ITSA DeFi Insight — Curve, Convex and the Curve Wars

Tokenomics of Curve

To understand the Curve wars we first have to understand Curve and its CRV token. If you were to provide liquidity in a Curve liquidity pool, besides your basic interest, you would be rewarded with CRV tokens, which act as a reward mechanism and a governance tool. The special thing about these tokens is that you can lock them in the Curve protocol for a minimum of 1 week and a maximum of 4 years. Specifically, this means that you will not have access to your CRV tokens for your chosen time, but you will receive so-called vote-escrowed CRV (veCRV) tokens. The longer you lock your CRV tokens on the Curve protocol, thus committing to it, the more veCRV tokens you get.

  1. The first advantage is that if you lock your CRV tokens for a certain amount of time to get veCRV tokens, you are able to boost your interest rates for the respective liquidity pools up to 2x (if you lock them for the maximum 4 years) the original interest. LPs with many veCRV tokens will therefore receive higher compensation for their stake than those without veCRV.
  2. The second advantage is that veCRV tokens allow you to participate in the so-called “gauge weight voting”. Since LPs are rewarded not only with a base APY when providing liquidity on Curve but also with CRV tokens, it must be decided how to allocate these CRV rewards to the different liquidity pools. The gauge weight voting is doing exactly that and decides what percentage of the total compensation in the form of CRV tokens will go to each liquidity pool within the Curve protocol.
Figure 1: Gauge relative weight (source:

Convex and the CRV monopoly

As mentioned, each Curve LP can boost its interest by locking its CRV tokens on the Curve protocol and receiving veCRV tokens. This has the advantage of a higher APY for the LP, but the CRV tokens are not accessible as long as they are deposited in the Curve protocol. This problem can be solved with Convex. Convex is utilizing Curve and allows users to get the maximum boost of interest while maintaining the ability to sell one’s stake. Instead of locking your CRV tokens in the Curve protocol yourself, you can simply do this via Convex. Convex will deposit all received CRV tokens in the Curve protocol for a maximum of 4 years. Therefore, Convex will receive the maximum amount of veCRV tokens, thus offering the highest APY for the LP’s stake, in each liquidity pool. In exchange for your locked CRV tokens, Convex will issue Convex tokens which can be sold at any time to preserve the liquidity of each LP. In such a way Convex offers LPs the maximum return, due to the pooled veCRV while maintaining the option to sell one’s stake due to a freely tradable token.

Figure 2: veCRV share by DAO (source:

The Curve wars

So, in summary, we can say that the unique tokenomics of Curve lead to what we currently call curve wars and Convex as an accelerator in this space.

Figure 3: Rewards voting results (source:

The classification of CRV according to the ITC

Figure 4: CRV Tokenbase entry (source:

The International Token Standardization Association (ITSA) e.V.

The International Token Standardization Association (ITSA) e.V. is a not-for-profit association of German law that aims at promoting the development and implementation of comprehensive market standards for the identification, classification, and analysis of DLT- and blockchain-based cryptographic tokens. As an independent industry membership body, ITSA unites over 100 international associated founding members from various interest groups. In order to increase transparency and safety on global token markets, ITSA currently develops and implements the International Token Identification Number (ITIN) as a market standard for the identification of cryptographic tokens, the International Token Classification (ITC) as a standard framework for the classification of cryptographic tokens according to their inherent characteristics. ITSA then adds the identified and classified token to the world’s largest register for tokens in our Tokenbase.

  • The International Token Identification Number (ITIN) is a 9-digit alphanumeric technical identifier for both fungible and non-fungible DLT-based tokens. Thanks to its underlying Uniform Token Locator (UTL), ITIN presents a unique and fork-resilient identification of tokens. The ITIN also allows for the connecting and matching of other media and data to the token, such as legal contracts or price data, and increases safety and operational transparency when handling these tokens.
  • The International Token Classification (ITC) is a multi-dimensional, expandable framework for the classification of tokens. Current dimensions include technological, economic, legal, and regulatory dimensions with multiple sub-dimensions. By mid-2021, there will be at least two new dimensions added, including a tax dimension. So far, our classification framework has been applied to 99% of the token market according to market capitalization of classified tokens.
  • ITSA’s Tokenbase currently holds data on over 4000 tokens. Tokenbase is a holistic database for the analysis of tokens and combines our identification and classification data with market and blockchain data from external providers. Third-party data of several partners is already integrated, and API access is also in development.


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International Token Standardization Association

International Token Standardization Association

The International Token Standardization Association (ITSA) is a not for profit organization working on holistic market standards for the global token economy.