The Curve vs Uniswap debate

23-01-30 18:09

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Original title: The DEX Throne: curve or uniswap

Original article by darkforest

In recent days, the debate between curve and uniswap over who is the defi king has become more and more heated. Friends from all over the world have expressed their opinions. However, as the discussion progressed, concepts and logic were flying around, which made my head spin. I'm just going to go through all the arguments a little bit, and then I'm going to be a little bit more simple and say what I think from an endgame.

争论的起因是 @DeFi_Made_Here 这位老兄谈到一个数字，28.01%，这是 curve 将在 2023 年 $crv Token的增发量，一看确实是不少啊，有点吓人。这哥们的担心也很在理，一方面，如果这么大量的新发 Token 没有人质押，那可能就要不停的被挖提卖了，$crv 价格肯定会被砸的很惨。另一方面，如果有很多 crv 质押为 veCRV，那么在相同交易量和贿赂费用的前提下，每个 veCRV 持有者的收益都将被大幅稀释。想想真是左右为难啊，这位老兄也出了个主意，赶紧上线 $crvusd 吧，一下能拉动交易量，让大家看到 curve 的价值，还说只要能撑到 2024 年，$CRV 增发量下降很多，这时币价就能撑住了。、

In my opinion, it is very well said, objective and fair, and the basis of judgment is realistic data. No one can say whether the market is out of the bear market at present, and it is indeed a question whether curve trading volume can go up in 23 years.

Then a DeFi_Cheetah is not happy to see that someone negatively speaks against curve. He identifies two weaknesses of Defiwap V3. 1. Your uniswap V3 lost the pricing power of your token; 2. Your profitability, these two really hit the nail on the head.

I have experienced the loss of pricing power. Whether it was the crash of $LUNA, the FUD of $usdt, or the decoupling of $stETH, uniswap was basically dead every time the market fluctuated wildly because V3 concentrated liquidity within a narrow range. After this interval, liquidity basically dried up, and everyone who paid attention to this market would only look at curve. V3's proactive management simply couldn't keep up with the pace of market changes. Moreover, at this time, GAS was too high for ordinary people to actively manage.

One consequence of the first lack of pricing power is that liquidity providers (LP) are being attacked by arbitrage bots. The big guy provided a figure that really struck me. 43% of the daily V3 trading volume is taken up by MEV bots, which is considered a toxic trading flow that is bleeding LP money every day.

If you are interested, you can read this article in detail

A harder cut was to say this: A business with no profits is never a good business, no matter how great the revenue seems to be.

Killing is the heart!

uniswap realized this and started thinking about cutting LP fees, but as Dana said, it's not that uni doesn't want to do it, it's just... I can't do it!

70% of transactions on V3 are algorithm-driven, with only 15% of front-end users. There is no engagement at all. Cutting LP fees creates a death spiral.

LPs less incentivised -> less TVL & liquidity -> higher slippage & worse execution price -> lower vol -> lower LP fees & LPs less incentivised

Finally, Dana also mentioned that uniswap v3 TVL is largely leveraged, which I agree with. In those years, MAKERDAO could enlarge DAI/USDC LP by 50 times through V3 active management of GELATO protocol. I was quite greedy to see that guy, Stablecoin trading pair, APY high scary.

However, market forces are so powerful, no matter how high the interest rate will bring you back to the reality of the gravitational field, but this time it is a win-win, MAKERDAO rapidly expanded DAI's stablecoin market share, uniswap V3 increased stablecoin TVL, and the slip-point is extremely low, invading curve's traditional territory.

I still don't understand how GELATO managed to achieve 50 times leverage without bursting. Is it not bursting yet? Or? Anyway, I was a little scared and stayed away.

@0xJamesXXX did the Chinese translation for the above tweet. Awesome!

We see an attack on uniswap. This man has launched a wonderful counterattack, to see how the rest of the story, listen to my next breakdown.