A fork of Curve, Swerve, has insta attracted some $400 million worth of stablecoin liquidity right out of launch.
That’s in part because Andre Cronje of YFI tweeted about it, and considering recent events, maybe he’s even the one behind the fork, something that is being denied.
As we reported some tensions developed between Curve and Yearn’s yETH over a parameter that underprices dai in the Y Curve Pool.
Cronje asked for a fix to the A parameter from 2,000 to 1,000, but yETH automates the insta selling of CRV tokens, so there were questions whether CRV holders would approve or not the proposal.
As we speculated, an obvious solution was to fork the pool, as they have done but the dev for Swerve is anon, so we’re in that Putin world of probably yes, but deniably so.
Anyway this Swerve pool has fixed the A and Curve holders are now voting to fix their A in their pool as well with Yearn and Curve now back to being best buddies in public.
Swerve has not been audited and it’s brand new, so naturally it’s a bit risky, but we gave it a testrun that allowed us to see what this whole thing is really about.
First, we didn’t have any dai so we had to convert some eth. We could have opened an eth collateral to get dai and then deposit that, but our day job is reporting, not to manage collaterals with assets across dapps to not get liquidated.
So this may have contributed a bit to the recent eth price fall, but after you go to their dapp, you click on swUSD and then you click on deposit.
Initially what we deposited was 100 dai, but as you can see above the numbers are quite different now.
That’s because after we went through the process once, we withdrew. However, instead of getting 100 (104?) dai back, we got back just 4 dai and all these other rando stable coins like tUSD.
So that makes a bit more real the meaning of a pool in this dapp. It is actually a pool. Our deposited assets are distributed throughout it as per the market’s swapping of assets, and thus our dai has transformed.
Now to get some Swerve, you’ll see the top menu has changed. It has a DAO tab on it now. You click on it and you deposit.
So this says we have some swUSD Liquidity Provider (LP) tokens which we deposit on this Gauge that says it has an APY of more than 200%.
We did so and our swUSD tokens disappear. We now just have a 104 balance in the gauge, and there’s a claim 0.00 SWRV button.
We’re obviously playing with relatively small amounts so it sounds like it would take some time before this gets to 0.01 SWRV with each of them tokens currently worth about $4.
So while the APY might sound high, you have to consider missed opportunities. Like we can gamble this on Deribit or something and at least have a chance, albeit a very remote one, of 10x-ing that 100 and 4.
We were a bit annoyed about finding out that our dai was balkanized, not because the dapp shouldn’t do it, but because it should have told us before we deposited that it’s what would happen.
Now if we want to turn this back to eth, we’ll have to go through three swaps and get stuck with that 4 dai.
At least nothing lost except now miners can get even fatter in fees, but you can see why something like yETH would have an appeal as there you just deposit and it does everything for you, albeit on the Curve dapp instead of on Swerve with it unclear whether yETH will be forked as well for the latter.