A new release of a fundamental DeFi protocol seeks to combine two popular asset swap models into a hybrid that may reshape the nature of the automated market maker (AMM) space – the total value currently locked in a DeFi primitive. accounted for more than $40 billion. Daphylama.
Earlier today Curve Finance announced the launch of a new “algorithm for the exchange of volatile assets”. Curve’s base functionality is designed to enable Low slippery swaps between similar assets, such as converting one type of stablecoin to another – USDC to DAI, etc – by concentrating liquidity on a weighted bonding curve towards a particular price.
When swapping or making deposits: treat it similar to a normal crypto pool elsewhere, except for small slippages on average https://t.co/yrhzW35y1B
— Curve Finance (@CurveFinance) June 9, 2021
However, the new release will allow low-slippage swaps between “volatile” assets, such as ETH/WBTC pools, or assets whose prices keep changing. The new pools will accomplish this with a combination of an internal oracle relying on the exponential moving average (EMA), as well as a bonding curve model deployed by popular AMMs such as Uniswap.
“This creates 5 – 10x more liquidity than Uniswap immutable, as well as higher leverage for liquidity providers,” an accompanying whitepaper reads.
While the math and architecture can be difficult to understand, the end result is not: Curve is now taking over the wider AMM space, which considers a more efficient product for both traders and liquidity providers, automatically rebalancing fees (KM). between .04% and .4%) and price structures.
“The most common pairs will be added in the coming weeks, before we move to a completely permissionless factory where anyone can build their own metapool,” said Curve team member Charlie.
Curve shipped concentrated liquidity that does not require manual rebalancing. Dynamic fees too. https://t.co/MsDtOSZl4y
— bantag (@bantg) June 9, 2021
There has been a great response from the DeFi community, with many naming the release as “Curve v2”. Observers are stressing about the capital efficiency and liquidity optimization the new model offers.
“[Curve v2] The pool extends curve v1 instead of optimizing a target price of ‘1’ for the dynamic price based on the Exponential Moving Average (EMA), which is a good indicator of the current pool price,” said WhiteHat Hacker and co-founder of DeFi Italy Said Emiliano Bonassi, comparing the product to an improved version of Uniswap v3, which concentrates liquidity at particular prices.
“It continuously rebalances (and concentrates) liquidity” [the EMA]. You may want to consider rebalancing the entire Uniswap v3 pool at once (not equal).