Curve Finance’s Strategic Crossroads: Power, Governance, and Survival in DeFi

In the ever-shifting landscape of decentralized finance (DeFi), Curve Finance has long been a cornerstone for stablecoin liquidity. As of Q3 2025, Curve’s total value locked (TVL) stands at $2.67 billion, a figure that, while slightly below historical peaks, reflects a protocol in motion. The platform has launched its first FXSwap pool on Binance Smart Chain (BSC), enabling efficient trading between fiat-pegged tokens like Brazilian Real and USDC [1]. This expansion into on-chain foreign exchange (FX) trading marks a strategic pivot beyond stablecoins, positioning Curve to capitalize on the growing demand for cross-border digital asset solutions.

The Stablecoin Dilemma: Fragmentation and Competition

Stablecoin fragmentation remains a defining challenge in DeFi. Protocols like Curve, Uniswap, and emerging competitors such as Ekubo are vying to address this issue through distinct liquidity provision strategies. Curve’s strength lies in its specialized stablecoin pools, which minimize impermanent loss and offer near-zero slippage for users. By contrast, Uniswap’s broader AMM model, while dominant in overall DEX volume, struggles to match Curve’s efficiency in stablecoin swaps [2].

Ekubo, however, represents a disruptive force. The platform’s ultra-concentrated liquidity model and gas-optimized execution allow liquidity providers (LPs) to allocate capital with surgical precision, reducing costs and increasing returns [3]. This has drawn attention from major players like Aave, which is exploring Ekubo’s TWAMM (Time-Weighted Average Market Maker) for buyback mechanisms [4]. For Curve, the challenge is clear: maintain its niche in stablecoin liquidity while adapting to a market increasingly dominated by capital-efficient AMMs.

Governance: Power, Incentives, and Risks

Curve’s governance model, centered on its CRV token, is both a strength and a vulnerability. Liquidity providers earn CRV, which can be locked as veCRV to gain voting power and boosted rewards. The longer the lock period (up to four years), the greater the influence—a design intended to align long-term incentives with protocol health [5]. However, this model has led to centralization risks. Entities like Convex Finance, which aggregate veCRV for users, now hold disproportionate governance power, raising concerns about equitable decision-making [6].

Recent governance debates, such as the YieldBasis proposal for a 60M crvUSD credit line, highlight the tension between innovation and risk management. While the community advocated for phased rollouts and safeguards, the proposal underscored the complexity of balancing growth with security [7]. In contrast, Uniswap’s governance, though less token-centric, benefits from its UNI token’s broader utility and lower concentration of power. Ekubo, meanwhile, has yet to reveal its governance structure, but its product-first philosophy suggests a focus on efficiency over decentralization.

Fee Structures and Capital Efficiency

Curve’s fee model splits trading fees between liquidity providers and the DAO, with variable Annual Percentage Yields (vAPY) and Token APY (tAPY) influenced by trading activity and CRV emissions [8]. This structure rewards liquidity provision while funding protocol development. However, Ekubo’s gas-optimized execution and singleton contract architecture threaten to undercut Curve’s efficiency, particularly for LPs prioritizing low-cost, high-precision capital allocation [9].

Uniswap v4’s introduction of “Hooks” further complicates the landscape. By enabling permissionless extensions and integration with lending protocols, Uniswap allows LPs to earn fees from both trading and lending—a dual-income model that could attract liquidity away from Curve’s stablecoin-centric pools [10].

Strategic Crossroads: Growth or Survival?

Curve’s cross-chain expansion, including its recent integration with Etherlink (a Tezos-native EVM rollup), demonstrates a commitment to interoperability [1]. This move bridges Tezos and EVM ecosystems, potentially unlocking new user bases. However, the platform must also contend with rising competition from Ekubo and Uniswap’s evolving AMM innovations.

The key to Curve’s survival lies in its ability to balance specialization with adaptability. While its stablecoin pools remain unmatched in efficiency, the protocol must address governance centralization and explore new use cases—such as its FXSwap pools—to avoid stagnation. Meanwhile, Ekubo’s focus on capital efficiency and modular design positions it as a formidable challenger, particularly in markets where gas costs and liquidity precision are critical.

Conclusion

Curve Finance stands at a strategic crossroads. Its dominance in stablecoin liquidity is well-earned, but the rise of Ekubo and Uniswap’s product innovations demand a recalibration of priorities. By addressing governance centralization, expanding into on-chain FX, and leveraging cross-chain interoperability, Curve can maintain its relevance in a DeFi ecosystem increasingly defined by capital efficiency and modular design. For investors, the question is not whether Curve can survive—but whether it can evolve fast enough to lead.

Source:
[1] Curve Price, CRV to USD, Research, News & Fundraising [https://messari.io/project/curve-2]
[2] Ekubo: The AMM Endgame [https://www.starknet.io/blog/ekubo-the-amm-endgame/]
[3] DeFi's Shadow Wars: The Unseen Battles of 2025 [https://www.chainup.com/market-update/defis-shadow-wars-the-unseen-battles-of-2025/]
[4] [ARFC] Aave Buyback Mechanism Upgrade [https://governance.aave.com/t/arfc-aave-buyback-mechanism-upgrade-utilize-ekubo-twamm-on-ethereum-mainnet/21699]
[5] Understanding Curve Finance and Its Mechanisms [https://www.linkedin.com/pulse/understanding-curve-finance-its-mechanisms-agustin-cortes-kzufc]
[6] The CRV Token: Detailed Inquiry (Curve DAO Token) [https://www.thestandard.io/blog/the-crv-token-detailed-inquiry-curve-dao-token]
[7] Curve Monthly Recap August, 2025 [https://news.curve.finance/curve-monthly-recap-august-2025/]
[8] Protocol TVL Lockup: Unlocking DeFi Growth Through ... [https://www.okx.com/en-us/learn/protocol-tvl-lockup-token-mechanisms]
[9] Ekubo: The AMM Endgame [https://www.starknet.io/blog/ekubo-the-amm-endgame/]
[10] DeFi's Shadow Wars: The Unseen Battles of 2025 [https://www.chainup.com/market-update/defis-shadow-wars-the-unseen-battles-of-2025/]