September 6, 2023: Nature Abhors a 4pool ⚗️🧪

Humanity's Perilous Dance with the Dark Forces of Crypto Alchemy

A brief update on our prior attempt to visualize losses in $crvUSD loans…

We had a lot of fun trying to tell the story of $crvUSD users and the “losses” users experience when they reach the “liquidation” stage.

Now you can view these data, and more, for each lending market, all updated in realtime at the wonderful Curve Monitor

Yet one user pointed out that all the prior charts are so zoomed in as to be misleading. These losses getting placed under a microscope has the effect of obscuring the performance of $crvUSD versus every other lending platform on the market.

So we put together the only chart that accurately depicts the story.

These losses need a magnifying glass when placed in proper scale. Share this chart far and wide until users comprehend…

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Nature Abhors a 4pool

We present an excerpt from the ancient text by Hermes 3smegistus…

The Alchemist’s Cryptonomicon

In the grand tapestry of existence, where atoms dance and molecules weave stories, the laws of nature eerily mirror those governing the world of stablecoins.

1. Like the solemnity of a noble gas, a lone stablecoin finds itself in splendid isolation. As inert as helium, a solo stablecoin like $pyUSD floats isolated in the vast cryptoverse, waiting, its potential restrained by its solitude.

2. Allow two stablecoins collide and intertwine, and a breath of life is instilled. This union, reminiscent of the life-affirming diatomic molecule of oxygen, O2, breathes energy into the realm. Just as electrons flit between oxygen atoms, forging bonds and paving paths for reactions, so too does the duo of stablecoins in a pool allow for deeper interactions. Coins in such an arrangement flow, interact, and lay down the very lifeblood of DeFi.

3. Venturing further, the trifecta, though harder to craft, births marvels. Just as three humble atoms conjure the elixir of life – H2O – a three coin pairing in DeFi is the holy grail of stability, the bedrock of intricate transactions. In the beginning, the trinity of DAI-USDC-USDT gave rise to the new dawn of stablecoin trade. Bitcoin on Ethereum flourished only when three stable wrappers emerged and harmonized in the 3BTC Curve pool. And the seminal USDT-WBTC-ETH TriCrypto pool? It was a revolution, shaping the very eddies and currents of volatile trading.

4. Yet, the cosmos speaks full-throatedly on one point: nature abhors a 4pool. A quartet of equal weight can only be brought into existence for a fleeting moment before it turns unstable and burns itself out of existence, usually with cataclysmic consequences.

History records the tragic tale of folly that was the 4pool. Alchemists, blinded by ambition and thirst for unprecedented power, believed they'd perfected a balance, melding the naturally abundant USDC and USDT with the crypto-native sorcery of Frax and UST. But such pride comes before a fall.

In this combination, the UST grew highly unstable. The fusion didn't just err; it birthed an apocalypse – a cataclysm echoing the unchecked wrath of Chernobyl. A fallout vast and insidious spread, casting a shadow that eclipsed stars and hope alike. The land has been shrouded in darkness ever since, the radioactive tendrils of the failed experiment reaching out to forever forestall the once-vibrant heart of DeFi

Alchemists and cryptomancers have tried their hand to mimic 4pools, by combining a 3pool with a lone token into a knockoff imbalanced admixture – a mere shadow of the forbidden 4pool. Yet a pure 4pool, with all elements situated in a perfectly balanced lattice, is believed to be the very anathema to existence itself.

And so, dear reader, in this vast and wondrous cryptoverse, tread lightly. For in the echoing silence between atoms and bytes, there lies a forewarning: dare invoke the forbidden 4pool and risk tearing the very fabric of the cosmos, beckoning forth an age of eternal night and incurring the indomitable wrath of ancient deities. Beware, for in their fury, even stars might tremble and fade.

Following the disaster that was Do Kwon’s original 4pool, from which our industry has still never recovered, no one had dared to tempt fate and launch a pure 4pool. Until yesterday.

Thought to be safely quarantined on the new Base chain, a pool containing three wrapped versions of USDC was balanced with a bridged $crvUSD for the first 4pool attempted in years. To attempt and bypass the laws of nature, it was thought the pool could be infused with heavy emissions to quickly grow the pool to a stable state.

For a time, it even seemed to work. The hefty APYs led to a bum rush onto Base chain. Within hours, the 4pool would see its rewards equilibrate with the inaugural 3 stablecoin pool launched onto Base chain.

The infusion sparked an influx of TVL that would bring Curve deposits onto Base chain past $34MM.

Though Curve launched onto Base later than its mainnet competitors, its TVL has now surpassed all others to land at second place, if you accept the $34MM figure.

Curve is now second only to Aerodrome, who have seemingly tapped into some other source of unknown dark magic.

Yet we caution that a 4pool tempts fate. A pool is only as strong as its weakest coin, so cramming more and more coins into a pool is destined to make the pool inherently more unstable.

Already, we see signs that mother nature is fighting back against the abomination that is a 4pool. Shortly after launching the 4pool, the Base chain would destabilize, unable to produce new blocks for a full half an hour. Too great a concentration of dark energy in the upstart chain?

Of course, official governance documents would not cite “the hubris of humanity” as the official cause of the delay. However, those versed in the ancient texts knows that creating a new 4pool is akin to spitting into the faces of the gods.

A patch was deployed to the chain, and the 4pool has become temporarily quiescent.

Top scholars have used this respite to prematurely declare victory, posturing with even grander ambitions of stabilizing even higher and more volatile orders of matter.

After humanity’s first attempt at a 4pool, the universe would punish DeFi with an ongoing bear market that has yet to end. What wrath might nature unleash should humanity have the gall to attempt an 8pool? 16pool?

We cleanse ourselves of this abomination and exhort the spirits to deliver us mercy. We have shouted your will to the world and condemn these evil actions! Spare us thy wrath!

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Disclaimers! In the spirit of transparency and candor, the author acknowledges being an LP in Base chain’s 4pool