1/ The battle between decentralized stablecoins just got serious!
Terra announced the 4pool on Curve made of #UST, #FRAX, #USDC, and #USDT.
This pool is a direct competitor of 3pool: USDT, USDC & DAI (a decentralized stable).
Why was #DAI singled out? Revenge.
A thread 👇
2/ Before explaining what Curve Finance is and the 3 & 4pools, here is why Terra's CEO hates DAI.
@MakerDAO Founder (DAI) called MIM & UST "solid ponzis" in Jan 2022 (pictured).
Terra did not take long to respond and their plan is aimed at crushing DAI.
How? 👇
3/ @CurveFinance is the largest AMM for stables with almost no slippage & very low fees.
It is the to-go place to swap stables for whales = juicy fees + extra profits for those controlling CRV rewards allocations.
Who controls CRV rewards, has a huge leverage on DeFI.
Next 👇
4/ Terra with @fraxfinance & @redactedcartel decided to create the largest stable pool on Curve.
Together they can ensure CRV rewards go to 4pool & not 3pool due to their large CRV holdings.
Whales are thus incentivized to provide liquidity to 4pool not 3pool that has DAI. 👇
5/ This way Terra ensures that #DAI is taken out of the picture, even if decentralized.
It is not about decentralization, rather... revenge (pictured).
DAI has to go and this alliance is aimed at that.
Plus Terra and Frax win, a lot.
Just check today's charts. 👇
6/ #Luna pumped to all-time high on this news. Frax Shares pumped 50%.
What is #FRAX?
Similar to UST, but with a fractional-algorithmic stablecoin (the ratio of collateral can vary based on demand).
UST and FRAX on one side plus USDC and USDT on the other = 4pool 👇
7/ USDC and USDT are the largest centralized stablecoins that still dominate DeFI.
This move from Terra is aimed at kicking DAI out and taking the lion share of the market.
In the process they leave DAI's founder nose bloody.
But is he right? Is UST a ponzi? 👇
8/ Check this thread I made on Terra / Luna / UST to decide for yourself.
There are some serious risks with algorithmic stablecoins that depend on constant demand to hold their peg.
This 4pool is another route to create demand for UST!
Smart play 👇
9/ By doing this, 4 of the top 7 DAOs by CVX holdings will funnel incentives into the 4pool.
3pool is the largest stable pool on Curve. Unlikely to last now with 4pool incentives.
DAI has $1.5 bil in 3pool that will see decreased demand = @MakerDAO in danger!
Sweet revenge! 👇
10/ This is certainly a smart move by Terra's CEO (no one doubted his abilities), but there is a clear personal touch as well.
However, UST & algorithmic stablecoins retain a question mark above their head.
If UST happens to fail later on, it will be a catastrophe to DeFi. 👇
11/ The integration of #UST across different DeFI chains (ETH/Cosmos/Avax/Phantom/Arbitrum) poses a systemic risk should it fail.
Maybe the plan is to make it "too big to fail".
However, that approach does not have a great track record.
Having said that 👇
12/ #DAI is a sound decentralized stablecoin with a history and a profitable DAO.
UST is still young, unproven and growing, maybe too fast...
Also check my good friend @cryptoharry_ who also made a thread on this, I recommend it.
And last 👇
13/ If you liked this thread, #retweet the first post to get more of this content in the future! 😍
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