DeFi
A new tool to capture yields from prominent stablecoin swapping service Curve has attracted over $60 million from depositors just over a week after launch.
Conic Finance, which went live Mar. 1, allows users to deposit tokens into its omnipools, a new product that diversifies exposure across the Curve ecosystem while increasing rewards.
Each omnipool allocates liquidity of a single asset into different Curve pools. All Curve liquidity provider (LP) tokens get staked on Convex to boost curve (CRV) rewards earnings. Convex (CNX), another Curve ecosystem token, is also rewarded, and so is conic (CNC), Conic’s native token.
Conic users can earn up to 21% annualized yields on the three omnipools for dai (DAI), frax (FRAX) and USD Coin (USDC). The USDC pool has attracted over $50 million in liquidity alone, as Conic is currently providing one of the highest available yields in the crypto market for USDC. Deposits of frax and dai are considerably lower at $7 million and $5 million, respectively.
Holders can lock their CNC tokens for vlCNC to participate in Conic governance and directly control how liquidity is allocated across Curve pools by participating in Conic’s Liquidity Allocation Votes (LAVs) – which determine the share of an omnipool’s liquidity that a Curve pool can receive.
In the coming weeks, Conic’s demand among traders for its yield-generating products could ultimately generate value for its own CNC token.
As such, CNC tokens currently trade at $8, losing 4% in the past 24 hours with a market capitalization of $32 million.
Why use Conic?
Curve uses smart contracts to offer an efficient way to exchange stablecoins while maintaining low fees and low slippage, according to developer documents. Depositors on Curve earn annual yields of up to 4% from one of the many pools on the platform, which locks over $5 billion worth of Ethereum-based tokens on its platform.
Curve tokens (CRV) are issued as yield farming rewards to liquidity providers on Curve Finance, and can be converted into vote-escrowed CRV (veCRV). Holding veCRV allows users to participate in platform governance, earn higher rewards and fees and receive airdrops.
The tokens are time-locked, meaning users are incentivized to lock their CRV for a long time to receive more veCRV and platform rewards. However, this mechanism effectively locks up liquidity, creating opportunity costs for users.
This is where protocols like Conic come into play, allowing users to gain exposure to, or provide liquidity to the Curve ecosystem to get rewarded while not having to lock up their tokens for long time periods by depositing on Curve directly.
