Swerve Finance ($SWRV): What is it and how are they different?

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Swerve ($SWRV) is a fork of Curve Finance ($CRV) that is 100% community-owned and governed. Decentralized finance (DeFi) projects came about because of a need to convenient access traditional banking services without centralisation. Some of DeFi’s most controversial areas include governance, pre-mining, and fixed allocation of coins to founders or shareholders of the respective platforms. This has led to DeFi systems being forked to create more transparent products. Swerve is one such fork.

Background

As mentioned previously, Swerve is a fork of Curve Finance. Curve Finance is a blockchain-based platform that powers the exchange of stablecoins. Its main advantage is the fact that dealing with stablecoins leads to minor slippage, increasing the profit margin for liquidity providers.

Curve also has a decentralized autonomous organization (DAO) to enhance distributed governance through voting. Unfortunately, the platform’s founder, Micheal Egorov, holds more than half of the voting power. This led to Swerve’s birth to provide a platform that’s 100% owned by the community.

Swerve.fi
Swerve.fi

What is Swerve and how is it different from Curve?

Swerve is a clone of Curve Finance but without:

  • A pre-mine;
  • token allocation to shareholders;
  • extended distribution of tokens;
  • a controlling founder or shareholder.

Swerve has a single pool that accommodates leading stablecoins such as DAI, TUSD, USDT, and USDC. Note that the creation of new pools is a function of the protocol’s DAO.

As such, the community can vote to introduce additional pools. Unlike other DeFi platforms, Swerve does not whitelist smart wallets allowing projects like Yearn.Finance and other DeFi-based smart contracts to participate in its votes.

Swerve Token ($SWRV)

Swerve’s native token is called Swerve token (SWRV) and it is supplied to the community without a reserve for founders or the team. SWRV has a total supply of 33,000,000 tokens, which are unlocked on a yearly basis, with all coins going to liquidity providers.

However, the first distribution of nine million SWRVs occurred 2 weeks after launch. The first year will see liquidity providers receive another 9 million SWRV tokens. The remaining 15 million tokens will then be equally spread over five years at a rate of 3,000,000 tokens per year.

How to Farm SWRV

Visit Swerve.fi, click “Swerve app” and connect your Metamask wallet. Other wallet options include Ledger, Dapper, and Trezor. Stuck? Check out our MetaMask guide.

Next, access the “Pools” tab. Click on “$ SWEVE POOLS $” where you will be able to see the pools for 4 stablecoins (i.e. DAI, USDC, USDT and TUSD). Note that the “POOL APY” means the APY you get for providing liquidity to the stablecoin pools, whilst “SWRV APY” refers to the APY for staking your tokens.

Once you enter the pools you will be taken to the “BUY and SELL” tab where you can buy the supported stablecoins directly (though payments must also be in other supported coins). Alternatively, you can just obtain the stablecoins directly from Uniswap.

Go to the “DEPOSIT” tab. Here you will be able to select the amount of stablecoins you want to add. In “Advanced options” you can also set the amount of slippage. Once you are done, you can go ahead and select “DEPOSIT”. There will be 2 transactions to confirm: (1) to approve the tokens to be used; and (2) to confirm your deposit into the protocol.

By depositing into the Swerve pools you would be rewarded in SWUSD tokens i.e. Liquidity Provider (LP) tokens. To start earning some of the APY referred to on the website go to the “DAO” tab, go to the bottom box titled “SWUSD LIQUIDITY GAUGE”. Use the slider to select the percentage of SWUSD you would like to deposit and click “DEPOSIT”. Depositing SWUSD here gets you SWRV tokens in return.

However, doing this does not enable you to earn the stated SWRV APY. To do so, you would have to “BOOST” their deposits to the maximum possible amount.

To enable the “BOOST” feature, you will need to lock SWRV tokens. This is done on the same page and you can choose the amount and duration of the lock. Locking for a longer duration increases the amount of “boost” and you can see the amount of boost by going to the “CALC” tab.

Note that locking SWRV tokens also enables you to exercise voting powers on how the protocol should be run.

To see more about Swerve’s statistics such as total value locked, price, 24-hour volume and market cap etc, see the Swerve dashboard which was created by @Chickenpie347, a member of the Swerve community.

Conclusion

It is noted that Pecksheild has completed the highly anticipated audit of Swerve and no critical vulnerabilities were found. However, on 6th October 2020 the Swerve team posted findings from 0xProject concerning a high severity exploit that would allow attackers to withdraw a large fraction of token balances when the smart contract’s amplification coefficient A is updated. Note that this also affects Curve Finance, as they both use the same contracts and see here for the full vulnerability report. Swerve posted they are working to fix this exploit and are attempting to reassure users that since there are no upcoming “A” factor changes which would trigger the vulnerability, the funds locked on Swerve are not at risk. However, one equally large obstacle faced by Swerve is the overall market sentiment which seems to have taken a negative turn, possibly due to a large number of other scams in this space. One will have to wait and see if Swerve can emerge as a survivor even in the face of these difficult circumstances.

Decentralised Finance (DeFi) series: tutorials, guides and more

With content for both beginners and more advanced users, check out our YouTube DeFi series containing tutorials on the ESSENTIAL TOOLS you need for trading in the DeFi space e.g. MetaMask and Uniswap. We also take a deep dive into popular DeFi projects such as Yearn.finance ($YFI), Balancer ($BAL) and ($COMP).

The DeFi series on this website also covers topics not explored on YouTube. For an introduction on what is DeFi, check out Decentralized Finance (DeFi) Overview: A guide to the HOTTEST trend in cryptocurrency

Learn about Yearn.finance ($YFI) and all its various hard forks and iterations:

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The information provided in this article is intended for general guidance and information purposes only. Contents of this article are under no circumstances intended to be considered as investment, business, legal or tax advice. We do not accept any responsibility for individual decisions made based on this article and we strongly encourage you to do your own research before taking any action. Although best efforts are made to ensure that all information provided herein is accurate and up to date, omissions, errors, or mistakes may occur.

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