THE 3RE-PEG
Tether FUD is officially out of fashion.
Nothing in life is certain except death, taxes, Tether FUD, and China banning Bitcoin once per year. So Tether FUD is presently strictly déclassé, but don’t stash it away, we’re sure it’ll make a comeback soon.
For now, 3pool has returned nearly to balance. The simplest possible interpretation of this is that the market is no longer fearful.
The great Fiddy had a deeper reading of the significance. The largest and most liquid trading pairs on CEX-es are BTCUSDT and ETHUSDT — could it be that the sudden swings are the effect of institutional moves?
Whatever the reason, can you use the phenomenon to profit? The repeg could be considered as a potential technical analysis signal, the sort you could feed into a Machine Learning model to try to make money off the market.
Sure enough, the 3re-peg is playing out amidst a broad coincidence of potential indicators. Tether parity is also restoring on various other exchanges.
This Tether bullishness coincides with positive price action in crypto markets. As suggested last week, the fear-greed indicators for cryptocurrency markets are finally starting to emerge from the historic bottoms.
So perhaps the 3re-peg has even greater cosmic significance… could this event be a window into the fundamental physical and spiritual nature of the universe as prophesied by the old masters?
FRAXBP
Before you get too bullish on 3CRV, note that the rebalancing is also coinciding with the possible erosion of 3CRV dominance. A fundamental realignment in Curve’s landscape is afoot with the rise of the Frax-USDC base[d]pool.
Based on recent governance activity, this realignment not manifesting gradually but suddenly.
See what we mean when we say fortunes are made in the bear market? Such an aggressive takeover would have been more difficult when TVL’s were several times higher. Instead, Kazemian woke up to a depleted DeFi landscape and chose sweet, sweet violence.
The new base pool is earning strong rewards for a stablecoin at the moment.
Hopefully you’ve been following all the Frax action to get a sense where the puck is headed. The master plan being executed exactly as announced.
The massive buyback of $FXS is only partially complete. Ask your registered financial advisor if this is bullish or bearish for the governance token.
While you’ve got your registered financial advisor on the horn, ask them what might happen when Frax stops dumping $CRV and begins farming instead.
I believe (fact check needed) Frax’s $CRV locking hasn’t begun yet, and I’m not sure if it’s bullish or bearish for the flywheel.
For more Frax excitement, check this hefty video.
TRICRYPTO
All good things come in threes, so for the third and final section we observe a recent research report by Delphi Digital confirming the efficiency of Curve v2 pools, and refuting the efficient markets hypothesis.
Core to the findings is that comparing Uniswap vs Curve TriCrypto on Ethereum mainnet, Curve provides superior pricing in about 2/3 of trades, but only sees about 1/3 of the volume. In other words, a lot of people are paying extra. Irrational behavior?
It’s not completely cut and dry though. A large volume of the Uniswap trades was small money, so the slightly higher gas rates for the more technically sophisticated v2 pools may have been an inhibiting factor. When Delphi looked at sidechains, where gas was less of an issue, the activity was closer to parity.
Indeed, @nagaking among kings pulled some numbers from subgraph data which showed the typical Uni v2 trade is <1 ETH, Uni v3 median is 4.95, whereas TriCrypto median = 68.47 ETH.
Crazy different, but t0his makes a lot of sense. Curve’s focus on bespoke slippage solves a problem much more acute for whales, whereas Uni’s focus on dog tokens may not exactly be attracting the smart money.
It also reinforces our prior research that demonstrates whales don’t particularly care about gas prices. Also, it corroborates our belief that more protocols is a win for DeFi: different services can cater to different niches, and everybody wins when there’s a larger surface of opportunity.
Nonetheless, I remain a fan of what Uniswap brings to the ecosystem, per my earlier . However, I personally steer clear simply because I perceive it as difficult to use the service as a small fish and not lose money. For a bigger brain take, we’ll leave it to this thread by @fiddy:
It remains an open question why more people don’t use exchange aggregators, which can sniff out the best price among several exchanges, as opposed to just accepting the price from a single exchange like Uniswap. One might suggest its sleek design, but aggregators often pump time into aesthetics. My personal hypotheses are (1) marketing works and (2) incumbency advantages are powerful.
Another possible explanation is that holders of the $UNI token are merely hopeful that the “fee switch” will be someday activated, perhaps with a retroactive airdrop to users. I’d argue the trendlines are pointing against this direction. A recent forum post to my reading suggests to me they’re actually pushing in the direction of rewarding a small handful of VCs instead of small fish, but reading comprehension was never my strong suit.
Finally, while we’re talking about exchanges, a final interesting thread on CEX volume I wanted to share but couldn’t find room anywhere else: