May 6, 2021: Curve's Got What Uni'd ππ¦
Curve seemingly dodges killshot as monster growth continues
In our mega-scientific poll about a month ago, 20% of rando anon degens thought Uniswap v3 would kill Curve v1.
Indeed, when Uniswap v3 launched yesterday, it certainly smashed through expectations, passing the ultra-spicy sextillion mark π³π³π³
Months ago, when Silicon Valley VCs unzipped their crystal ballsacks in preparation to prognosticate the future, they confidently predicted v3 would kill Curve. Now that v3 is live, has anybody checked Curve for a pulse?
Hmmβ¦ looks like Curveβsβ¦ still around?
Wellβ¦ maybe itβs just a lagging indicator. Except that people are still unloading dump trucks of money into Curveβ¦
We donβt really read too much into the often irrational pumps and dumps of the crypto markets. Nonetheless, itβs undeniable that $UNI trended downwards while most other markets pumped green yesterday.
Perhaps rumors of Curveβs death are a lot like the Fleetwood Mac album Rumours: greatly overrated.
Lest you think weβre here to troll though, weβre on record as fans of what Uniswap brings to the ecosystem. More DeFi services to expand the ecosystem is a good thing for everybody.
We also tend to see Curve vs Uni mostly as apples vs oranges. Non-stablecoin pools are Uniswapβs bread and butter, and Curve has not shown heavy push in that direction. Within the domain of stablecoin pairs, the strategic edge remains with Curve.
The launch turned into something of an applied math lesson as users started to compare Uniswap v3 rates with Curve rates and discover that math actually works.
Now, to be fair, price is just one of many considerations for consumers. In real life, you may have come across the phenomenon of two neighboring gas stations with wildly different prices.
Economists would conclude only one of these gas stations would have business. In reality, both often have customers. Some customers may be motivated by factors like reward cards or brand loyalty. One member of my family is willing pay a premium not to make a left turn. And to economistsβ eternal chagrin, many people simply act irrationally.
In business, if you can drive business at higher margins, youβre in really good shape. Is that the case here? Is there a large market of innumerate whales who donβt really care about maximizing gains? It could beβ¦
For one example, this finance guru is apparently making so much money he canβt be bothered to calculate that a basis point of savings would actually be $1000 instead of $100 in his example. Itβs a great example of wealth signalingβ¦ anything under a million dollars basically rounds to zero, amirite?
Besides which, Uniswap may be sacrificing something in price, but they are making up for it with art. With great fees come great NFTs πππ
Can you really put a price on an NFT? It could fall anywhere on the spectrum from valueless to priceless. Donβt think of it as a basis pointβ¦ think of it as a collectible!
Seemingly the battleground is shaping up as mathematicians versus artists. People who want to maximize yield vs. wealthy patrons who will splurge on other intangibles.
It may prove to be a good gamble β the psychedelic patterns have already enraptured many smart people.
Another number to factor into the equation is gas prices. We know gas prices donβt tend to alter whale behavior, but it may intimidate smaller fish.
Most people Iβve talked with essentially consider v3 to be a hefty middle finger to the poor people on their platform. Uniswap makes their money on large traders, so why not try to disincentivize the small fish. The architecture would seem to be a NIMBY signal for indigent LPs to get lost.
Then again, itβs not terribly clear what the incentive would be for most LPs to choose Uniswap over Curve.
Although sitting around as an LP in Uniswap may not make too much sense, there is a potential trading strategy unlocked.
Although begging is for doges, the question being raised is compelling. While Curve is presumably too busy printing money to attack this, there could be some opportunity for automated arbitraging between Curve and specific liquidity bands on v3. In fact, given the number of protocols pivoting to building v3 solutions, weβd be surprised if some smart builders arenβt already working on it.
However things shakes out, we remain impressed by the innovative idea, diligent execution, and rapid deployment. We look forward to the DeFi ecosystem continuing to expand, with the inevitable v4 and beyond.
For more info, check our live market data atΒ https://curvemarketcap.com/Β or our subscribe to our daily newsletter atΒ https://curve.substack.com/. Nothing in our newsletter can be construed as financial advice. Author is a $CRV maximalist.