Curve Finance is a decentralized exchange platform in Ethereum that uses liquidity wells, supplied by the same users, which allow maintaining sustainability in its operations. A new well was recently created, but this time under the Ethereum layer 2 structure, facilitated by the Polygon project, allowing users to obtain much lower commissions on transactions carried out.

In this way, the new liquidity pool of Curve Finance will allow users to obtain rewards in MATIC, an ERC-20 token belonging to the Polygon platform , responsible for the development of the liquidity pool of Curve finance layer 2. It will also be possible to operate in exchange markets with ERC-20 tokens such as: USDT, DAI and USDC .

Likewise, the well protocol will work synchronizing with the Aave platform . This means that the deposits made by users in Curve Finance will be managed in the liquidity wells of the Aave platform , thus offering better interest rates.

The announcement of the launch was given from the official Twitter of the platform . In the tweet, the launch of the well was announced along with the possibility of generating rewards in MATIC, a functionality that has not yet been activated, but which is expected to be launched in the coming days.

It should be noted that the liquidity pool of Curve Finance collected, in just one day after its launch , a total of approximately 10 million dollars, an amount that, at the time of writing, rises above 23 million dollars

The concept of liquidity wells or pool , is a paradigm used by DEX or exchange decentralized to provide liquidity to their markets in exchange. These allow some users to deposit cryptocurrencies to supply liquidity to a pair to be exchanged, and generate passive dividends in the form of interest.

The liquidity wells, at least in Curve Finance, are based on a smart contract created in the Ethereum network, which is responsible for storing the deposited tokens and calculating the interest for each user. Everything happens in a decentralized way.

What is Plasma and Polygon
Polygon is a protocol that makes use of Ethereum layer two scalabilities, Plasma , a proposal raised by Ethereum’s own co-creator, Vitalik Buterin . This allows the creation of Ethereum sidechains, improving the number of transactions per second, which can be processed on the network along with a drastic reduction in commission costs.

In Curve Finance Polygon was used to build a liquidity well together with the decentralized application (dApp) Aave, specialized in loans and lines with tokens from the Ethereum network . Given this implementation, Curve Finance allows users to generate rewards in MATIC, a token belonging to the Polygon platform, which serves as an incentive for liquidity provider users.

DeFi and developments on Ethereum layer 2
The Ethereum network has been suffering from great congestion due to the demand for use that the network has had, and the little scalability. A definitive solution to the problem seems to be Ethereum 2.0 . So far, as CriptoNoticias has already reported , the dates for the first implementations of a minimum viable merger with Ethereum 1.0 are being defined.

Based on this problem, the different dApps, as was the case of the dYdX exchange , have come out of the way using Ethereum layer 2 scalability proposals, including rollups . These allow multiple transactions to be “rolled” into one, improving the flow of transactions per second that the Ethereum network can currently process.