Curve Finance, the automated market maker protocol, has announced the launch of a new “algorithm for exchanging volatile assets.”
It has been reported that Curve’s base functionality is designed to enable low-slippage swaps between similar assets, such as one type of stablecoin to another, USDC to DAI, etc., by concentrating liquidity on a bonding curve weighted towards a particular price.
When swapping or depositing: treat it to be similar to typical crypto pools elsewhere, except with smaller slippage 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 an ETH/WBTC pool, or between assets that have ever-changing changing prices. The new pools will accomplish this with a combination of internal oracles relying on Exponential Moving Averages (EMAs), as well as a bonding curve model deployed by popular AMMs such as Uniswap.
The whitepaper reads:
“This creates 5 − 10 times higher liquidity than the Uniswap invariant, as well as higher profits for liquidity providers.”
The report said that Curve is now taking on the broader AMM space with what it believes to be a more efficient product for both traders and liquidity providers, using automatically rebalancing fees (between .04% and .4%) and price structures.
Following the launch of what many have branded Curve v2, a @CurveFinance team member tells Cointelegraph $CRV is now aiming to take over the AMM space, with popular trading pairs to be added in the coming weeks. @Blockanalia reports. https://t.co/VG6FFN1S6O — Cointelegraph (@Cointelegraph) June 9, 2021
Charlie, a team member of Curve, said:
“Most common pairs will be added in coming weeks before we go to a fully permissionless factory where anyone can spin up their own metapool.”
Likewise, the DeFi community has reacted glowingly, with many christening the release as “Curve v2.” Observers have been gushing about the capital efficiency and liquidity optimizations the new model offers.
Emiliano Bonassi, the Whitehat Hacker and co-founder of DeFi Italy, said:
“[Curve v2] extends Curve v1, instead of optimizing for target price of ‘1’ to a dynamic price based on pool Exponential Moving Average (EMA), which is a good indicator of the current pool price.”
Thus, Bonassi said:
“It continuously rebalances (and concentrates) the liquidity to [the EMA]. You can think like (not equal) to rebalancing a whole Uniswap v3 pool at once.”