Dynamic Interest Rates on Curvance

Interest rates within the platform are dynamic, adjusting in real-time to meet market demand within each lending pool. Inspired by models like Fraxlend, Rari, and Kashi, Curvance’s rates are determined by factors including pool utilization, usage multiplier, and time decay, ensuring stability and flexibility as conditions change.

Interest Rate Adjustments

• Pool Utilization: This metric reflects the proportion of total funds in a lending pool actively borrowed by users. A higher pool utilization rate indicates that a larger portion of the pool’s funds are being borrowed, while a lower rate shows more lending capacity.

• Interest Rate Dynamics: As pool utilization increases and nears maximum capacity, interest rates progressively rise, significantly beyond a set “vertex point.” This vertex point serves as a threshold where rates begin to accelerate, responding dynamically to increased demand and incentivizing liquidity supply.

• Time Decay: Interest rates adjust with a gradual decay over regular intervals (currently set to every 4 hours). If utilization drops below the target rate, the vertex multiplier lowers, leading to a decrease in rates to maintain stability.

Example Scenario:

Initial State: A lending pool contains 1,000,000 USDC, of which 800,000 USDC is borrowed, resulting in an 80% utilization rate with an interest rate of 2%.

• Surge in Utilization: If a large borrower enters and takes an additional 200,000 USDC, pushing utilization to 100%, the interest rate rises significantly due to exceeding the 85% vertex point. In this scenario, rates increase to 8%, which then double every 4 hours until utilization decreases.

This dynamic adjustment encourages borrowers to consider repayment while incentivizing suppliers to add more USDC to the pool, helping balance demand and maintain liquidity. The system’s responsiveness promotes an equilibrium within the lending ecosystem, supporting stability and addressing the evolving needs of the protocol users.

Multichain Vote Escrow System

The Multichain Vote Escrow System is a core component of Curvance DAO governance and incentive design, enabling holders to actively participate in the protocol’s development direction and benefit from multiple revenue streams across chains. By locking CVE tokens for veCVE, users gain governance power that extends across Curvance’s multichain ecosystem.

Cross-Chain Governance and Incentive Flexibility

One of the unique features of Curvance’s multichain vote-escrow system is the ability for veCVE holders to participate in governance across chains seamlessly. Through the CVE Gauge System, veCVE holders can direct emissions and influence incentives on any supported chain, allowing for a highly flexible and powerful governance model.

• Migrating Locks Across Chains: veCVE holders can migrate their locks to integrated chains, allowing them to access chain-specific incentives. This feature gives users flexibility and enhances the protocol's network reach, attracting liquidity and activity to targeted chains.

• Multichain Fee Distribution: veCVE holders receive fees generated across all integrated chains, regardless of where their lock is held. This is a key innovation compared to traditional vote escrow models, which limit users to receiving fees and exercising voting power solely on the chain where their tokens are locked.

The Multichain Vote Escrow system is more than just a governance mechanism—it is a comprehensive structure for aligning user incentives, facilitating cross-chain incentives, and reinforcing Curvance’s mission of building a multichain DeFi ecosystem. By empowering veCVE holders with voting power and shared fee distributions across chains, Curvance incentivizes meaningful, long-term engagement and growth throughout its ecosystem.

Liquidations in Curvance

Liquidations play a vital role in maintaining the stability and integrity of the Curvance protocol by protecting lenders from potential losses. Liquidations are triggered when the value of a borrower’s collateral falls below a defined threshold, known as the Health Factor.

Understanding the Health Factor

The Health Factor measures an account’s stability and capacity to cover borrowed funds. Calculated as:

• A Health Factor above 1 signifies sufficient collateral value and a safe position.

• A Health Factor below 1 indicates insufficient collateral value, triggering Curvance’s liquidation processes.

The liquidation engine is proactive and designed to protect borrowers from hard liquidations by implementing a linear scale between "soft" and "hard" liquidation levels. The severity of liquidations is continuous as collateral runs out and travels along a linear curve from soft liquidation to hard liquidation. The severity of a liquidation is calculated from a user's lFactor or liquidation factor. A liquidation factor of 0 indicates that no liquidation is possible, whereas a liquidation factor of 1 indicates a full hard liquidation.

• Soft Liquidation: A partial liquidation occurs with a small penalty, preserving more of the user's collateral, making Curvance more forgiving during times of low volatility.

• Hard Liquidation: Full liquidation with a high penalty if the Health Factor is critically low, meaning Curvance can shed risk faster than other lending protocols in times of high volatility.

Recommendation: Maintaining a Health Factor above 1, ideally at 1.5 or higher during market volatility, is advised to reduce liquidation risk.

Liquidations in Other Protocols

Most lending protocols set single-point liquidation levels, creating a trade-off:

• Overly Conservative Liquidation Levels: This can lead to premature liquidations, making the user experience less favorable.

• Overly Generous Liquidation Levels: This may increase the risk of bad debt within the protocol.

Other lending protocols also tend to only look at three different factors to determine liquidations:

• Collateralization Ratio: Determines the maximum borrowing threshold for each asset.

• Liquidation Threshold: Equivalent to the Curvance protocol's Hard Liquidation Threshold, this looks at when a position should be liquidated by half or in full.

• Liquidation Fee: A fee on the user's collateral value during a liquidation that goes back to the protocol in the form of revenue.

Curvance’s Dynamic Liquidation Engine

The Dynamic Liquidation Engine allows for more flexibility in determining liquidation thresholds, how much of a position gets liquidated, the fee associated with that liquidation, and the incentives for liquidators in each scenario. This is done using the following configurable values:

• Collateralization Ratio: Determines the maximum borrowing amount per $1 of collateral for each asset.

• Soft Collateral Requirement: The premium of excess collateral required to avoid triggering a soft liquidation.

• Hard Collateral Requirement: The premium of excess collateral required to avoid triggering a hard liquidation.

• Soft Liquidation Incentive: The base incentive to liquidate a user position.

• Hard Liquidation Incentive: The maximum incentive to liquidate a user position.

• Liquidation Fee: The fee the protocol takes from a user's collateral during a liquidation.

• Base Close Factor: The % of outstanding user debt that can be closed for a user position.

This approach balances the user experience and protocol stability, minimizing the risk of sudden liquidations for borrowers while protecting the protocol and lenders against bad debt.

Yield-Bearing Assets

The surge in popularity of yield-bearing assets spans wide, from assets such as LSTs, LRTs, yield-bearing stablecoins, Perpetual Exchange/DEX LP tokens, and more. This growing asset class offers both fungibility and income-generating potential.

With Curvance, users can embrace a new paradigm that removes the compromise between participation in lending protocols and yield farming across DeFi. This enables individuals to explore new strategies, such as providing liquidity on Aerodrome while simultaneously borrowing against their LP tokens, maximizing both composability and capital efficiency.

The flow on Curvance will be as follows:

1. A user is interested in unlocking capital on their yield bearing asset. The Curvance protocol will facilitate the user's redirection of the supplied assets back into the respective underlying protocol to earn the native yield while permitting the user to borrow against their position as it remains productive.

2. Upon deposit, the user will receive representative pTokens (position tokens) minted from Curvance, equal to their pool share. These pTokens will redeem their share of deposits after the loan is paid back.

This unlocks the potential for users to leverage Curvance's advanced position looping, enabling participation in traditional strategies like LRT or yield-bearing stablecoin looping and more advanced strategies such as LP token looping.

Through advanced position looping, users can borrow against their LP tokens while continuing to earn the underlying yield. The borrowed funds are then zapped into the underlying protocol's LP token and redeposited into Curvance, effectively creating a leveraged yield farming position.

Non-Yield-Bearing Assets

The Curvance protocol accommodates a wide range of assets, including non-yield-bearing tokens like WETH, WBTC, USDC, and USDT. These assets, though lacking native yield generation, still play a vital role in DeFi by providing liquidity and stability within lending markets.

With Curvance, users can unlock the capital potential of non-yield-bearing assets without sacrificing flexibility. Unlike traditional lending protocols, which limit non-yield-bearing assets to passive roles, Curvance integrates them into a composable framework that allows users to borrow, lend, and manage positions across multiple chains.

How It Works on Curvance:

1. A user can deposit non-yield-bearing assets such as WBTC into a market on Curvance, using the asset as collateral for leveraging their original exposure or accessing liquidity without losing their original exposure. While these assets do not generate native yield, users benefit from access to CVE emissions and protocol incentives, enhancing passive yield on their holdings.

2. Upon deposit, users receive pTokens, representing their share in the pool. These pTokens can be redeemed for the original collateral once any outstanding loan obligations are repaid.

Collateral Caps in Curvance

Collateral caps are used as a core safeguard for the lending markets, setting specific restrictions on the amount of each asset that can be used as collateral. This mechanism is essential for protecting the protocol against bad debt and unintentionally incentivizing market manipulation by bad actors.

Purpose and Function of Collateral Caps

While the protocol allows unlimited vault deposits to earn yield, only a percentage of total assets in each market can be used as collateral for borrowing. By setting these collateral caps, the Curvance protocol minimizes the risks posed by market volatility and sudden price shifts, aligning with industry risk management principles to ensure the platform’s stability.

• Mitigating Overexposure: Collateral caps prevent overexposure to specific assets within isolated markets, reducing potential adverse impacts during volatile market conditions.

• Ensuring Controlled Borrowing: Collateral caps create an over-collateralized borrowing environment, mitigating systemic risk while providing users with a secure lending and borrowing experience.

Determining Collateral Caps

Collateral caps are determined by a third-party risk management group elected by Curvance DAO participants known as the Curvance Collective. These caps are based on an asset’s on-chain liquidity across various pairs within the network. The elected third party also evaluates offside liquidity (liquidity distributed across asset pairs within the protocol) and sets caps to ensure stability.

Example: If USDY constitutes 80% of a skewed stable pool, with USDC making up 20%, the collateral cap for USDY is calculated based on USDC’s liquidity. If total offside liquidity is $10 million (with $8 million in USDY and $2 million in USDC) and Curvance allows a cap of 40% of offside liquidity, the collateral cap would be 40% of $2 million, or $800,000, translated into tokens based on asset value.

DAO-Controlled Updates

Shortly after the Curvance DAO launches, the Curvance Collective will vote to select their preferred third-party risk management group. This group will be tasked with determining risk parameters for all supported assets. Together, the Curvance DAO and the elected group will regularly review and adjust collateral caps in response to changes in offside liquidity, ensuring alignment with on-chain liquidity. This dynamic approach to risk management helps mitigate systemic risks and maintain stability within the protocol's lending markets.

Collateral Cap Example: On-Chain Liquidity Focus

Consider $100 million in sDAI within the Curvance protocol, earning native gauge emissions. With a focus on on-chain liquidity, the protocol caps collateralization for sDAI at approximately 10 million tokens. This cap means that no more than 10 million sDAI can be used as collateral, ensuring controlled asset exposure while minimizing systemic risk.

By carefully linking collateral caps to liquidity dynamics and adjusting them via DAO governance, the protocol can provide a robust, stable approach to collateralized borrowing. This method aligns user security with broader protocol health, allowing users to scale responsibly within DeFi.

Supply-Side: Earning Interest By Providing Liquidity

The Curvance protocol enables users to earn yield by supplying assets to borrowers in its peer-to-peer lending markets. Depending on the market, most deposits can be used as collateral, allowing users the ability to borrow against their holdings. Assets supplied solely for lending, however, cannot be borrowed against.

Characteristics

• Common Borrowable Assets:

  • Stablecoins: Stablecoins are commonly borrowed by users who want to improve their net DeFi strategy yields.

  • Volatile Non-Yield-Bearing Tokens: Volatile Non-Yield-Bearing Assets are commonly borrowed by users who want to create cross-token strategies such as longing BTCETH or farming staked ether yield.

• Adding New Supported Tokens: New tokens can be introduced as lending options by the Curvance DAO, expanding opportunities.

How It Works for Lenders

When users deposit tokens into Curvance as lenders, they receive a proportionate amount of eTokens (earn tokens), representing their share in the lending pool. Earned interest is automatically compounded, increasing the user’s overall position over time.

Key Benefits of Lending:

• Instant Yield Access: Users can deposit into earning positions for no cost and immediately earn yield on their assets.

• Automatically Reinvested Yield: Interest on outstanding debt is managed by automation across all positions for all users simultaneously, continuously reinvesting accrued interest back into all user's positions.

• Instant Liquidity Access: After a 20-minute cooldown period, lent liquidity can be redeemed at any time unless there is 100% utilization in that particular market.

Demand-Side: Supercharged DeFi opportunities

Curvance offers users on the demand side various options to generate yield and access liquidity by borrowing against their deposited assets. Deposited assets are routed to all supported yield opportunities. Users can then use them as collateral to access new liquidity.

Characteristics

• Common Depositable Assets:

  • Interest-Bearing Stablecoins: Stablecoins are commonly borrowed by users who want to improve their net DeFi strategy yields.

  • Liquid Staked/Restaked Tokens: Assets such as LSTs are natively supported, offering streamlined yield generation.

  • LP Tokens: More complex assets, such as LP tokens for AMMs, Perps, CLOBs, etc., benefit from auto-compounding, optimized yield generation, and improved user experience.

• Adding New Supported Tokens: New tokens can be introduced as deposit options by the Curvance DAO, expanding opportunities.

How It Works for Depositors

When users deposit tokens into Curvance, they receive a proportionate amount of pTokens (position tokens), representing their share in the managed vault. Earned yield is automatically compounded, increasing the user’s overall position over time.

Key Benefits of Depositing:

• Instant Yield Access: Users can deposit into earning positions for no cost and begin earning yield on their assets immediately.

• Instant Liquidity Access: Deposited assets can, in most cases, be collateralized, allowing access to borrowed liquidity against the market value of deposited assets.

• Automatically Reinvested Yield: Yield on deposited assets is managed by automation across all positions for all users simultaneously, continuously reinvesting accrued yield into all users' positions.

• Economies of Scale: By pooling all users' positions together, any managed actions are executed for all users simultaneously, minimizing automated management costs. For example, If 10,000 users deposit into a particular asset vault, auto compounding operations are executed for all 10,000 positions at once, reducing user costs by (9999 / 10000) 99.99%.

Enabling Collateralization for Borrowing

To enable an asset as collateral, users can follow these steps:

1. Go to the main dashboard to view all deposited assets.

2. Locate the assets to be used as collateral.

3. Enable the desired assets as collateral using the "Increase Collateral" button.

Note: When enabled, the corresponding deposited assets continue to earn yield, ensuring efficient capital utilization across DeFi.

Borrowing Limits

A user’s borrowing capacity within Curvance is determined by two key factors: the collateralization ratio set by the Curvance DAO and the available liquidity within the isolated market.

1. Collateralization Ratio

The collateralization ratio defines the maximum borrowing threshold for each asset, reflecting its specific risk profile. Assets with lower risk have higher collateralization ratios. For example, an asset with a 75% collateralization ratio allows a user to borrow up to $0.75 for every $1.00 of the asset deposited as collateral.

Curvance calculates each user’s borrowing limit as a blended collateralization ratio across various assets within an isolated market. This blended Loan-to-Value (LTV) ratio represents the maximum amount users can borrow based on the combined collateral they’ve supplied.

Example: A user deposits $100 of WETH/wstETH LP tokens, which earns an APR of approximately 4%. Leveraging the ERC-4626 architecture, Curvance directs the LP tokens to an underlying protocol to capture yield. With a collateralization ratio of 80%, the user can borrow up to $80 in assets, against their LP tokens.

2. Available Liquidity

A user’s ability to borrow also depends on the pool’s liquidity. If the requested loan amount exceeds the available liquidity in a given pool, borrowing may not be possible.

Example: A user deposits $1000 of cbBTC into a market with $50 in available USDC liquidity on the lending side. With a collateralization ratio of 90%, the user can borrow up to $900 in assets against their wrapped bitcoin. Still, with only $50 in available liquidity, the user can only borrow up to 50 USDC even though the Protocol Risk Engine would support a larger debt position.

Repaying Loans and Collateral Redemption

To close a debt position, users must repay the borrowed amount and any accrued interest costs in the same asset initially borrowed. This can be done via the Curvance front end or directly through smart contracts. After repayment, users can redeem their collateral and underlying assets by returning the pTokens received at the time of the initial deposit.

Bad Debt Socialization in Curvance

Bad debt socialization is a critical mechanism within the Curvance protocol, designed to maintain market stability and manage risk in cases where borrowers default on their loans, leaving a shortfall in collateral. For example, if a borrower owes $500 but has collateral worth only $300, a $200 shortfall arises.

Bad debt socialization addresses isolated and cross-margin scenarios, providing a nuanced solution that differentiates it from other protocols.

How Bad Debt Socialization Works

When an undercollateralized position is liquidated, and a shortfall remains (e.g., $200), the deficit is socialized across the entire lender market to protect market health. This process involves an adjustment to the exchange rate of each lender’s token, allowing the shortfall to be absorbed proportionally by all lenders:

• Proportional Distribution: The shortfall is distributed across all lenders within the affected market. Each lender’s token value for redemption is slightly reduced to cover the debt, ensuring that the impact on each lender is proportional to their market participation.

• Exchange Rate Adjustment: Adjusting the exchange rate systematically distributes the deficit, preventing any single lender from bearing an excessive share of the loss. This method stabilizes the market and keeps it operational, even in significant default events.

Rationale and Lender Risk

Bad debt socialization aligns with the inherent risks lenders assume when participating in the protocol. Since lenders are exposed to borrower defaults, sharing the impact of bad debt across all participants is an equitable solution. This approach decreases risk to lenders and strengthens the protocol’s resilience by preventing bad debt accumulation that could destabilize the market.

Wormhole: Enabling Curvance's Multichain Strategy

Wormhole is a pivotal technology that supports the Curvance protocol's multichain approach by enabling seamless communication across EVM and non-EVM blockchains. Through Wormhole, the protocol can overcome composability and scalability limitations, allowing the Curvance protocol to operate efficiently on multiple chains.

At the core of Wormhole’s architecture is the Guardian Network, a decentralized validator network that verifies and signs cross-chain data transfers, ensuring the integrity and authenticity of each transaction. Wormhole’s Cross-chain querying and Standard Relayers streamline the process by automating data reads and transfers between chains, making it simpler and more cost-effective for developers to build multichain applications.

The Curvance protocol utilizes Wormhole’s technology to power the Multichain Fee System and Multichain Vote Escrow system, bringing greater scalability and interoperability to the Curvance ecosystem.

For an in-depth explanation of Wormhole’s technology, visit the Wormhole Docs.

Circle: Powering Curvance's Multichain Fee Distribution

The Cross-chain transfer protocol (CCTP) facilitates Curvance's multichain fee distribution system, by enabling zero slippage value transfer between EVM and non-EVM chains.

How it works

1. USDC is burned on the source chain: Using an app, a user initiates a transfer of USDC from one blockchain to another, and specifies the recipient wallet address on the destination chain. The app facilitates a burn of the specified amount of USDC on the source chain.

2. A signed attestation is fetched from Circle: Circle observes and attests to the burn event on the source chain. The app requests the attestation from Circle, which provides authorization to mint the specified amount of USDC on the destination chain.

3. USDC is minted on the destination chain: The app uses the attestation to trigger the minting of USDC. The specified amount of USDC is minted on the destination chain and sent to the recipient wallet address.

CCTP's value proposition is increased when combined with the aforementioned Wormhole tech stack. Allowing Curvance to facilitate value transfer and information transfer simultaneously between chains. Curvance utilizes CCTP to power our Multichain fee system, bringing greater scalability and interoperability to the Curvance ecosystem.

For an in-depth explanation of CCTP, visit the Circle Docs.

New Age Liquidity Mining with Curvance

The Curvance protocol provides new innovations in liquidity mining infrastructure by streamlining incentive programs for protocols, token issuers, and blockchains while simplifying participation for liquidity providers and users. Traditionally, setting up secondary and tertiary incentivization layers involves complex processes and additional steps for users, leading to a measurable drop in participation and adoption. Curvance’s infrastructure delivers incentives directly while optimizing the underlying liquidity mining strategies for greater efficiency and growth. Additionally, user liquidity can be routed through multiple layers of incentivization, ensuring peak capital efficiency and maximizing yield.

Abstract

Curvance was created to empower users to unlock the full potential of their digital assets through a decentralized, interoperable application. Our founding team believes in a future where financial tools are accessible, secure, and efficient for everyone, regardless of the chain or asset type. The mission is to simplify and enhance capital efficiency and reduce fragmentation throughout DeFi. Enabling new users and experienced veterans alike to optimize yield and unlock liquidity in a seamless, trustless way.

How does Curvance empower its users?

Curvance plays a key role in multichain DeFi by offering a secure, modular, and composable protocol that can support complex yield assets along with any ERC-20 token. The platform offers a seamless experience through:

• A chain-agnostic reward and utility layer for every asset class.

• ERC-4626 vault technology that allows integration with third-party protocols.

• A robust security model featuring dual oracles, volatility circuit breakers, rigorous audits, and real-time threat monitoring.

• Unified liquidity powered by Wormhole, enabling users to access liquidity and optimized strategies across multiple blockchains.

• A multichain vote escrow system designed to simplify DeFi incentives and reduce liquidity fragmentation.

• An institutional-grade liquidation engine that is the best place to borrow during periods of low volatility and has unmatched flexibility during high volatility, protecting lenders.

• A developer-friendly “Plugin” system that allows developers to build tools that easily automate actions taken and permissions granted for wallets interacting with Curvance

• ERC-4337 MEV protection, decentralized auctions that recapture value lost to MEV searchers and block builders through the use of application specific sequencing.

Why should you use Curvance?

Curvance provides a comprehensive suite of decentralized finance tools designed to enhance capital efficiency and unlock new opportunities for users.

Key features include:

1. Decentralized Lending Products: Facilitate peer-to-peer lending and borrowing by allowing users to collateralize their positions, unlocking liquidity in a secure, trustless manner across multiple chains.

2. Native Auto-Compounding: Leverage our modular ERC-4626 vault technology to automatically compound yields, optimizing user returns with minimal effort and maximizing capital efficiency on yield-bearing assets.

3. Position Management Tooling: Empower users to easily manage their positions through an intuitive interface, enabling efficient rebalancing, collateralization, and monitoring across various protocols and assets.

4. Opportunity Discovery: Curvance's front-end users can view and interact with all available strategies from one unified screen. They can discover new yield-generating opportunities and innovative DeFi products integrated into our platform, ensuring they always find the best opportunities.

5. Multiple Sources of Revenue: Curvance, as a protocol, has more ways to generate revenue than most existing DeFi applications, such as interest on yield-bearing assets, borrowing, lending, and application-specific sequencing.

6. Sustainable DAO Model: Curvance operates under a sustainable DAO structure, where governance is decentralized, and users can actively participate in shaping the protocol’s future. When paired with Curvance's revenue potential, this DAO model ensures continued development, security improvements, and user acquisition for many years.

7. Plugin System:

   Access any externally built feature in a single approval, like downloading DLC from a video game. Unlocking features like crosschain borrowing, crosschain deposits, or limit orders. Choose what Curvance is to you.

Vision

The vision for Curvance is to become the front page of DeFi, creating the final reward and utility layer for every asset under the sun. As DeFi grows, Curvance will play a pivotal role in expanding access to sophisticated yield-generating products across multiple chains, maximizing capital efficiency, and empowering users to leverage their assets like never before.

Will you join us, anon?

Website: https://curvance.com/

X: https://x.com/Curvance

Telegram: https://t.me/curvance

Discord: https://discord.com/invite/curvance

Capital Efficiency and Composability in Curvance

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.

Risk-Isolation Model

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.

Composability

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.

An RPC (Remote Procedure Call) allows users to interact with a blockchain by sending requests to remote servers (nodes) for actions like checking account balances, submitting transactions, or querying blockchain data. It simplifies blockchain interactions by enabling commands to be executed on external servers without requiring direct access to the blockchain infrastructure. This functionality powers wallets, decentralized applications, and other blockchain services, ensuring a seamless user experience.

However, testnet networks are often less stable than their mainnet counterparts. As a result, users may experience issues with certain RPC endpoints. To address these issues, refer to the attached guide for detailed steps on how to update your RPC endpoint and restore functionality.

Multichain Gauge: Enhancing Voting and Rewards

The Curvance Multichain Gauge is a system designed to build on the traditional vote-escrow model by enabling cross-chain voting and reward distribution, a feature unavailable in most gauges that limit governance participation to a single chain.

Key Features of the Multichain Gauge

• Cross-Chain Gauge Emission Voting: Users can lock CVE across all supported chains, enabling them to vote for native gauge emissions regardless of their lock location. This system allows for flexible and robust liquidity strategies.

• Reward Distribution Across Chains: CVE token lockers can receive pro-rata protocol fees generated across all integrated chains. As a result, this allows veCVE holders to benefit from fees generated across the entire Curvance ecosystem, regardless of the blockchain their lock is located.

• Cross-Chain Lock Bridging: Users can burn and mint their veCVE locks to move them from chain to chain, where pro-rata chain rewards are available, driving volume and TVL to a particular chain.

How the Multichain Gauge Works

Using Snapshot’s gasless voting system, voting occurs during biweekly epochs. Once an epoch concludes, votes are aggregated and processed on onchain.

Emissions remaining for an epoch are queried across all chains simultaneously via Wormhole's CCQ, validating the efficacy of the aggregated voting data. Once validated, emission data is updated on the source chain, and remote chain emission data is relayed via Wormhole's standard relayer to each chain. Gauge Rewards are made available in the Gauge Manager on each chain.

Benefits of the Multichain Gauge

Curvance’s multichain gauge introduces a unified, chain-agnostic vote-escrow system that reduces gas costs, promotes deep liquidity, and enables efficient fee generation across multiple chains with minimal maintenance. This design empowers users to lock CVE on any chain, vote for any pool, and share in protocol fees equally, enhancing governance flexibility and ecosystem growth.

For a visual overview of the cross-chain communication system, please see the diagram below.

Application Specific Sequencing in Curvance

The Curvance protocol introduces an oracle-agnostic, MEV-optimized system for handling liquidations, developed in partnership with Atlas. This system integrates orderflow auctions, allowing liquidators to bid for the right to liquidate collateral in the Curvance lending markets. This makes the Curvance platform one of the first to leverage this advanced approach in DeFi.

Liquidation Characteristics

Through app-specific sequencing, the protocol captures Maximum Extractable Value (MEV) by organizing liquidation events to maximize efficiency and value for the protocol. Here’s a simple breakdown of how it works:

1. Orderflow Auctions: When a liquidation event is triggered, liquidators participate in an auction, bidding for the right to execute the liquidation. This competitive bidding process allows the protocol to receive the transaction validation bid rather than the block builder.

2. Rapid Execution: The entire auction process takes just 300 milliseconds (3/10ths of a second), ensuring liquidations occur quickly and with minimal delay.

3. Fail-Safe Permissionless Liquidation: If no winning bid is determined or the winning liquidator fails to execute, a permissionless liquidation immediately takes place to protect the protocol’s stability and assets.

Incentive Capture

Over the last four years, traditional platforms like Compound and Aave have left a combined $180 million in liquidation incentives to MEV searchers. Historically, 95 - 98% of all incentives are given as incentives to block builders to validate their liquidation first. Curvance’s MEV-optimized system is designed to recover as many incentives as possible through auction revenue, significantly reducing the opportunity cost of liquidations while increasing protocol revenue potential.

Competitive Edge

With the built-in fallback mechanism, the protocol remains competitive with other DeFi platforms (Lending Protocols, Perpetual Exchanges, Collateralized Debt Positions Protocols, etc.), which may need to liquidate user assets. Curvance can capture MEV without needing an appchain, minimizing costs, enhancing protocol sustainability, and providing a unique advantage for users and liquidators.

Strategic Advantages for Protocols

The Curvance platform enables other protocols to run incentive campaigns tailored to their specific objectives. By utilizing Curvance, protocols can enhance existing liquidity mining and product growth strategies while introducing new utility and maximizing yield opportunities for their users. This is accomplished by:

• Optimization of DEX Liquidity Mining: The Curvance protocol optimizes DEX liquidity mining for other protocols by creating vaults that support their DEX liquidity pool tokens. These vaults natively auto-compound underlying emissions and incentives back into LP tokens. This leads to deeper, continually growing DEX liquidity for protocols and higher yields for liquidity providers on Curvance.

• Multichain Incentivization: Traditional vote escrow models require protocols to lock their tokens and commit to a specific blockchain ecosystem for long periods. With the Multichain Gauge System, protocols can leverage veCVE to create a sustainable incentivization strategy that spans multiple chains and DEXs, providing enhanced flexibility and enabling cross-chain growth.

• Ease of Incentivization: Protocols can seamlessly stream any whitelisted ERC-20 token through the Partner Gauge System. This includes ecosystem grants and the protocol's native token, offering a flexible approach to incentivization.

• Asset Looping and Leveraging: Protocols can incentivize users to leverage their positions through one-click asset looping. This allows users to leverage basic yield-bearing assets and long-tail exotic assets, such as Decentralized Exchange LP tokens and Perpetual Exchange LP tokens, unlocking a new market of liquidity providers for protocols to capitalize on.

Dual Oracle System and Circuit Breaker Protection

To enhance security, the protocol primarily uses a Dual Oracle system, leveraging data from various sources such as Redstone, Chainsight, Pyth, Chainlink, API3, Chronicle, and more. While most assets utilize two independent oracle sources to ensure accurate pricing and protect against manipulation and volatility, the protocol can support assets with a single oracle when appropriate. For instance, assets like wstETH, which are redeemable for stETH, may not require a second oracle due to their inherent price stability and transparency.

How the Dual Oracle System Works

If the price data from both oracles diverges significantly—due to either manipulation or extreme market fluctuations— The Curvance protocol can pause borrowing and redemptions for that asset. Preset parameters trigger this pause, allowing time for Oracle prices to stabilize and converge.

• In the event of an abnormal pricing discrepancy between oracle feeds, typically seen during flash loan or oracle attacks, the creation of new debt and redemptions are halted while liquidations are still allowed to be processed.

• If an extreme discrepancy is detected, the creation of new debt, redemptions, and liquidations are all halted.

Together, these measures form the protocol's Circuit Breaker System, which safeguards users during market anomalies.

Lender Protection and Price Favorability

To provide additional security for lenders, the dual oracle system uses the most favorable oracle-reported price when calculating the final asset price in user liquidity checks, optimizing protection against bad debt.

Example:

• If one oracle reports an asset price of $100 while another reports $101, the collateral value is set at $100 for borrowing calculations, ensuring conservative collateral valuation and protecting borrowers from taking more debt than they should.

• If a user risks liquidation and stablecoin oracle prices differ, e.g., $1 and $1.01, the system will evaluate the position at the higher $1.01 price, providing added security for lenders.

Token Approvals

Curvance offers a robust and user-friendly token approval system, ensuring users have full control over their assets while interacting with the platform. This system provides flexibility, security, and transparency, making it easier to manage token interactions and minimize risks.

Token Approval Options

1. 1/1 Approvals: Users can approve tokens for each individual transaction, providing maximum control and limiting risk.

2. Infinite Approvals: For convenience, users can approve tokens once for unlimited transactions with that asset, eliminating the need for repeated confirmations.

Approval Revocation

Curvance includes an Approval Revoke System that serves as a public good, which allows users to:

• View Current Approvals: Check all active approvals to monitor asset permissions.

• Revoke Specific Approvals: Remove approval for individual assets.

• Revoke All Approvals: Instantly cancel all token approvals for enhanced security.

This feature ensures users can stay updated on their approval exposure and revoke access to their assets across DeFi whenever necessary.

Asset Lockdown System

The Asset Lockdown System is an additional layer of security and control that complements the token approval mechanism. It is an opt-in feature with customizable settings to protect users' assets.

Features of the Cooldown System

• Opt-In Mechanism: Users can choose whether to activate the cooldown system based on their preferences and security needs.

• Customizable Cooldown Timers: Users can set specific unlock cooldown durations to limit the immediate transferability of deposited tokens or balances.

• Transfer Control:

  • On/Off Toggle: Users can enable or disable the ability to transfer deposited tokens and Universal Account Balance funds.

  • If the cooldown timer is decreased, it automatically applies a cooldown to transfers as an added safety precaution.

• Plugin System Integration: The cooldown system extends to the plugin system, with a separate on/off toggle for plugin interactions, ensuring comprehensive control across the platform.

Why It Matters

The token approval and cooldown systems in Curvance are designed to provide a balance between flexibility and security:

• Flexibility: Infinite approvals and plugin integration enable seamless and efficient DeFi interactions.

• Transparency: Users can easily monitor and manage approvals, ensuring clarity over asset permissions.

• Security: The cooldown system and approval revocation ensure users can limit risks associated with token interactions and unauthorized transfers.

By offering these features, Curvance empowers users to maintain full control over their assets while enjoying a streamlined and secure DeFi experience.

Strategic Advantages for Chains

Blockchains can utilize the Curvance platform to attract new users and liquidity from competing networks via the Multichain Gauge System and Multichain Vote Escrow System. Curvance enables this by improving:

• Opportunity Discovery: Exclusive opportunities on chains can be highlighted by increasing visibility among Curvance users since all available strategies can be viewed on the same dashboard. This increased exposure helps chains attract interest and engagement from users across other networks, resulting in increased ecosystem participation.

• Advanced Liquidity Mining Infrastructure: the multichain architecture of the protocol empowers chains to drive growth to their DeFi ecosystems by attracting users and liquidity from other networks through grants or liquidity incentivization campaigns. By integrating these campaigns through the Partner Gauge System, chains can effectively target and incentivize specific areas of growth within their ecosystem.

• Strategic Ecosystem Growth: The Curvance platform offers a new approach for blockchains to drive ecosystem growth, going beyond traditional airdrops, incentive campaigns, or grants. By utilizing the Multichain Vote Escrow System, chains can acquire veCVE lock dominance by incentivizing veCVE lock holders to migrate their locks to their chain. This also exposes the chains to the biweekly rewards distributed to lockers on their chain. This strategy enables chains to achieve measurable impacts on total value locked and transaction volume, fostering long-term, sustainable ecosystem growth.

The Curvance DAO is the governing entity of the Curvance protocol and is controlled by the holders of veCVE.

Voting power from veCVE is aggregated from all chains supporting the token and accumulates voting power of all locks across all supported chains. The more veCVE voting power a given user has, the stronger that user's voice will be within the DAO.

The goals are a democratic, transparent, decentralized, strategic decision-maker involving stakeholders and incentivizing participation and contribution.

Proposals

The DAO can direct structural changes to the protocol through DAO proposals. Any member of the DAO can offer a proposal to improve the Curvance protocol. Proposals may be offered via a public forum to facilitate discussion between token holders and to collect feedback. Once a quorum is reached on the forum, an official proposal and voting process is initiated on Snapshot.

Here are some examples of topics that are related to governance proposals:

• Expenditures

• Treasury

• Fees, features, and functionalities

• Security

• Protocol parameters

• Other topics

Direct Gauge Emissions

Gauge Emissions allow approved Curvance pools to receive continuously streamed CVE rewards decided by the DAO.

We have explained this model in detail under Multichain Gauge System.

Universal Account Balance

The Universal Account Balance feature lets users leverage Curvance's native money market supply-side yield. By depositing idle wallet assets like USDC, USDT, or ETH into the Universal Account Balance smart contract, users can earn yield on those assets that would otherwise remain unproductive. Essentially, acting as a DeFi composable high-yield savings account. This method of supplying liquidity also benefits from increased composability within the Curvance plugin system.

How It Works

• Users can deposit supported lendable assets into a Universal Account Balance contract. Depositors benefit from supply side yield from select Curvance markets and increased composability within the Curvance plugin system.

• DApps such as trading bots and wallets can route idle user liquidity through the Universal Account Balance smart contract, enabling users to earn yield on their assets. With no lock-up duration, protocols are able to instantly withdraw user liquidity from the contract when users need it for platform activities.

Example Use Case

Trading bot XYZ integrates with the Universal Account Balance smart contract, allowing users to earn yield while maintaining custody of their assets. The bot can pull from this balance on an as-needed basis for trading activities, ensuring seamless access to liquidity without needing a lockup period.

Key Benefits

• Yield Generation for Non-Yield-Bearing Assets: Idle assets can now earn Curvance native yield.

• Composability: Universal Account Balance assets benefit from compatibility within the Curvance plugin system, enabling delegation and integration with protocols built on top of Curvance.

• Flexibility: No lockup periods ensure that assets remain accessible and can be withdrawn or redirected at any time.

• Protocol Integration: Protocols can enhance their yield offerings by routing liquidity through Curvance, allowing their users to benefit from Curvance’s native yield without any additional input.

The Universal Account Balance transforms idle assets into productive capital, offering unprecedented flexibility and composability for both users and protocols. By leveraging this feature, Curvance empowers DeFi participants to unlock new opportunities and maximize their capital efficiency.

The Plugin System enables unparalleled interoperability and flexibility within the Curvance protocol, allowing users to authorize specific actions by external addresses on their behalf. This structure enhances the protocol’s composability and enables innovative use cases across DeFi, while maintaining user security and control.

How the Plugin System Works

The Plugin System combines elements of Uniswap V4’s hook system with the familiar ERC20 approval process but with advanced features that extend its functionality. Here’s how it works:

• Authorization for Specific Actions: Users can grant permissions to external addresses to perform specific actions on their behalf, such as borrowing, collateralizing, and claiming rewards within the protocol. This system enables flexible interactions without requiring centralized approval.

• Security-Centric Design: The plugin system was designed with security in mind. All approvals can be instantly revoked across smart contracts, and users can add an additional “lock” on new approvals for an extra layer of protection—essentially creating a two-factor authentication for approvals.

Benefits of the Plugin System

The Plugin System empowers users in several ways:

1. Enhanced DeFi Composability: By enabling external protocol logic to be built directly on Curvance, the plugin system supports diverse use cases, such as cross-chain money markets, DeFi strategy abstraction, and balance sheet management for DAOs and institutions.

2. Accelerated Innovation: Builders can leverage the full Curvance Protocol and its network effect to develop new solutions without needing to fork the protocol or compete for dominance. This allows for a unified DeFi ecosystem, with each new plugin amplifying the protocol's utility.

3. Integrated Monetization: Plugins can implement their own fee structures, creating a clear path for developers to monetize their innovations. This incentivizes further development and a robust ecosystem of interconnected solutions.

4. User Control and Security: Unlike the traditional ERC20 approval system, the plugin system prioritizes user control, allowing them to manage and revoke permissions easily. The added lock feature further enhances security by introducing an optional two-factor approval mechanism.

The Plugin System in the Curvance protocol unlocks powerful new use cases. It offers a secure, composable foundation for DeFi innovation, enabling the development of cross-chain applications and sophisticated strategies that benefit users, DAOs, and institutions alike.

How Curvance Benefits Supported Chains

The protocol's integrations with various chains extend beyond simple technical integration; they foster innovation, expand accessibility, and drive new opportunities within each ecosystem. By designing around what these unique networks offer, the protocol enables each chain to amplify its strengths while offering users a distinct experience aligned with each chain’s vision. Let's look at a few examples below:

1. Berachain: Building on the Proof of Liquidity Model

About Berachain: Berachain introduces a novel Proof of Liquidity model, encouraging DeFi teams to innovate on liquidity mechanisms that generate stronger, self-sustaining economic flywheels within the network.

Benefits of Collaboration: Protocol support for Berachain benefits other teams in creating liquidity-driven applications that maximize capital efficiency. Through the Curvance platform, these applications benefit from a more dynamic, composable rewards structure, helping Berachain achieve its goal of supporting innovative DeFi projects that leverage liquidity to generate network growth.

User Experience on Curvance: Curvance users can access yield-generating opportunities specifically optimized for Berachain’s Proof of Liquidity model, allowing them to participate in new flywheels unique to Berachain’s ecosystem. This gives users an experience that leverages high liquidity and fast discoverability of emerging projects.

2. Monad: Enabling High-Throughput, Gas-Efficient Applications

About Monad:

Monad’s parallel EVM design enables ultra-fast, efficient transactions that can seamlessly scale to meet the demands of existing projects. This architecture also unlocks new possibilities for projects previously limited by scalability constraints on other chains, fostering innovation in ways not achievable elsewhere.

Benefits of Collaboration: Protocol support Monad allows dApps to leverage gas-efficient auto-compounding, high-frequency strategies, and interactive liquidity tools, all powered by Monad’s fast, low-cost transactions. This partnership also enables developers to build high-frequency solutions on top of Curvance using the plugin system, expanding user experiences with innovative, scalable DeFi solutions.

User Experience on Curvance: Within the Curvance protocol, users can explore custom mini-games, high-frequency plug-ins, and gas-optimized yield strategies that offer a distinctive, engaging experience. This collaboration allows Curvance users to experience DeFi in a more interactive, cost-effective way, with applications that are as fast as they are efficient.

3. Movement's M2: Expanding into the Move Ecosystem

About Movement's M2: The M2 network by Movement Labs brings EVM compatibility to the Move programming language, allowing for a broader ecosystem that spans Move-based dApps and protocols.

Benefits of Collaboration: By integrating with M2, Curvance bridges the gap between the Move-based ecosystem and Ethereum, offering Move-based projects exposure to the broader Ethereum community—addressing one of the biggest challenges for non-EVM chains. This integration broadens the DeFi landscape, enabling seamless collaboration and growth opportunities for Move ecosystem projects and EVM users.

User Experience on Curvance: Curvance users on M2 gain exposure to our supported Ethereum and Move-based applications, allowing them to engage with cross-ecosystem strategies, lending opportunities, and liquidity tools. This interconnected environment provides users access to innovative products from both ecosystems, enhancing their experience with diversified ecosystem options and unique liquidity incentive programs.

Creating Unique Experiences Across Chains

Curvance’s multi-chain support provides a wide range of experiences tailored to each ecosystem’s unique strengths. By connecting with specialized chains like Berachain, Monad, and M2, Curvance offers users a platform where they can discover and interact with distinct opportunities across the DeFi spectrum—whether it’s liquidity flywheels, fun mini-games, or Move-compatible applications. Each chain benefits from increased exposure, user engagement, and network activity, making Curvance a collaborative space that fosters growth across the DeFi landscape.

The CVE token can be converted to veCVE via the vote-escrow smart contract, which follows a modernized voting escrow model. CVE can be locked up for a period of time (12 months) to gain access to DAO voting and other benefits.

Locking mechanisms inside Curvance vary from conventional methods, allowing for only a single duration of one year. Like many other systems, token voting power decreases linearly as the lock matures. The issue of the necessity to constantly relock to maximize voting power has been addressed with the addition of a "Continuous Lock" mode. This mode allows a user to keep their veCVE position at a full-duration lock that can be enabled or disabled at any time and provides a modest boost to voting power, and a large boost to protocol fees.

Locking CVE for veCVE

By locking CVE as veCVE, a user can access platform fees, voting power for gauge emissions, and potentially even bribes.

Combining Locks

Users can also opt into combining and condensing their locks; this re-extends the lock back to max duration and cleans up a user's UI/UX interface.

Rewards

Rewards can be distributed proportionally to holders of veCVE. For example, if there are 10,000 veCVE in existence and you own 1,000 of those locked tokens, you would theoretically earn 10% of all fees generated on the platform.

veCVE-lock Migration Service

Utilizing Wormhole, the protocol allows users to move their CVE and veCVE tokens from one chain to another.

This has multiple benefits:

• Make use of lower TX fees.

• Make use of faster block times.

• Tokens will never be stuck on one chain.

Example: Timothy locked CVE for veCVE in the continuous lock on Ethereum. He did this at a time when gas prices were low; now gas prices are high.

Thanks to the versatility of Curvance, Timothy is able to use the migration service to move his locked veCVE from Ethereum to Arbitrum, where he is able to enjoy lower transaction fees and faster block times.

The migration service allows for flexibility and consistency. Users can choose where to store and use their veCVE based on their preferences, whether for lower transaction fees, better security, or deeper liquidity.

How Are New Assets Integrated into Curvance?

There is a structured process for integrating new assets, ensuring each addition is carefully evaluated, secure, and beneficial to the ecosystem. This multi-step approach involves collaboration with asset teams and Curvance DAO contributors, due diligence on infrastructure, and rigorous testing, leading to seamless integration within the protocol.

1. Initial Conversation

The integration process begins with an initial conversation, typically initiated through business development efforts or inbound requests from teams looking to have their assets supported on Curvance. These discussions aim to understand the asset’s potential and explore collaborative opportunities.

2. Infrastructure and Compatibility Assessment

Both the assigned Curvance development team and the asset's team verify the availability of critical infrastructure, such as price oracles and other relevant data feeds. This assessment helps determine the type of integration possible, factoring in considerations such as:

• Total available liquidity for the asset

• Whether other lending protocols support the same asset

• The quality and reliability of infrastructure components

3. Strategy Vault Development

Based on the information gathered, the teams decide on the optimal type of integration for the asset. This decision balances factors such as liquidity, support within the broader DeFi ecosystem, and the asset's potential for yield generation and capital efficiency within the Curvance platform.

The Curvance DAO's assigned engineering team develops a strategy vault tailored for the new asset. This vault is designed to integrate with the existing protocol infrastructure while maximizing yield and liquidity opportunities specific to the asset.

4. Security Audits and Validation

The newly developed strategy undergoes rigorous third-party security audits to ensure protocol stability and user safety. This step is crucial for maintaining trust in the protocol's security standards and protecting the broader DeFi community.

5. Asset Integration and Deployment

Once the strategy passes the security audit, the new asset is integrated into the Curvance protocol. From this point, users can access and interact with the asset throughout the platform, leveraging its unique yield opportunities, lending capabilities, and liquidity options.

This structured approach ensures that each new asset added to Curvance meets rigorous security, liquidity, and usability standards, creating a seamless user experience and maintaining the protocol’s integrity.

Revenue Sources

The Curvance protocol generates revenue through various streams that can benefit both veCVE token holders and the DAO. Each revenue source is designed to enhance the protocol’s sustainability, incentivize participation, and reward stakeholders, creating a balanced ecosystem where both veCVE holders and the DAO contribute to and benefit from protocol growth.

Revenue Streams to veCVE Holders

veCVE holders can receive specific revenue streams that align their interests with the protocol's performance, incentivizing their ongoing support and governance participation. Some revenue streams can be distributed as USDC at each epoch, while others provide additional benefits tied to holding voting power in the CVE Gauge System or migrating locks to certain chains:

• Fee on Underlying Yield from Deposits (15% currently): veCVE holders benefit from a share of the yield generated by deposits, aligning rewards with overall protocol growth.

• Bribe Rewards: Revenue from external voting incentivizes that affect CVE Gauge emissions.

• Partner Protocol Incentives: Partner protocols can contribute incentives that veCVE holders receive, fostering collaboration and enhancing yield within the Curvance ecosystem.

• Chain/Network Incentives: veCVE holders can earn a portion of incentives provided by partner chains and networks, rewarding them for contributing to the protocol's multichain expansion and presence.

Revenue Streams to the DAO

The DAO also benefits from revenue streams that support long-term protocol development, security work, and expansion. These streams help the DAO remain self-sustaining and responsive to the needs of the overall Curvance community:

• Fee on Active Loan Interest Rates: The DAO can receive a fee on active loans, enhancing its revenue as lending activities grow.

• Application-Specific Sequencing: Revenue from selling liquidation order flow will make liquidations in the Curvance protocol highly profitable for the DAO.

• Fee Switches on Zapping Tools: A fee switch on native Zapping tools can provide a revenue stream for the DAO, supporting innovative tooling and improvements.

• Partner Protocol Incentives: Additional incentives from partner protocols can also benefit the DAO, supporting the protocol’s collaborations and growth initiatives.

Alignment of veCVE and DAO Incentives

The direction of specific revenue streams to veCVE holders and/or the DAO is intended to foster sustainable growth and robust governance within Curvance. By balancing benefits between veCVE token holders and the DAO, an ecosystem where stakeholders are motivated to contribute to and support the protocol’s ongoing success is created.

CVE: The Governance Token of Curvance

The governance token of the Curvance protocol, CVE, grants holders the ability to participate in DAO Governance, direct emissions, and influence fee distribution. These governance powers are unlocked by locking CVE tokens to receive veCVE via the vote-escrow smart contract.

Unlocking Governance Power with veCVE

Users access voting power by locking CVE for veCVE within the Curvance protocol. The lock period is set for 12 months, with voting power decreasing linearly as the lock approaches its unlock date across each two-week epoch.

• Governance: Locking CVE for veCVE enables users to vote on proposals made in the Curvance governance forum, helping shape key parameters and the future direction of the DAO.

• Direct Emissions: veCVE holders can vote on biweekly emissions for lending markets, thereby influencing the platform's incentive structure and interest rates.

• Fee Distribution: veCVE holders can access a proportional share of platform fees.

Boosting veCVE Voting Power

The Curvance protocol introduces two mechanisms to enhance the voting power of long-term, engaged users, aligning incentives with platform goals:

1. Continuous Lock

   • Users can opt for a continuous lock to keep their veCVE at maximum lock duration, ensuring consistent voting power without relocking.

   • Users can convert an existing standard lock into a continuous lock at any time, automatically resetting the lock to the maximum lock duration.

   • Benefits: Continuous lock users receive a 20% boost to voting power and doubled fee rewards, rewarding long-term DAO participants and frequent platform users.

2. Bimodal Emissions

   • When users have unclaimed CVE rewards from gauge emissions, they can choose to lock them immediately as veCVE to receive an additional variable bonus, as determined by the DAO.

   • Example: If a user has 100 unclaimed CVE rewards and a claim boost incentive of 20%, opting for the boost would yield 120 veCVE locked for one year.

   • This boost is a one-time option when claiming rewards; boosted tokens can be compounded into an existing continuous lock, added as a new 12-month lock, or compounded into an existing standard lock, resetting the lock duration to 12 months.

Aligning Long-Term Participation

These features prioritize long-term participants, providing enhanced rewards and governance power to users who heavily commit to the protocol. This alignment strengthens the vision of becoming the leading DeFi liquidity hub.

Risk Factors In Decentralized Lending Protocols

As with any DeFi platform, using the Curvance protocol has inherent risks. Users need to understand these risks and manage them effectively.

1. Liquidation Risk

Borrowing on Curvance's lending markets exposes users to liquidation risk. The more assets borrowed, the higher the risk of liquidation if collateral values drop. Users are responsible for monitoring and managing their borrow positions. For detailed information, see the section.

2. Smart Contract Risk

The protocol is comprised of various open-source smart contracts, which can contain vulnerabilities. Although the protocol undergoes regular audits to minimize this risk, no audit can entirely prevent potential exploits. Additionally, Curvance’s integrations with infrastructure providers and other DeFi protocols introduce added layers of smart contract risk. While auditors vet all protocols in use, users should conduct their own research and assess risks before interacting with any dApp.

3. Oracle Manipulation Risk

The Curvance platform depends on oracles for accurate pricing data. While the dual-oracle system is designed to prevent manipulation, edge cases could occur where both oracles are compromised. Users should be aware of this risk when interacting with the platform.

What is Curvance? Curvance is a decentralized, multichain liquidity hub that empowers users to unlock the full potential of their digital assets.

Key Features:

• Secure, modular, and composable protocol supporting any ERC-20 token

• Chain-agnostic reward and utility layer for yield-bearing assets

• ERC-4626 vault technology for integration with third-party strategies and DeFi flywheels

• Multichain equivalence powered by Wormhole for access to opportunities across ecosystems

• Custom-built liquidation engine and cross-chain voting for an improved user experience

Benefits:

• Unlock liquidity and maximize yields across multiple chains

• Simplify DeFi with a seamless, trustless user experience

• Participate in a sustainable DAO model with decentralized governance

• Discover new yield-generating opportunities and innovative DeFi products

Join the Curvance Community: Learn more about Curvance and get involved in shaping the future of DeFi. Visit the website, X, Telegram, and Discord channels to stay updated and join the conversation.

Website:

X:

Telegram:

Discord:

The Curvance protocol empowers a wide range of DeFi users, each with specific needs. By delivering tailored solutions to each customer type, the platform drives growth, capital efficiency, and revenue generation through diverse mechanisms.

Individual Users (Retail Investors)

Why They Use Curvance: Retail investors seek accessible, simplified ways to maximize yields and manage their assets across multiple chains.

How Curvance Benefits Them:

• Unified position management tooling for an easy, seamless DeFi experience.

• Access to optimized yield strategies, enhancing yield on deposits.

• Collateralized loans and one-click leverage that improves financial flexibility.

• Visibility into top opportunities across chains, supporting well-informed investment decisions.

Token Issuers / Treasury Managers

Why They Use Curvance: Token issuers and Treasury Managers seek to maximize treasury performance, liquidity management efficiency, and liquidity depth for their tokens.

How Curvance Benefits Them:

• Auto-compounding of LP tokens to optimize yields on protocol-owned assets and flywheel bribing.

• Increased ROI via the CVE Gauge System, stacking on top of yield from underlying strategies.

• Access to collateralized loans to enhance treasury efficiency.

• Flexible veCVE tokens adaptable to existing flywheels, providing additional flexibility when expanding to new networks.

Institutional Investors (Liquid Funds)

Why They Use Curvance: Institutional investors can use the Curvance platform for custom-built strategies, capital efficiency for their existing liquidity provisioning deals, and peace of mind with permissioned pools, which align with their overall compliance requirements.

How Curvance Benefits Them:

• Access to customized structured products tailored to institutional needs.

• Compliance infrastructure integrations ensure that strategies align with regulatory standards.

• Access to spot leverage maximizing investment power and potential returns.

• Enhanced capital efficiency via optimized strategies designed for high liquidity.

Chains / Networks

Why They Use Curvance: Chains and networks can leverage the platform to drive ecosystem growth, increase TVL (total value locked), and foster a vibrant DeFi environment.

How Curvance Benefits Them:

• Predictable, measurable TVL inflows, bolstering network activity and liquidity.

• Enhanced transaction volumes, promoting sequencer revenue.

• Marketing and ecosystem exposure, amplifying their reach and user base.

• A multichain vote-escrow system enables networks to "siphon" liquidity from other chains.

Official Links

• Website

• Discord

• Twitter

• Farcaster

• Telegram

• Medium

Ecosystem Links

• CoinGecko / CMC

Security at Curvance

The Curvance protocol is engineered with security as its number one priority. In this space, where people transact valuable assets, safety is crucial, especially in the case of Curvance, which deals with sophisticated and complex assets.

DeFi can be intimidating; in 2023 alone, close to $2 billion has been exploited through smart contract vulnerabilities. The industry is prone to various attack vectors, and Curvance has worked extremely hard to minimize these risks.

During the creation of the platform, Curvance maintained a strict policy on code review, testing, and security by working with reputable auditors and security experts.

Audit reports will be posted publicly when available.

Auditors

To ensure the highest level of security, Curvance has partnered with several of the leading Web3 security firms and organizations. Each brings their own merit and strengths to the table.

TrustSec (link)

TrustSec serves as the primary security partner, addressing concerns related to potential bugs, exploit vulnerabilities, and overall functionality. They have significantly contributed to the majority of hours invested in code auditing over the past five months. Auditors include Trust, Zach Obront, MiloTruck, and Bernd.

yAudit (link)

From the yAcademy hosted by Yearn Finance, it spawned yAudit, a team of Web3 hackers and engineers. The team assisted in test expansion and helped with nuanced intricacies, such as external integrations through 4626 vaults.

Trail of Bits (link)

Trail of Bits played an important role in creating a highly sophisticated test suite for the complex and extensive code base for the cross-chain money market. ToB helped employ stateful fuzzing and systematically tested code through various actions and states.

Public Audit

A public audit will be conducted through Cantina, a groundbreaking marketplace for web3 security. The platform aims to simplify audits and provide tailored experiences with varied pricing.

Cantina connects organizations with security needs to expert auditors (teams and individuals) through Guilds, emphasizing accessibility and credibility. The platform ensures transparency, addressing the challenges faced by solo auditors and smaller audit teams.

Curvance has strategically chosen Cantina for its audit, recognizing the valuable advantages offered by Cantina's broad audit community and its connection to Spearbit DAO. By tapping into this diverse pool of auditors, Curvance ensures a thorough evaluation of its security protocols, benefitting from varied expertise and specialized knowledge.

This approach aligns with Curvance's commitment to a comprehensive security assessment, leveraging the efficiency and timeliness inherent in a larger audit community.

Emergency Unlock for veCVE

For users who have locked their CVE tokens as veCVE, they have access to the Emergency Unlock function. This function is available for users who need immediate access to their liquidity before the lock matures. The Emergency Unlock provides a way to unlock veCVE early, subject to a penalty that redistributes forfeited tokens to the DAO treasury.

How Emergency Unlock Works

When a user opts to unlock veCVE early, they incur a penalty on the underlying CVE amount (currently 80%), that gradually decreases as the lock nears maturity.

Examples:

• If a user locks 1,000 CVE for veCVE and chooses to use the Emergency Unlock immediately, they would receive 200 CVE back while the remaining 800 CVE (80%) is redirected to the DAO treasury as the penalty.

• As the lock duration progresses, the penalty decreases, reaching zero once the full 12-month lock period has completed.

Penalty Scaling

• Starting Penalty: The initial penalty rate is configured by the Curvance DAO (currently 80%).

• Linear Reduction: The penalty rate decreases linearly as the lock approaches its 12-month term, incentivizing users to hold the lock as intended.

The Emergency Unlock function allows users flexibility while ensuring that early exits contribute to the DAO’s sustainability by replenishing the treasury. This design maintains protocol stability and aligns user incentives with long-term engagement, balancing flexibility with a commitment to the platform’s growth.

Curvance brand assets can be found here.

This documentation is a rough draft and currently undergoing legal review for compliance, and as a result, are subject to change.