Curve works using its AMM protocol to facilitate trades. Liquidity pools(LP) are used to determine the price of an asset. These LPs are smart contracts which allow trades to occur without the need for an order book.

Smart Contract – A smart contract is a procedure that manages the contract’s terms and conditions and stores them in the blockchain.

Unlike how traditional finance works, which requires a buyer/seller on the other side of the deal, the advantage of liquidity pools is that you can buy or sell your asset at any time without the need to have a party on the other side.

Curve functions by allowing people to provide liquidity to their pool, these people are referred to as “liquidity providers”. For providing liquidity, liquidity providers receive incentives of $CRV for providing liquidity.