Providing liquidity to Convex Finance amplifies rewards from the Curve ecosystem. When users deposit their Curve LP tokens into Convex, they receive cvxCRV tokens and protocol fees. More importantly, this action is a high-value on-chain signal. It demonstrates advanced DeFi participation and deep engagement with the Curve/Convex staking mechanism. For airdrop purposes, this is often weighted more heavily than simply providing liquidity on Curve, as it shows a commitment to maximizing yield within that specific DeFi niche.
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The minimal multiplier for a positive 5-year Net Present Value (NPV) must cover the discounted expected slashing losses over that period. The calculation is: NPV = Σ [ (Reward_t - Expected Slashing Loss_t) / (1 + Discount Rate)^t ], where the sum is from year 1 to 5. The minimal reward (multiplier) is found by setting NPV = 0 and solving. This incorporates the time value of money. A key insight is that a slashing event in year 1 is more damaging to NPV than one in year 5, as it loses the compounding potential of the slashed capital. Therefore, the multiplier must be high enough not just to cover the average annual loss, but to ensure that the early-year returns are sufficient to withstand an early slashing event and still yield a positive long-term value when discounted back to the present.
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What is the minimal multiplier required to maintain positive net present value over five years? The minimal multiplier for a positive 5-year Net Present Value (NPV) must cover the discounted expected slashing losses over that period. The calculation is: NPV = Σ [ (Reward_t - Expected Slashing Loss_t) / (1 + Discount Rate)^t ], where the sum is from year 1 to 5. The minimal reward (multiplier) is found by setting NPV = 0 and solving. This incorporates the time value of money. A key insight is that a slashing event in year 1 is more damaging to NPV than one in year 5, as it loses the compounding potential of the slashed capital. Therefore, the multiplier must be high enough not just to cover the average annual loss, but to ensure that the early-year returns are sufficient to withstand an early slashing event and still yield a positive long-term value when discounted back to the present.
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