August 24, 2022: Hope Clouds Observation🌶️🏜️
5 Curve Trends Illustrated by Smyyguy/Blockworks New Dune Dashboard
“Deep in the human unconscious is a pervasive need for a logical universe that makes sense. But the real universe is always one step beyond logic.”
Frank Herbert on Curve Finance, probably
Smyyguy at Blockworks Research recently published a very good Curve dashboard, a helpful companion to a previous Convex dashboard. Check it out!
Dune as an analytics company is incredibly useful for being able to pull a robust amount of nearly live Blockchain data using its friendly SQL-like interface. However, as somebody who prefers crunching raw data to enjoying pretty pictures, I confess I seldom use Dune because I chafe at the $400 monthly price tag to export data.
Still, it’s a useful resource to visualize trends across DeFi. A number of users have built out some nice Curve dashboards using Dune. A non-exhaustive list (drop others in comments!) of other dashboards which appear to still be at least somewhat current include:
“He who controls the spice controls the universe”
Frank Herbert on the Curve Wars, probably
A major issue with Dune dashboards, particularly for Curve, is that they tend to fall out of date, especially given the rapid pace of development at Curve. For example, a dashboard launched a year ago is great, but if it’s not including the new FRAX/USDC base pair it’s necessarily missing a ton of recent volume.
Keeping these dashboards up to date can be a full time job in and of itself. So often times a newer dashboard tends to be a useful resource to capture a particular slice in time. With that in mind, let’s take a look at some interesting trends to keep an eye on based on this new Blockworks Dune Dashboard.
Curve v2 Dominance
For some weeks I’ve taken to denouncing people who dismissively refer to Curve as merely a stablecoin exchange. Certainly Curve has tremendous facility at operating stablecoin pools thanks to its robust v1 algorithm, but the growth of v2 pools as a contributor to activity is unmistakable.
In recent weeks volume from volatile pools have crept above 50% of volume and we see little indication this would reverse. A smoothed moving average here would doubtless confirm the trendline — and at least at the moment the data appears roughly in line with the numbers reported on Curve’s homepage.
Curve Inflation
The earliest knock against Curve was its substantial inflation schedule, which got it called all sorts of mean names. Keep an eye out for anybody still clinging to this narrative, for they might be outing themselves as a boomer.
The chart here compares the expected inflation rate with the net inflation rate (due to the impact of locks), and we see the salad days of free $CRV are behind us. We’re down to 38.5% expected and 14.6% effective inflation and continuing to drop. At some point a new narrative will emerge that $CRV is too scarce, and we’re currently enjoying the transitional phase.
Note the upper line draws down significantly from August (the chart is a 100 day moving average) — we just hit another such rate reduction, so we may see steeper dropoff soon. The chart below demonstrates the cliff more dramatically, along with its effects on liquidity incentives.
Frax Dominance
It’s been said that Frax is winning/has won the Curve Wars. The above chart of gauge weights borrowed from 0xOuija’s dashboard helps visualize this dominance by gauge weight.
The parallel version of the top chart on Curve’s DAO page.
This chart is more accurate as it captures emerging pools in realtime — for instance, the large lime green chunk is Frax’s new basepool, which is flippening Frax’s classic pool in terms of gauge weight. It’s a good example of how tough it is to keep track of the activity on Curve.
Even absent these emerging pools built on FRAX-USDC, the dashboard clearly demonstrates the rising dominance of Frax over time, no small feat in a bear market.
However, is Frax dominance plateauing? Some interesting activity in recent weeks with major punctuations of growth amidst outflow. Worth watching.
It’s all a great illustration of both the rise of Frax and the speed with which the Curve Wars can be reshaped.
3Pool as Omen
Although the rise of Frax Base[d]pool, and potentially more base pools, may signal the end of an era, @3CRVBull is not yet being put out to pasture. The old stalwart is finding some utility as a leading indicator.
When Tether FUD was at its peak a few months back, the pool became Tether dominant. When USDC FUD hit a peak a few weeks ago, Tether became scarce. As a dollar substitute, 3CRV is nice and stable, but its underlying engine is volatile.
Ever since the late great @fiddy published a tweet suggesting the composition of 3pool could be a leading macro indicator, the idea has caught on among observoooors. Here Blockworks tracks it explicitly as a possible indicator of ETH price.
DeFi Winter
The chart of weekly active users shows a clear spike the week of UST depegging, and these users appears to have been permanently rekt. With several billions worth of dollars disappearing overnight, the number of DeFi users is clearly in a slump. The chart of weekly active users appears to have been diminished by about 10% at that time.
This is pretty far from the “death spiral,” for which Curve haters hope to one day uncover some elusive shred of evidence to finally support their idiotic narrative.. It in fact the evidence here shows the opposite — a fairly consistent and predictably steady usage over its lifetime, continuing steadily even despite the onset of crypto winter.
We don’t need nice charts to confirm this trend though, we can all feel the winter chill. Your fave anons disappeared without a trace. Memes dried up. We’re all still here because we certainly hope and expect these trends to reverse someday, but we know it’s a slog at present.
Is this 2018 redux? Users fleeing the psychological torment of our parched and barren hellscape? What if crypto never pumps again? Us desperate hangers-on are waiting for a relief rally never to come. We instead stubbornly wait out our dies, destined to a slow death by entropy.
“People need hard times to develop psychic muscles”
Frank Herbert on Crypto Winter, probably