March 29, 2022: Curve v2 Flippening Watch ππ
Several v2 Pools Outpacing Rivals in Trading Volume, TVL
Big if true!
The 300-year bull case for Curve involves the eventual flippening of less efficient liquidity pools in favor of the Curve v2 pools. Yet this may happen sooner than three centuries from now.
Data can be a manual process to come by, as v2 pools are not yet consistently picked up by trackers. Hence the value in the great https://v2pools.com/ site, which keeps a close watch on the action. Hereβs what the transaction chart looks like, with an uptrend as successful new pools get added, and a notably big uptick driven heavily by Stargate.
This morning we pulled data to analyze a snapshot of the actual activity on Curve v2 pools (>= 4MM TVL) and compare 24-hour volume trends between Curve and other popular sources. All Curve data is as displayed on the website. All other data, including Uniswap and the pairβs leading volume source, comes from Coingecko. All pools with no Coingecko listing (cvxFXS) and pairs with no crypto asset (ie tokenized gold/euro-dollarcoin pairs) are excluded.
On Coingecko we also took note of whether they had listed the Curve v2 pool or not. The snub, though presumably not malicious, means Coingecko is often presenting its users with inaccurate data given the rapid ascendancy of Curve v2 pools.
As we see, in every case above where TVL exceeds $10MM, the Curve v2 is generating more transaction volume than its Uniswap equivalent.
In several cases, Curve transactions are near or exceeding the Coingecko leader. The βVS CRVβ column captures the multiplier of the Coingecko leader volume that equals CRV volume. In other words, per this chart, the Curve STG/USDC pool did a 3.47x multiple of purported leader FTXβs volume.
Some notes on each pool:
STG/USDC
This pool became the source of the most contention around Coingeckoβs omission. Stargate speculation has been intense lately, and this action has entirely been on Curve.
Weβre not sure exactly where users are finding out that the Curve v2 pool is the most reliable trading source, but itβs a success story for both Stargate and Curve. We see no rationale why other tokens wonβt choose to replicate Stargateβs successful launch playbook, a great omen for v2.
CRV/ETH
The past 24 hours has seen a nice run-up in the Curve price. Although Curveβs native CRV/ETH pool is a healthy source of this volume ($22MM), a number of centralized exchanges are the primary drivers.
If Curve was listed on Coingecko, it would rank a solid fifth, and tops among DEX activity.
Itβs also worth flagging here, the top four pools are dollar denominated, while the Curve pool is ETH denominated, so itβs not an apples-to-apples comparison. Complex Curve routing options through v2 pools is still under construction, so users interested in trading using dollarcoins instead of ETH would presently would have to run the hops manually in two steps without cues from the UI: (USDT β WETH using TriCrypto, WETH β CRV)
CVX/ETH
We saw yesterday just how little of the scarce $CVX supply is going to fall onto CEXes. In this case, Coingecko has in fact caught on and listed the Curve v2 pool already, where it in fact is overestimating Curveβs volume (presumably due to data snapshot times). Coingecko credits $14MM to Curveβs UI self-reporting $9.6MM.
Given Curve has the largest source of precious $CVX, along with decent incentives, we imagine this pool could remain a trading powerhouse as long as the Convex Wars rage.
YFI/ETH
Yearn speculation is a healthy cottage industry, with $154MM in trading yesterday dominated by CEXes.
Trading just on the ETH pairings at DEXes is far less popular for some reason, with Curve ($1.9MM) dominating Sushi ($1.3MM) and Uni ($1.1MM).
T/ETH
This is the only other instance in which Coingecko lists Curveβs v2 pool and its $27MM in liquidity for the Threshold Network Token. However, the pool is sparsely utilized, with just $400K worth of activity on Curve. All around T has not generated large trading volumes since launch. Most of the trailing dayβs activity was $3MM on Binance.
BTRFLY/ETH
Redacted Cartel has a well-utilized Curve v2 pool, generating great trading fees for the $12.9MM in TVL. In this case the token has almost no CEX listings, so all trading occurs in the DEX world.
The most activity picked up by CoinGecko for the Olympus DAO fork is in fact from the SushiSwap OHM/BTRFLY pool, which saw $3.7MM in activity.
Curve dominated the ETH trading pair, at $3.1MM to Uniswapβs $1.6MM. Curve v2 is unlikely to capture OHM/BRTFLY interest though, as Curve presently has no viable $OHM/ETH pool to allow for easy routing between $OHM and $BTRFLY.
FXS/ETH
FXSETH is the first case of a Curve v2 pool badly underperforming. This is likely due to the fact that most of the Curve activity surrounding $FXS is dedicated not to its ETH pool but toward the cvxFXS pool, presumably to reinforce this peg.
While the cvxFXS pool has a massive $151MM TVL, the ETH pair has only $4MM in TVL and no Curve emissions. This means Curve LPs are unsurprisingly choosing to put their money in the cvxFXS pool with its 7-17% emissions and lower risk of impermanent loss.
The FXS/ETH trading is dominated by LPs willing to risk Uniswap v3, where the $1.1MM in volume is over 5x the Curve v2 activity.
BADGER/WBTC
The only other pool where Curve v2 is lagging Uniswap is the BADGER/WBTC pool. This one is a bit more surprising, given that the Badger pool is well incentivized (22.1% - 55.2% CRV emissions) and the only Curve v2 destination for WBTC outside of TriCrypto.
Bitcoin DeFi on ETH is overall in a confusing state, as noted above. Yields are generally terrible, with only $BADGER working hard to create a robust ecosystem of DeFi offerings.
Badger for its part is making interesting moves around Convex.
SDT/ETH
The final v2 pool we consider is StakeDAO, which is running strong for its size. Rewards are a whopping 103.74%-259.35%, and the Curve pool would be dominant on CoinGecko if it was listed.
Of course, as one of the few whitelisted protocols, StakeDAO knows how to play an exquisite Curve game.
SPELL/ETH
Finally, a note on SPELL/ETH which missed the cutoff for the above chart, but is another wacky outlier. The beleaguered $SPELL token still captures very high trading activity, with about $80MM recorded by CoinGecko.
Yet Curveβs v2 pool captured $1.5MM of activity on just $2.5MM TVL, making it very highly utilized yet low liquidity pool. The pool still offers a healthy 13.5%-33.8% rewards, but has enticed few takers among Curve LPs. Instead, the main source of DEX liquidity is SushiSwap, which captured $10.8MM volume over the past 24 hours.
Conclusion
Speaking generally, the Curve v2 pools with >$10MM in TVL are all significant success stories. Theyβre generating more trading volume than their Uniswap knockoffs, and often see better trading activity than CEXes.
Therefore, if you want to speculate on this (not financial advice), you might consider the need for protocols to be able to effectively steer sufficient liquidity to their v2 pool to become as effective as above. Ergo you may want to pay attention to protocols that are acquiring a significant stake of $CVX, as they will have outsized capability to drive liquidity to their own pool or similar pools in their ecosystem.
Another notable development to keep watch for will be the deployment of Curve v2 pools to sidechains. One presumes the threshold for a successful pool will be far lower on sidechains, and it may be easier for projects to execute strong Curve v2 games into their launch plans.
Note the downstream effects, it was just over a month ago that L2 Boosties went live, and now weβre consistently seeing them work through governance.
Itβs a flywheelers world, do you live in it?