In a potential masterstroke, Terra and FRAX have a plan to take over the most critical infrastructure for decentralized stablecoins, Curve Finance, the stablecoin decentralized exchange.
TL;DR:
- Terra, FRAX and Redacted Cartel join forces.
- 4-pool will provide liquidity across chains.
Let’s dive in with a little help from this excellent thread from Yaniv Neu-Ner.
CRV tokens are distributed to liquidity provider (LP) pools on Curve Finance, where token holders can vote on which LP pools receive these CRV distributions, otherwise known as “emissions”.
In what was termed “The Curve Wars”, Convex Finance accumulated over 50% of all CRV. They now control the emissions and, as a result, determine which pools have the most liquidity.
Consequently, Convex started taking “Bribes” every two weeks to determine which pools receive the emissions. They are now earning more than US$1 million a day in “Bribes”. The largest pool to date has been the 3pool (USDT – UDSC – Dai) with around US$3.4 billion in liquidity.
Now, Terra and Frax are looking to usurp this 3-pool with a new 4-pool Curve pool, consisting of UST, FRAX, USDC and USDT (leaving out DAI). An alliance has formed between Terra, Frax and Redacted Cartel to make it happen.
Together, Terra and Frax will concentrate stablecoin liquidity across 4-pool on every major chain via Curve. Initially, 4-pool will be tested on Fantom 76, Arbitrum 48 and mainnet Ethereum. Redacted Cartel is an initiative using the Protocol Owned Liquidity (POL) mechanics of OlympusDAO to accumulate as much liquidity as possible from the Curve ecosystem, in order to have a majority say over the Curve gauge along with other protocol governance systems.
Combined, they own around 12% of all CVX today. And this is how they plan to vote for all emissions to go to the 4-pool.
However, other whales could alter the currents. A potential obstacle along the way is how Tetranode will act. He controls more CVX than Terra. It will be interesting to see how this plays out!
Banter’s take
All in all, this is great news that will allow for a more even flow of decentralized stablecoins across the entire crypto ecosystem. As we’ve always said, a decentralized internet needs decentralized money, and decentralized money depends on decentralized stablecoins.
This is bullish for all of crypto.
Thanks to Yaniv Neu-Ner for the brilliant thread.
Not following Yaniv on Twitter means you must hate alpha!
