*** **CURVE FINANCE** ![images (1).png](https://cdn.steemitimages.com/DQmPej8qyaEBwPvagFZV8eenvMkEbNcpRyv2YwcrkADnb23/images%20(1).png) _{[source](https://insidebitcoins.com/buy-cryptocurrency/buy-curve)} You must comprehend a few phrases in order to comprehend what curve finance is. You should be aware that Curve Finance is a decentralized application you can use with Trust wallet, Meta Mask, and other similar services. Curve Finance uses automated market-making technology, which enables a large number of traders worldwide to trade with an asset that has been deposited into a pool. *** **WHAT IS AUTOMATED MARKET MAKER** *** Automated Market Maker, in its most basic sense, serves as a tool to link traders and investors because investors are the actual owners of the liquidity that has been traded. The investors who stake their token in the liquidity pool will get the transaction fee that traders must pay in order to exchange their tokens. With an order book, you'll need a buyer and a seller who are available, but AMM makes it simpler because the liquidity is there. For instance, you would need to go to a dApp that would allow you to instantly convert your BUSD to Bitcoin if you wanted to trade some BUSD for Bitcoin. Since they are stable swaps, traders can swap the stablecoin with little slippage. Curve Finance was initially a stablecoin of the dApp (Stable swap). Because it uses an algorithm to decide how much you would receive, the slippage is a little technical. In other words, you might want to spend USDT to purchase $2000 BUSD. Due to the slippage, you might receive just 1950 BUSD in the end. Slippage was a concern that led to the creation of curve finance, which at first exclusively used stable currencies before adding other tokens. *** **Yield farmer and impermanent loss** *** Yield farming may be defined as basically investing your cryptocurrency in a pool of assets in order to generate more tokens. Because it involves so many specifics, impermanent loss is a little technical. The value of the cryptocurrency decreases if you deposit it into Curve Finance at a lower price since the asset must automatically be sold to the other pair in order for the price to balance. Typically, the liquidity pool has one pair, and when the value of one pair declines, the token in that pair is immediately sold and replaced by another token to restore the liquidity pool's balance. The transaction fees traders pay to Curve financing go to the liquidity providers. Despite being small, transaction fees eventually add up. The initial incentive offered by curve finance is in the form of curve tokens to early investors. The fact that Curve Finance is a DAO, or that token holders have the ability to cast votes on the network, must be understood.