Protocol Architecture
Last updated
Last updated
The Curvance protocol offers a new solution to the challenge of capital efficiency and composability in DeFi. Designed from the ground up, the protocol enables users to interact with various DeFi ecosystems and strategies while prioritizing security, capital efficiency, and ease of use. This design enhances the user experience and unlocks new opportunities for yield maximization and enhanced financial flexibility.
Curvance’s code architecture employs a novel, risk-isolated design of multiple markets derived from various DeFi ecosystems. This allows users to participate in markets that are comprised of underlying assets from protocols and ecosystems such as Aerodrome, Pendle, Eigenlayer LRTs, and Ethena. Users can select markets that align with their risk preference, creating a spectrum of options from conservative, low-risk exposure to more dynamic, higher-yield opportunities.
This model strikes a flexible balance between the traditional shared pool and fully isolated pool models utilized by incumbent protocols, improving capital efficiency and protocol security. Each market’s risk exposure is managed through dynamically adjustable collateral caps and bad debt socialization, effectively reducing protocol risk. This approach allows for the development of exotic markets, offering unique yield opportunities not present in traditional markets.
One of the most sought-after goals in DeFi is composability, which allows protocols and applications to interact seamlessly, improving user experience and maximizing capital efficiency.
The Curvance protocol delivers on the vision of composability by directly hooking up to applications and infrastructural technology. The protocol also optimizes DeFi participation for the benefit of users and builders alike due to its ability to natively route vault liquidity through all applicable reward layers.
For users, this creates fundamentally new DeFi actions, such as using liquidity provided on a DEX as liquidity in Curvance's lending markets or the ability to borrow capital and bridge across networks in a single click.
For builders, this fixes issues with token incentives by creating the ability to reward users for various actions from any chain on any chain. Full liquidity mining programs can be built permissionlessly on top of Curvance for any supported asset on any supported chain.
Example: A user deposits their USDC/AERO Aerodrome LP tokens into the Curvance protocol. Leveraging the ERC-4626 architecture, the protocol automatically routes the deposited LP tokens back to the Aerodrome platform and compounds the rewards, capturing both the underlying reward layers and Curvance’s native rewards.
This structure enables the user to collect all yield layers seamlessly within the Curvance platform and benefit from simplified position management while unlocking collateralization opportunities.
