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Overview

GitHub

The source code for the contracts of the new fee collection, burning, and distribution system can be found on GitHub .

The Curve ecosystem has various sources of revenue. In order to distribute these fees, they need to be burned into a unified token.

Prior to this new system, Curve used a system of multiple different kinds of burners (e.g., one for LP tokens, one for underlying tokens, etc.) where the exchange routes for the to-be-burned coins had to be manually added. Additionally, exchange routes were hardcoded, which often led to semi-efficient fee burning. If coins were not manually added to the burners, they could not be burned, which resulted in unburned (but obviously not lost) fees. All in all, the old burner contracts required lots of maintenance and dev resources.

The new system utilizes CowSwap's conditional orders to burn the tokens. Sell orders, which burn the admin fees, can simply be created by calling a function on the FeeCollector. This ensures all coins can be burned without the need to manually add coins to burners or hardcode exchange routes.

This system can and is deployed on other chains besides Ethereum but is partly dependent on, e.g., CoWSwap deployments if the CowSwapBurner is used. If the CowSwap protocol is deployed on a sidechain, fees can be burned there. For chains where this is not the case, the admin fees are still being burned using the original architecture and then transfered via a bridging contract to Ethereum.

The flow of the system can be roughly summarized as follows:

The collected admin fees can accrue in any type of tokens, whether they are LP or "regular" tokens. For simplicity, the Hooker.vy contract, which is essentially responsible for transferring the reward tokens from the FeeCollector to the FeeDistributor, was omitted from the graph. This infrastructure functions exactly the same on chains where the CowSwap Protocol is deployed (Gnosis and soon Arbitrum). The only difference is that instead of transferring the reward tokens to a FeeDistributor contract, they are bridged to the FeeCollector on the Ethereum mainnet.

The new fee collection, burning, and distribution system of Curve involves the following four main contracts:

  • Fee Collector

    Contract which acts as the entry point for the fee burning system. All admin fees in various kinds of tokens are collected here.

    FeeCollector.vy

  • CowSwap Burner

    Contract which burns the collected admin fees into a unified token. The current system utilizes CowSwap's conditional orders to burn the accumulated fees into a specific target token. In theory, the burner can be any kind of contract that exchanges tokens.

    CowSwapBurner.vy

  • Hooker

    Contract that allows users to execute certain hooks like forwarding crvUSD from the FeeCollector to the FeeDistributor.

    Hooker.vy

  • Fee Distributor

    The FeeDistributor is the contract which distributes the fee token to veCRV holders. This contract is only deployed on Ethereum mainnet. There are actually two FeeDistributors deployed, as rewards were distributed in 3CRV tokens, before a DAO vote changed the reward token to crvUSD.

    FeeDistributor.vy

Technical Flow of Fee BurningΒΆ

The process of burning coins into the target coin involves the following flow:

  1. Collecting Fees: Admin fees can be collected in any type of tokens in the FeeCollector, whether they are LP tokens or "regular" tokens. Newer pools like stableswap-ng, tworcrypto-ng, or tricrypto-ng periodically claim admin fees when users remove liquidity. For older pools where this is not the case, admin fees can be collected via the withdraw_many function.
  2. Burning Admin Fees: After collecting all the fees that need to be burned, one can initiate the burn process via the collect function. This will create a conditional order for the token to burn (if one has not been created yet). The order specifies the FeeCollector as the fee receiver, ensuring all target coins are automatically transferred to the FeeCollector.
  3. Forwarding Fees: The collected target coins can then be forwarded by executing hooks of the Hooker.vy contract to the FeeDistributor using the forward function, from where they can ultimately be claimed.
  4. Claiming Fees: The accrrued fees can ultimately be claimed form the FeeDistributor using the claim function.