Curve Finance at the Crossroads: Power, Wars, and Survival

Curve’s Stability Model — Curve’s StableSwap formula transformed on-chain stablecoin trading by offering near-zero slippage and became the foundation for its rise as a DeFi liquidity hub.

Governance Wars — The veCRV system and Convex’s aggregation of voting power turned Curve into the center of “Curve Wars,” where projects openly competed and bribed for liquidity incentives.

Crisis and Resilience — A $60M+ exploit in 2023, combined with founder Michael Egorov’s heavy leverage, nearly triggered systemic risk, but OTC sales and white-hat interventions helped Curve survive and continue innovating.

From a physics lab to the center of decentralized finance, Michael Egorov turned a mathematical curve into one of the most influential protocols in crypto. Curve Finance, launched in 2020, became the “home of stablecoins,” attracting billions of dollars in liquidity. But its rise also brought political battles, governance wars, and near-fatal crises. Compared with Uniswap’s minimalist style, Curve’s path is a story of engineering ambition, power struggles, and systemic risk.

CHAPTER ONE: THE BIRTH OF STABLESWAP

Michael Egorov’s background stood out in crypto. Unlike most founders from computer science or finance, he trained as a physicist at Moscow Institute of Physics and Technology, later moving to Australia for doctoral and post-doctoral research.

In 2019, he released the StableSwap whitepaper. The model combined elements of constant sum and constant product formulas. When assets trade close to parity, swaps occur with near-zero slippage. When prices diverge, the curve shifts to preserve liquidity.

In January 2020, Curve went live on Ethereum with its first pool of Compound tokens cUSDC/cDAI, later followed by the famous 3Pool (DAI/USDC/USDT). For traders, this meant that large stablecoin swaps could finally be done on-chain without painful price impact.

Unlike Uniswap’s simple formula and retail focus, Curve positioned itself as infrastructure for capital efficiency. By mid-2021, its TVL exceeded $18 billion, making it one of the most important liquidity hubs in DeFi.

CHAPTER TWO: THE RISE OF A POLITICAL MACHINE

Curve’s biggest innovation was not just math but governance. In August 2020, the CRV token launched with a vote-escrow model. By locking CRV for up to four years, users received veCRV, which granted three rights: governance voting, trading fee sharing, and boosted liquidity rewards.

This transformed Curve into a political economy. Weekly “Gauge” votes decided which pools received CRV inflation rewards. For new stablecoins, securing votes was equivalent to survival.

Convex Finance quickly stepped in. It aggregated CRV from users, locked it on their behalf, and distributed extra incentives. Within months, Convex controlled more than half of all veCRV, turning itself into the power broker of Curve.

This was the beginning of the so-called “Curve Wars.” Projects like Frax, Lido, and Yearn fought to direct Convex votes toward their pools. Bribe markets such as Votium and Hidden Hand openly priced governance: projects paid voters to back their pools.

Other protocols later copied the ve model—Balancer with veBAL, Velodrome on Optimism—but Curve remained the core battlefield. Its governance machine secured deep liquidity but also raised concerns about fairness: decentralization now meant markets for votes, not equal voices.

CHAPTER THREE: ON THE EDGE OF CRISIS

In July 2023, Curve faced its sternest test. A bug in older versions of the Vyper programming language allowed re-entrancy attacks on several Curve pools. Losses were estimated between $61 and $70 million. The CRV/ETH pool alone lost nearly $20 million worth of assets.

The technical exploit was damaging, but the real threat came from Egorov’s personal leverage. He had borrowed tens of millions in stablecoins against CRV collateral across multiple lending platforms. If CRV’s price collapsed, forced liquidations could spiral into a death loop: more selling, deeper crashes, and systemic bad debt across DeFi.

For several days, markets waited nervously. The resolution came through unconventional means. Egorov sold large blocks of CRV over the counter at roughly $0.40, offloading more than 100 million tokens to market makers and institutions. With the proceeds—over $40 million—he repaid loans and stabilized his positions. White-hat hackers also returned part of the stolen funds, and Curve patched the affected contracts.

The crisis ended without systemic collapse, but the episode underscored how Curve’s complexity can amplify risks. Unlike Uniswap, which lacked such governance entanglements, Curve’s political machine and founder’s holdings made it vulnerable to cascading shocks. Afterward, Egorov’s influence declined as his giant positions were reduced, leaving governance more distributed.

CHAPTER FOUR: AN UNCERTAIN FUTURE

Curve did not stop building. In 2023 it launched crvUSD, a native stablecoin with the LLAMMA “soft liquidation” model. Instead of instant liquidations, positions gradually rebalance between collateral and debt as prices move. In 2024, Curve expanded this into LlamaLend, opening new lending markets. By 2025, it began work on “Yield Basis,” a new AMM aiming to address impermanent loss.

Competitors also moved forward. Uniswap introduced Hooks, enabling custom trading logic and greater extensibility. Balancer deepened its multi-asset pools. Velodrome became central to Optimism’s liquidity politics. Each protocol searched for its edge.

Curve’s challenges remain: Uniswap’s concentrated liquidity has reduced Curve’s slippage advantage; Convex and Frax still dominate governance, raising barriers for newcomers; CRV incentives may weaken in bear markets. Yet Curve’s role as infrastructure is undeniable. Most stablecoin issuers, LSD projects, and lending protocols still rely on its deep pools.

Curve is no longer just a DEX; it is a backbone. Hidden behind interfaces and aggregators, it powers swaps, lending, and yield across DeFi. Egorov’s experiment—born from a physicist’s formula—has grown into a political and financial system of its own. Its future is uncertain, but its impact is already permanent.

〈Curve Finance at the Crossroads: Power, Wars, and Survival〉這篇文章最早發佈於《CoinRank》。