDC or in some extreme scenarios 0.8 $USDC.

Slippage allows you to specify the difference in the price you are willing to accept. On the screen above, I specify that I am willing to accept a 1% change in price. Therefore, I will receive 0.99 $USDC for 1 $DAI in the worst-case scenario. In case the balance of the pool changes where the price difference is higher than 1%, then the transaction will fail, and you will remain with your 1 $DAI.

It would help if you were extremely cautious when changing the slippage, as there are a lot of risks associated with having a high slippage. Use it only when you have to, and you know what you are doing. Whenever you change it for your own reasons, make sure that you change it back afterward. Otherwise, you can potentially accept exchanging 1 Dollar for 0.8 Dollars. Usually, 0.5% should be acceptable for pools with high liquidity.

Gas Price

That option changes from network to network as Gas Prices are different. What this option allows you to do is change the priority of your transaction. In some networks, the higher the Gas you are willing to pay, the higher your transaction’s priority. Gas is the amount of ETH or AVAX you are willing to pay the validators securing the network to execute your transaction. If you want your transaction to be executed faster, then you need to raise the Gas. Be extremely cautious when using this option, or don’t use it if you don’t clearly understand what is happening.

Step 5: Execute your swap or trade

To execute your trade, click sell. Metamask will prompt you to sign the transaction. Sign the transaction and wait. Once the transaction is completed, Metamask and Curve will inform you.

How to provide liquidity on Curve

Step 1: Find a Liquidity Pool

The first step in becoming a liquidity provider on Curve, is deciding which liquidity is best for you to deposit your funds.

Move down to the “Curve Pools” section from the main page, and click on the “See All Pools”. Alternatively, go to curve.fi/pools, avax.fi/pools or the corresponding /pools URL of the network you are using.

how to provide liquidity on curve
Select Liquidity Pool Screen

In this section, you will find all liquidity pools available on the exchange. The table of pools has four different sections. Let’s see what is the meaning behind each one.

1. Pools

The Pools column is self-explanatory. It shows the name of each liquidity pool as well as the assets included in each corresponding pool

2. Base vAPY

This number shows the Anual Percentage Yield (APY) generated from each pool. Given today’s activity, APY is the return you will get on the funds you will deposit in the pool, in one year. This number is based on the fees collected from the daily trading volume on the liquidity pool. When traders trade on liquidity pools, they pay a small percentage fee to the pool, which is given as a reward to liquidity providers risking their money. APY, not to be confused with APR, assumes daily compounding. Liquidity providers receive these fees when they withdraw the funds from the pool.

For example, If a pool contains 990000 USDC, DAI and you deposit 10000 additional DAI, you will be collecting 1% of the daily trading fees on that liquidity pool. Consequently, the APY provided on the screen is variable and can change from day to day based on the trading activity and the size of the pool.

3. Rewards tAPR

This number represents the additional rewards given to liquidity providers to incentivize liquidity on the exchange. These funds usually come from the exchange itself or the underlying network that wants to attract users to the ecosystem.

Let’s have a look at the first pool of the list. As you can see on the screen, additional rewards are given to liquidity providers. In this case, in addition to the base 1.25% APY the platform gives, the liquidity providers will also get 6.03% and 3.23% rewards in WAVAX and CRV respectively. This number can vary as well, as it is based on the current prices of WAVAX and CRV respectively as well as the corresponding reward rates that could be adjusted by the team.

Therefore, if you deposit 1000$ worth of DAI in this pool, in one year, you will receive roughly 12.5$ in DAI or another stable coin from the pool, 60.3$ in AVAX, and 32.3$ in CRV, given the current exchange and reward rates.

4. Volume

This number represents the daily trading volume of each liquidity pool. Sometimes you see high volume and low APY because the fees are distributed as a percentage of the overall liquidity. The higher the volume the more fees are generated for liquidity providers.

Hence, if there is an equal trading volume on two pools, but one pool has twice the amount of liquidity compared to the second pool, then, the liquidity providers of the pool with the lowest liquidity get double the rewards.

Step 2: Select Liquidity Pool

Once you decide on which liquidity you want to deposit your funds then select it and then click deposit on the top menu. This step is visualized with the number 1 on the screenshot above.

Step 3: Enter the amount of funds

In the blue boxes on the screen, enter the funds you want to deposit.

Step 4: Deposit your tokens

Finally, click Deposit. The Metamask wallet will prompt you to sign the transaction. If it’s the first time you are using Curve, then you will need to sign two transactions. The first one is for authorizing the protocol to use your funds. The second one is your actual transaction. Wait a few minutes, and you are done.

To ensure your funds have been deposited, scroll down and check in the “My Share” section. There you will see your percentage share in the pool.

Step 5: Stake your tokens

Once you deposit your tokens, a new button will appear prompting you to “Stake or Unstake in gauge”. In order to earn the additional rewards like in the example above WAVAX and CRV, you have to stake your tokens. If you won’t, you will be earning only the base APY based on the trading fees.

Similar to the previous step, if you are using this functionality for the first time, you will need to sign two transactions.

How to withdraw liquidity from Curve

how to withdraw liquidity from curve

Step 1: Find your Liquidity Pool

You should know in which liquidity you deposited your funds. If not, then navigate to “My Dashboard” from the home page, and you will find it. Then:

  • Navigate to curve.fi/pools page.
  • Select the Liquidity Pool where you deposited your funds.
  • On the Top Menu of the page click Withdraw

Step 2: Withdraw your Liquidity

On the page, you will find a few options. Assuming that you have deposited and staked your liquidity, then you will have two options:

  1. Unstake from Gauge: You use this option in case you want to withdraw your funds from the Gauge but not from the liquidity pool.
  2. Unstake & Withdraw: You use this option in case you want to completely withdraw your funds from the protocol. This option will both unstake and withdraw.

You will also need to decide if you want to withdraw tokens in one currency or multiple currencies. If you want to withdraw in a single currency, let’s say DAI, then select DAI from the selection menu called “Withdraw % in.”

Final Thoughts

Curve Finance and Stableswaps overall are some of the most important DeFi protocols. It doesn’t matter if you are an experience DeFi user or a completely new one. If you are using DeFi protocols frequently, at some point you will need to swap one representation of your stablecoins to some others. Curve Finance allows you do to exactly that. Furthermore, Curve Finance is deployed already on 8 different networks.

It is very unlikely for any DeFi user on those 8 networks to never use Curve at least once. Hence, learning how to use the basic functionality of Curve is important. I hope this guide helps you navigate the world of Decentralized Finance.

Aris Ioannou
Aris Ioannouhttps://coinavalon.io
Aris created Coinavalon with the purpose of helping the average person navigate the decentralized web. Aris has been passively in the space since 2017 and full time since late 2020. Before Coinavalon, Aris worked as a Business & IT Architect in the financial services sector. Aris holds an MSc in Advanced Computing from Imperial College London, a BSc in Computer Engineering from University of Cyprus and currently pursuing an MBA degree from CIIM.

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