The Curve Wars | CurveMarketCap

The Curve Wars are the DeFi trenches. Deep in the realm of liquidity and incentives, a battle of tokenomics rages on. Many might not be clued into the mountains being moved in the Curve War, but CurveMarketCap is here to settle it all. Will there be one automated market maker to rule them all? Does he who control the liquidity control the universe? Tune in and find out! ------ 📣 ALTO IRA | THE CRYPTO RETIREMENT ACCOUNT https://bankless.cc/AltoIRA ------ 🚀 SUBSCRIBE TO NEWSLETTER: https://newsletter.banklesshq.com/ 🎙️ SUBSCRIBE TO PODCAST: http://podcast.banklesshq.com/ ------ BANKLESS SPONSOR TOOLS: 👀 POLYGON | LAYER 2 DEFI https://bankless.cc/Polygon ❎ ACROSS | BRIDGE TO LAYER 2 https://bankless.cc/Across 🦊 METAMASK | THE CRYPTO WALLET https://bankless.cc/metamask 💳 LEDGER | THE CRYPTO LIFE CARD https://bankless.cc/Ledger 🧙‍♂️ ALCHEMIX | SELF REPAYING LOANS https://bankless.cc/Alchemix 🦄 UNISWAP | DECENTRALIZED FUNDING https://bankless.cc/UniGrants ------ Topics Covered: 0:00 Intro 5:00 CurveMarketCap aka Gerrit Hall 9:56 What is Curve? 16:15 The Curve Wars 24:52 Governance & Rewards 32:54 Convex Finance 40:01 Bribing as a Good? 48:00 The Curve Community 53:16 Valuing Convex & veTokens 57:33 Uniswap vs Curve v2 1:06:08 PAC.xyz 1:11:13 Closing & Disclaimers ------ Resources: CurveMarketCap https://twitter.com/CurveCap?s=20 Conway's Game of Life https://newsletter.banklesshq.com/p/ether-is-equity Llama Airforce https://llama.airforce/#/convex/flyer PAC: https://www.pac.xyz/ PAC Discord: https://discord.com/invite/Y95mnqewpb ----- Not financial or tax advice. This channel is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. This video is not tax advice. Talk to your accountant. Do your own research. Disclosure. From time-to-time I may add links in this newsletter to products I use. I may receive commission if you make a purchase through one of these links. Additionally, the Bankless writers hold crypto assets. See our investment disclosures here: https://newsletter.banklesshq.com/p/bankless-disclosures

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:04Ryan Sean Adams?

  Hey, Bankless Nation. Welcome to another State of the Nation episode. The episode where we go over a topic that's kind of been in the headlines. This is an exciting evening episode for us, David. Usually, we record these during the daytime, and we're going to be talking about Curve, the Curve Wars, more specifically.

• 0:24David Hoffman?

  Curve Wars.

• 0:25Ryan Sean Adams?

  Curve. Like, there's a lot of subjects to unpack here. This has been something that's, you know, probably emerged over the last six months. I think it's important that we cover it because we want to understand it more fully. I feel like there hasn't been a podcast that has synthesized everything that's going on, and I think this mechanism will repeat in all sorts of different DeFi protocols. So, we're not only going to see these wars play out on Curve, we're going to see them all over DeFi as well. So, it's about time we take the time to understand them. Who do we got on today?

• 0:59David Hoffman?

  We have a community favorite. I actually did not ask if he goes by his name or not, but he goes under the newsletter of Curve Market Cap, which I believe is a play-off of CoinMarketCap. And apparently, Curve is deep enough to justify an entire newsletter. And so, Curve Market Cap has gone with just producing enough content out of about Curve, just unpacking what's going on in the world of Curve Wars. And no other DeFi protocol has had this whole war thing going on. And so, we kind of want to figure out, why does Curve go so deep? What is going on? What is the game that is being played? Because apparently,

• 1:40David Hoffman?

  there's a lot of things to unpack and things to discuss. And so, Curve Market Cap is going to unpack that for us.

• 1:46Ryan Sean Adams?

  Yeah, what's everyone fighting over?

• 1:48David Hoffman?

  Yeah, what are we fighting over? What's the war over?

• 1:51Ryan Sean Adams?

  We're going to be talking about all that. And of course, guys, you know, prices are down a little bit on the year. So, got to tell you about Crypto IRA, getting a Crypto IRA, that is, from our friends Alto. They wanted us to let you know, now is a fantastic time. To open your IRA account, okay? Not only they want to let you know, I want to let you know. I love these things, David. I, I think crypto IRAs are the best way for retail to avoid paying taxes on crypto gains.

• 2:25David Hoffman?

  This is the truth.

• 2:26Ryan Sean Adams?

  And that could be a lot, okay? And I did this a few years ago when the market was down. Probably the best, most like, the most tax optimizer thing I've ever done was to open an IRA and also invert some of my old 401Ks to the IRA structure and buy crypto. This used to be hard to do, but now there are companies like Alto IRA that are providing the easy button for this. So they're just like integrated with Coinbase. That means you can purchase 125 assets, a few clicks, you're up and going, you got all your paperwork filed and you've got your own crypto IRA. So go check them out. It's time to open a crypto IRA. Best time to do it is when you buy low in a bearish market, in a dip, whatever this thing is right now.

• 3:10Ryan Sean Adams?

  And you can do that at altoira.com/bankless. Check that out. Hey David, I gotta ask you the question though, before we get in. What is the state of the nation today, sir?

• 3:22David Hoffman?

  The state of the nation, Ryan, is cornering because apparently that is what's going on in the curve wars. Apparently the curve wars is all about the game of cornering the market. And it might have already been cornered by convex finance.

• 3:36Ryan Sean Adams?

  It's over? Someone won the war?

• 3:37David Hoffman?

  The thing is, and I think this is what we need, we need to check on, but I think the game just repeats because once somebody corners the market, then it's about cornering that market. And that's actually what I found out is actually quite interesting about this whole curve wars thing. So Ryan, on this state of the nation, we are cornering.

• 3:55Ryan Sean Adams?

  All right, we're gonna find out how the curve market, the curve markets get cornered. And we've got the expert to do it, to do that coming up. We're gonna introduce him right after we say hello to the fantastic sponsors that made this episode possible.

• 4:09David Hoffman?

  Polygon is Ethereum’s largest and most vibrant scaling solution to date. With millions of monthly users and all of the biggest DeFi apps, the Polygon ecosystem has turned into a blossoming metropolis of DeFi activity. Transactions on Polygon are quick and cheap, allowing users the freedom to achieve their DeFi goals, all while being economically anchored to Ethereum. But Polygon isn’t just the proof-of-stake sidechain. The Polygon team is building a suite of scaling solutions, including Polygon Hermes, Midan, Nightfall, and Zero, all with different design choices in order to be optimized for all possible crypto use cases. If you’re a developer who wants to build on the Polygon ecosystem, go to the link in the show notes to check out their fantastic documentation. And if you’re a user who just wants to experience fast and cheap DeFi, you can bridge over your ETH or other tokens

• 4:54David Hoffman?

  and start playing around with any of the thousands of applications that are available on Polygon. If you’re going Bankless, you need MetaMask. This is your tool to unlock the world of DeFi without giving up custody over your private keys. MetaMask is both a secure in-browser wallet and also a secure bridge for your hardware wallet. You can now trade tokens on any Decks or Aggregator. MetaMask Swap gathers real-time pricing information across all the DeFi exchanges, allowing you to select your best price while getting all the MetaMask benefits of self-custody, lower gas costs, and increased transaction success rates. MetaMask also has a fantastic mobile wallet that I use when I’m out and about, which I use to collect PoApps, NFTs, and do all my DeFi things while I’m away from home. If you haven’t downloaded MetaMask, you gotta try it out. Web3 wouldn’t be the same without it.

• 5:37David Hoffman?

  Download MetaMask for desktop and mobile at metamask.io and load up your Trezor, Ledger, Lattice, or Keystone hardware wallets so that they too can get into the world of Web3. Bankless is proud to be sponsored by Uniswap. Uniswap is a new paradigm in asset exchange infrastructure. Instead of a cumbersome order book system where trades are matched with other humans, Uniswap is an autonomous piece of software on Ethereum that lets you trade any token at the current market price. No human counterparties or centralized intermediaries, just autonomous code on Ethereum. Input the token you want to sell and receive the token you want to buy. The Uniswap Grants program is accepting applications for grants. Do you have something of value that you think you want to contribute to the Uniswap ecosystem? No matter how big or small your idea is,

• 6:21David Hoffman?

  you can apply it for a unique grant at uniswapgrant.org and help steer Uniswap in the direction that you think it should go. Thank you, Uniswap, for sponsoring Bankless.

• 6:32Ryan Sean Adams?

  Hey guys, we are back talking about the Curve Wars. We're here with Garrett Hall. He runs a newsletter called Curve Market Cap, fantastic newsletter that covers the Curve ecosystem. And when we tweeted out, who is a person who can come on Bankless and explain the Curve Wars? The resounding answer was Curve Market Cap, Garrett Hall, the person that we have as a guest today. Garrett, it's great to have you on Bankless. How are you doing?

• 6:59Speaker 02

  Thank you. Thank you. It's going good. I have to ask, is it still Bankless? Or after the market crash, are you down to a homeless?

• 7:06Ryan Sean Adams?

  Yeah, yeah, we're getting there. Yeah, we're getting there.

• 7:09David Hoffman?

  I aspire to be homeless one day.

• 7:11Ryan Sean Adams?

  You tweeted out that meme before someone could use it against us, right? That's the thing you have to do is, you know, scratching out Bankless, front run the attacks. You know how Twitter can be. Speaking of Twitter, you were recommended to us on Twitter from CryptoCondom, I believe, who apparently is a brilliant voice on Curve and on DeFi. And I am just blown away by how interesting this community is. And I wonder if you could start, Garrett, by telling us a little bit about yourself? Like, how did you get into Curve and kind of your background to give us some context? Because CryptoCondom didn't fill us in. They just said, you need to speak to Garrett.

• 7:49David Hoffman?

  Oh, these late night streams are weird.

• 7:53Speaker 02

  We're already entering the after dark territory, right? So it can be explicit. No, I got my start in crypto actually back in 2014. And for various reasons, was out of the space until about 2019, when I popped back in. And at the time, I'd had like some Bitcoin lying around and I was just looking for places to earn yield on it. And at the time, I was actually looking at Binance of all places. I'm an American citizen, so I can't use Binance, but I was saying, what on earth is going on? How come like they're actually able to get these incredible yields on things? So I asked a colleague of mine and I was saying, hey, what do you know about this? And he was like, stop, don't look at Binance, look at Curve. And this was at the time that Curve was having its Curve Swerve drama.

• 8:36Speaker 02

  I don't know if you were around to remember that. It's like very old school.

• 8:40Ryan Sean Adams?

  Swerve was a freak of Curve is what I remember, what I recall.

• 8:44Speaker 02

  Exactly, exactly. So I started to poke around and take a look at it. And the more that I read, the more that I learned about Curve, just the more mind, like more, more, my mind was blown. So I just decided to just dive all in.

• 9:01Ryan Sean Adams?

  That's awesome. Yeah. And what about it blew your mind? I'm curious, Garrett, like what was cool about it?

• 9:07Speaker 02

  So there's a number of things. If you look at where it is today, it's phenomenal. It's got nearly $20 billion in value locked, according to DeFi Lama, by far the largest source of liquidity in all of DeFi. This is now across eight chains. The mathematics behind the Curve pools are bespoke. So when you read through the Curve white papers, they get into incredible detail and very higher, higher level math. And I'm a huge math geek, so that really definitely appealed to me.

• 9:38Speaker 02

  In a nutshell, it allows for incredibly high volume transactions with extremely low slippage, which makes a huge difference for whales. And you two are probably whales, but for peasants like me, the Curve tokenomics is also incredibly generous. It's splashing these fees to Curve holders.

• 9:56Ryan Sean Adams?

  That's super cool. And just maybe for people who aren't as familiar with Curve at a high level, could you even go back and sort of explain that? So this is a decentralized exchange, I believe, of the automated market maker variety. So sort of like a Uniswap where you are, you know, trading with a, with a protocol and a pool on the other side, but it specializes in similar tokens, right? So like, you know, stablecoins would be one, you know, where the tokens are like kind of a similar value and Curve tries to sort of equalize them. You could probably explain this better. What is Curve in a nutshell at the highest level?

• 10:38Speaker 02

  I think that's a good explanation that you provided. So it definitely got its start as a stablecoin AMM. And that was also something that I found really interesting about the protocol is that they had kind of looked at the existing capabilities of Trading between like type, like price tokens and they figured out more efficient ways to adjust the formula. So Uniswap, which you mentioned is the constant product X times Y equals a constant. And that works fairly well, but then it kind of runs into some issues in that it can produce more slippage. The Michael Egeroff white paper on this essentially figured out a way to combine a linear

• 11:20Speaker 02

  constant invariant with a, the product constant invariant that allowed it to have the low slippage that you would like to see. At that would, you would see from a linear invariant and the capability of kind of shooting rapidly towards imbalance. And as a result, the pools can stay maybe 70% imbalanced and not see too much in the way of issues, which was very useful for the curve V1, which focused extraordinarily on stable coins.

• 11:49David Hoffman?

  For the visual learners out there, X times Y equals K is the classic Uniswap curve. And that is just a normal parabola that is very uniform and curves innovation. And what Garrett just explained using math, I'm going to try and explain using visuals where the center of the curve, the center of the parabola is flattened. And what that means is that when you have two of these, two of these things, as in two trading pairs, because the, where the curves meet is flatter, these pools can be more and more imbalanced from each other. As in, we could have like 70,000 USDC on one side and only 30,000 USDT on the other side. And these things are still trading at basically $1.

• 12:34David Hoffman?

  And so while the pools are out of whack in how much supply there is, the trading prices on these things still trade really, really close to one to one. And that's a feature that Uniswap, that Uniswap does not have, Uniswap V2 does not have. Because a 70,000 supply of USDT on one side versus 30,000 on the, on the other side for USCC would represent something like 70 cents versus a dollar 30, something completely out of whack. And so Curve really came into the market via this flattened curve of the, of the Uniswap, of the, of an AMM that really optimized for trading like kind assets. So Curve made this assumption that you can trade, that you can bend the curve a little bit

• 13:17David Hoffman?

  and allow for much more optimized trading of like kind assets.

• 13:23Speaker 02

  And this has done, I think, just a phenomenal job on just literally Curve V1 is focused only on like kinds. So stablecoin to stablecoin. And of course Uniswap is very good at transacting between different coins. And I think probably towards a bit later, we might get into Curve V2 pools, which is this whole kind of on top of it. But just even in terms of where we've come from, this is like allowed Curve to attract a ton of liquidity to the tune of about $20 billion.

• 13:51David Hoffman?

  Yeah, that's exactly right. And we definitely want to unpack Curve V2 versus Uniswap V3, because there's been some rumblings about, does Uniswap V3 eat into Curve? And some people think yes, but then Curve fans really think no. But that conversation is coming at the end of the Curve Wars conversation. Well, we want to talk about the Curve Wars situation first. I know, Ron, I know you have a question. What's up?

• 14:15Ryan Sean Adams?

  I was just going to ask, like, because when people are hearing about Curve and if they go to the Curve website in like the app itself, this is what it looks like. And Garrett, I have to ask, this is going to throw a lot of people off. Like, it looks pretty basic. It looks pretty janky.

• 14:32David Hoffman?

  Looks pretty 90s.

• 14:33Ryan Sean Adams?

  This is like, like 90s. And but can you tell us, I mean, we talked about the liquidity in this thing. How much volume is this user, is this user interface, is this, is this protocol throwing off right now? Are we talking some large numbers?

• 14:49Speaker 02

  Yeah, so you could scroll down to the bottom and the volume is published right there. We're seeing, we're seeing about

• 14:59Speaker 02

  Curve itself, about daily volume, often north of a billion. And in fact, during bear markets, it even tends to spike a little bit because so many people need money fast. Maybe they've printed too much like liquidity USD, which is a lending stablecoin, and they need to cover their position quickly. So they jumped to Curve because Curve is one of the few things that does pretty well during bear market. Gas fees might be spiking, but they'll take out as much as they can to try and cover their positions. So in fact, during the market crash of the past few days, we actually saw Curve routinely exceeding $1 billion in trading volume per day, in some cases, 2 billion.

• 15:38Ryan Sean Adams?

  Are people using this interface or is it all happening, money robots, behind the scene aggregators, that sort of thing?

• 15:44Speaker 02

  Like I so personally, I do think that this super retro interface is gorgeous. But I'm like older than the average person. I also happen to know that they're working on a new UI, which is a bit more of like a Windows 98 type feel.

• 15:57David Hoffman?

  Oh, cool. Getting an upgrade, going from like Windows 3.1 to 98. That's great.

• 16:03Speaker 02

  But I myself, like, I'm a super geek, so I just tend to do most of my stuff in Brownie, which is a Pythonic smart contract testing suite.

• 16:12David Hoffman?

  Awesome. Very cool. So let's go ahead and dive into the curve wars. So now that we understand what curve is, we kind of want to figure out why there is a war happening and who's fighting that war. And I think this conversation starts with the CRV token. Garrett, can you kind of take us through the unique properties of the CRV token and why it's instigated a war?

• 16:38Speaker 02

  Yeah, and unfortunately, the victims of the curve war seem to be everybody's portfolio this past week.

• 16:46Speaker 02

  So I'd say in a nutshell, the the big value behind the curve token is two things. There's the revenue share component, and then there's the government's aspect of it. So diving into each of these with the revenue share, all the trading fees that occur when people are trading on curve, usually it's about four basis points, and that's split evenly. And VE CRV stakers earn 50% of that.

• 17:12David Hoffman?

  So if you stake the curve token, the CRV token, it turns into VE, which I think stands for vested curve token. And those people get 50% of those four basis points for whoever's taking, right?

• 17:25Speaker 02

  That's correct. It's a vote escrow CRV. And and the VE CRV is very interesting in that it is non-transferable. You can't do anything with it other than that it's an ERC 20 token. The curve itself is transferable. You can do whatever you want with it, but curve by itself does nothing. So you have to lock it to get the benefits. And then Curve implemented the system where if you lock it, you have to do the maximum lock of four years to be able to get the boosted rewards that were on the screen shown earlier. So that's The curve Dow voted into existence, the property of allowing users to vote with their V E C R V on the emissions of curve that these different pools would would receive.

• 18:10Speaker 02

  So you get some fees from the basic trading activity, but then you also can get a you can get a minimum of the number on the shown on the left. And if you have enough V E C R V locked, you can earn the maximum boost, which is the 2.5 times that number on the right. So by locking your curve as V E C R V, you can achieve this maximum boost. In some cases, double digit and some in I've seen as high as triple digit A P wise in terms of the in terms of the value you can get from from staking of these pools.

• 18:43David Hoffman?

  So when you say boost, that is yield farming, correct? And when you stake your your curve for the maximum amount of time, which is four years, it means you're not getting your curve back for four years. And that's a one way decision. It's not like you can go command Z on that like once you stake it, it's in there. But then you are also getting the maximum amount of emissions, because that is because you've locked it up for the maximum amount of time, you're getting the maximum amount of emissions as a result of that of that staking. And those emissions are in C R V token?

• 19:16Speaker 02

  They are, although it's not as good as that, because the V E C R V that you have also linearly decreases over time. So if you lock for four years today, the V E C R V will drop to zero by four years unless you extend your lock.

• 19:31David Hoffman?

  Well, it's drops to zero, as in it is deleted?

• 19:35Speaker 02

  No, you still have your curve, but the V E C R V you have drops to zero.

• 19:40David Hoffman?

  Okay, wait, but I thought V E C R V is is curve just vested or voting?

• 19:45Speaker 02

  No, you you you lock the curve, you receive this V E C R V token. It starts at the amount of curve that you have, but it decreases linearly over time until you have nothing left unless you extend your lock.

• 20:00David Hoffman?

  Okay, and you extend the lock of the C R V token?

• 20:04Speaker 02

  Uh, yes.

• 20:04David Hoffman?

  Okay, okay.

• 20:05Speaker 02

  So you take your bag of curve, you lock it, and then you have to keep locking it if you want to keep getting this maximum boost. So it really does incentivize tying up the curve, keeping a massive amount of the curve off the market.

• 20:17David Hoffman?

  Was that the intent of the design here is to just like increase the value and price of Curve? Or is the intent to, I guess, incent governance of the protocol? Why the lockup in the design of Curve?

• 20:36Speaker 02

  And here's where Twitter did you wrong, because you really should have invited on Michael Edgarov or someone from the team that actually designed it. Because I can just speculate. I would assume that it is for these reasons to massively extend the amount of Curve that is locked and therefore off the market. As you know, four years is a massive amount of time in DeFi. Like, four years in DeFi time is, what, like 80 years in real time?

• 21:00David Hoffman?

  Oh, at least. We invented DeFi like three years ago.

• 21:06Speaker 02

  So, but still, until Convex came around, people were doing this. People were taking their Curve and they were locking it for four years, which is an amazing signal. So I think it's something like 80% of the Curve is just completely off the market, which is pretty wild if you think about it.

• 21:22David Hoffman?

  And perhaps the reason why this dynamic exists at all is specifically because of the emission schedule of Curve and also the boost dynamics. But Curve has this very aggressive emission schedule where it's inflating at an insane amount. But the reason why that doesn't result in just like a complete dump of the value of the token is because everyone's locking it up for four years and then also re-locking it up for four years. And then they're locking up their emissions that they get for four more years so that they can get more emissions, so that they can lock those up for four more years.

• 21:56Speaker 02

  So what's really mind-blowing about the emission schedule is it's actually a 300-year emission schedule. So the final Curve will be emitted and sometime in 2030 or something.

• 22:08David Hoffman?

  Real years, not DeFi years.

• 22:09Speaker 02

  Real human years, not DeFi years.

• 22:10David Hoffman?

  Okay, wow. So the Curve wars is going on for 300 more years? It's a 300-year war.

• 22:17David Hoffman?

  After that, who knows? The war is done.

• 22:19Speaker 02

  Dig yourself in, it could get wild. No, the 300 years is like, it's crazy. Every August, though, the emissions rate decreases. And in fact, half the curve has already been emitted. So we're already 50% of the way through the emission schedule. It's been decreasing and every August when it decreases, it's a fairly substantial amount.

• 22:40Ryan Sean Adams?

  Okay, just to be clear, if I own Curve, I lock it as V-Curve for some length of time for being the maximum. And then I'm eligible for this boost. That means I get more CRV rewards. And am I also getting a share of like that 50% of the fee on all transactions, on all trades on Curve? Am I also getting that? And if so, what is that paid in?

• 23:06Speaker 02

  So that is paid in 3-Curve. The Curve 3pool contains Dye, Tether and USDC. When you stake your current, when you stake any of those coins into the 3pool, you receive a 3pool LP token. And that LP token can then be redeemed for Dye, Tether or USDC.

• 23:26Ryan Sean Adams?

  So that's cool. That's like a nice little dividend. And plus, on top of the dividend, the cash that I'm getting, I'm also getting more, if we translate this into the equities world, I'm getting more stock, right? I'm getting stock as a boost for, you know, locking it up. And then I'm also getting this dividend, which is basically a percentage of revenue generated by Curve.

• 23:46Speaker 02

  That's correct.

• 23:47David Hoffman?

  But if you really want to get the value, the maximum value out of Curve, you can never actually get the value of the CRV token back. Because if the game is to corner the Curve market by having as large of a CRV share as possible, you always need to be locking up CRV as long as possible. And the only value that you get is your share of the stablecoin volume fees that get swapped. So the two basis points that go to the CRV holders, right? So if you keep on locking up Curve forever and ever and ever and ever, that's how you maximize your dividends that are being paid in stablecoin fees. But you can never get the CRV back because if you start to offload your CRV,

• 24:30David Hoffman?

  you're also offloading your rights to the point, to the two basis points. Is that right?

• 24:35Speaker 02

  Yeah, I'd say that's a fair characterization. So you do have a dilemma like the price of Curve was before the crash, $6 is $3 now. Most people don't even seem to care about the price though, because if they've been locking their Curve, can't sell it until the next presidential election.

• 24:53David Hoffman?

  Okay, so that's, I think, phase one of the Curve wars. And things get even more complicated and even more crazy after this, because I think why there's so much excitement about convex finance is it seems to be that convex finance has started to really get into cornering the Curve market. Would you say that that's a fair classification of convex?

• 25:17Ryan Sean Adams?

  Have we actually talked about, before we get there, have we actually talked about, David and Garrett, like, what else you can do? Because there's some voting aspect of this, right? It's like, maybe we should talk about that, because you're not only locking up Curve to transform to V-Curve to get the boost and the staking, there's also like a governance right, as I understand it, so that you actually get to decide which of the pools receive a share of future Curve rewards. Is that an aspect we should talk about first, before we get to your question, David? Set that up.

• 25:57Speaker 02

  Yeah, that's worth getting into. So a lot of protocols have governance rights, and sometimes it's not clear what those governance rights do. With Curve, it has a very strong degree of decentralization, and nearly every aspect of Curve is managed by the by VECRV holders. So most commonly, this is to periodically vote on which pools get the most rewards.

• 26:23Speaker 02

  And we'll get into a bit more of the mechanics, especially how convex disrupted all of that. But basically, if you see those boosts and the emissions on the front page that you looked at earlier, that's all voted on by the community. The community decides which pools it's going to reward. And there we go.

• 26:45Speaker 02

  If you click on home, actually the Dow is also a good place to do it too. All those rewards TAPRs are what the community decided. We vote that this pool will get 10% max boost. The next one, three pool gets 1% max boost. That's just a straight up vote of VCRV holders.

• 27:05David Hoffman?

  And so what this is doing is this is directing what stablecoin pools get more rewards in emissions. And so what that's doing is that's incentivizing liquidity to come into into curve for specific stablecoins. And so for stakeholders, for somebody like SUSD, if somebody was incentivized to really bootstrap SUSD liquidity, they might want to vote with their curve tokens to incentivize SUSD to come in. And so they would vote in the using in the Dow, using their CRV tokens to put more rewards in the SUSD pool. And so how has this played out?

• 27:45David Hoffman?

  What what stablecoin pools has the Dow elected to incentivize the most? And how often does that change? Or is it relatively stable over time?

• 27:57Speaker 02

  Changes roughly weekly. And you can actually have full transparency into how the Dow is voting on it. And you can therefore try and move your coins around to the pools that are going to be, you know, going to next week be like getting more rewards. Or if your pools losing rewards, you can move out of it. Some protocols also choose to like the SUSD that you were pointing out, also choose to issue directly rewards in their own token.

• 28:25David Hoffman?

  Yes, the next token.

• 28:26Speaker 02

  So you can see, so you can see some examples of that.

• 28:32David Hoffman?

  And so yeah, so

• 28:37David Hoffman?

  is it fairly balanced or are like if from the from the perspective of stablecoin operators? Like, how badly does like Circle, for example, really want USDC liquidity? Or are those are these types of who's really playing? And why are they playing in this game? Like, what are their interests in bootstrapping certain liquidity pools over others?

• 28:59Speaker 02

  That's a good question. So I think one really good example would be Steph and F. Are you familiar with Lido Finance and their staked Ethereum?

• 29:09Ryan Sean Adams?

  Totally.

• 29:09Speaker 02

  So if you have 32 Ethereum, you can run a validator node yourself. If you have maybe one Ethereum and you want to get the 5% interest rates, you can't do that directly, but what you can do is you can go to Steph, Lido Finance, you can stake your Ethereum there. And they will give you a Steph token, which is relies very heavily on people believing that the Steph Ethereum peg is always one to one. So it's very useful for them to have a lot of liquidity in this pool because they want to be able to move between ETH and Steph fluidly. If there's not a lot of liquidity in the pool, then you might end up seeing a run on the Ethereum and it'll just be overbalanced with Steph.

• 29:55Ryan Sean Adams?

  That's cool. So what's interesting here is it feels like there's some value, some additional value to V-Curve, right? So like, I guess there's value because V-Curve pays out dividend and the boost rewards of CRV. But there's also value in the governance vote itself because that governance vote, you know, as allocated as a percentage of V-Curve, actually

• 30:25Ryan Sean Adams?

  dishes out a lot of capital, it seems like, a lot of liquidity rewards here. And how much are we talking, Garrett? Like, how much money are we, you know, talking that goes through this reward system? We're talking about like millions of dollars? You know, more than this?

• 30:44Speaker 02

  Yeah, when we get into the, further down the flywheel towards Votium, you'll see that to be able to influence this, protocols are putting in roughly on the order of like a million dollars cash equivalent per week.

• 30:58Ryan Sean Adams?

  Wow. Okay, so if I'm, if I'm Lido then, and I want to create liquidity for staked ETH and the ETH pair, or maybe I'm Rocketpool and RETH and, you know, the ETH pair or something, then how much am I willing to pay?

• 31:18Ryan Sean Adams?

  For is this where bribing comes in like how much am I willing to pay to get liquidity on my on my pair like or do I have to buy a whole bunch of curve and stake it as V curve in order to do that or is it seems like the curve wars are about the secondary market that's popped up and created kind of a way to pay V curve holders somehow in order to sway their votes is that what's going on here?

• 31:45Speaker 02

  Yeah, and when we look at the raw value of curve, you know, there's the trading fees, which are of interest to everybody. And then these votes are probably not of interest to you unless you're operating a protocol. But if you are operating a protocol, it can be massively important to you. And it's it's fairly fairly interesting because this the ECRV mechanic as we get further and further down the flywheel, we can see where it really has advantages in being able to somewhat separate out these different these different needs because protocols all have their issues to deal with. So they often have conflicts of interest between like whales LP holders and figuring out what they're

• 32:25Speaker 02

  going to do with their own emission. So if you look at the this voting system, it does a really good job of being able to split out some of this value and convex was able to basically just swoop right in, figure out exactly how things worked well within this ecosystem and use it to architect their protocol to really intermediate themselves in a non parasitic way into this market.

• 32:55Ryan Sean Adams?

  Is this where we should get into the conversation of convex finance? I think I think it's time. Garrett, what is convex finance and why is it such a big deal?

• 33:07Speaker 02

  So my colleague told me that convex is so perfect. And he asked me, it has to have been designed by someone at curve, right, right, right? And I have my doubts on this. But I do agree that convex fits in perfectly as the aforementioned crypto condom cites that convex solve the emissions problem that curve has in the short term, but it's not parasitic. So it fits in nicely and only serves to amplify all the benefits of curve. So essentially Convex streamlined the process of allowing protocol owners to bribe different curve pools. And it did this by, when they launched, they solved a problem for the liquidity providers on Curve, which was this need to stake your curve for the ECRV, lock it up for four years, keep extending your boost.

• 33:52Speaker 02

  It's really difficult to do and it required a lot of gas, it required a lot of kind of constant management. Convex automated it. So they said, you take your Curve LP token that you get for staking, and instead of staking in the Curve Rewards gauge, you stake it into Convex. Convex is going to manage the ECRV for you. Every curve that Convex gets is going to lock it up for four years and it's going to pool that all together. So everyone gets just about the max boost and then they slice off, you know, 10% or so for themselves.

• 34:28David Hoffman?

  Okay, and is it fair to say that Convex has successfully cornered Curve?

• 34:34Speaker 02

  Yes, Convex is about 50% of the voting interest in Curve at this point.

• 34:40David Hoffman?

  And by the definition of what Convex is and how it operates, it's never going to lose that market share?

• 34:48Speaker 02

  No, no. So there was probably a time when someone could have outcompeted Convex. That time, who knows, maybe something will happen in the future and it could happen where someone else finds an entry to compete. But Convex doesn't use this voting share for itself. It then turns that back owner over to Convex owners to be able to bribe the curve pools that they want through the Vodium protocol.

• 35:13David Hoffman?

  Okay, so is it now, instead of the Curve wars, is it now the Convex wars? Like, did we just pass the wars down the line to the winner?

• 35:25Speaker 02

  I still think they're all kind of part of the larger global conflict.

• 35:30David Hoffman?

  Uh huh.

• 35:33Speaker 02

  So it's a new front in the Curve Wars, perhaps.

• 35:36David Hoffman?

  So Convex hasn't just won the war and the war's over. There's going to be like, it's just won the battle, I suppose, and the war.

• 35:44Speaker 02

  Convex is now the battleground.

• 35:46David Hoffman?

  Convex is now the battleground. Okay. All right. So, so Convex basically just automated the bribing process that was already going on on Curve. Right. They just automated all of that and now they they dominate it. What what's in it for Convex? What does Convex gain out of it? And I guess it's not parasitic, right? Is this a symbiotic relationship of some sort? Like, why does, why does Curve, does Curve benefit from this? Or is Convex the, you know, the organism that's that's chiefly benefiting from this relationship?

• 36:25Speaker 02

  So they do appear to be in symbiosis, which both seem to benefit. And this is where this concept of this flywheel came in. And that these are sort of intricate machines moving together. And they just tend to throw, both throw off a ton of cash to whoever happens to be standing nearby them.

• 36:44David Hoffman?

  And so I I'm actually really fascinated by this because at one point in time, I wrote this article. I can't remember what it's called, but it it used Conway's Game of Life to describe some DeFi apps. About, uh, Gary, are you familiar with Conway's Game of Life?

• 36:59Speaker 02

  I am, yeah.

• 37:00David Hoffman?

  Yeah, uh, listeners should look it up. It's kind of hard to explain, but basically it's just these very programmatic rules that if you design them correctly, they take on these life forms that perpetuate off into infinity. And so like, there's been a lot of like DeFi innovations these days that kind of just feel like uh, obfuscated Ponzi games, but that's not what this feels like. This actually feels like oddly sustainable. Yeah, here's, here's Conway's Game of Life. This, uh, and so like you make these different shapes, they they react to each other. Yeah, like there's a fantastic animation. It's supposed to be self-perpetuating little organisms. That with, you know, some inputs create infinite outputs and just exist.

• 37:39David Hoffman?

  And it seems to be that convex and curve are the right constructions, combined with the right issuance, to just be kind of filling the original ethos of what DeFi was supposed to be, which is these long-term, self-perpetuating, fully decentralized applications that really return value towards the LPs and the governors. Like, is, this seems like an elegant model. Like, would you agree with that description?

• 38:12Speaker 02

  Yeah, the, and this is why convex really made a splash when it first hit, because the Curve community is full of a lot of very smart people. Because of course, you have to be smart if you're going to understand all these complexities of Curve in the first place. And when you look at the way each element of convex is architected, it's sort of filled in some of these gaps from the user interface perspective. So like, the hassle of having to lock your Curve is kind of gone. If you want a liquid D provide, it's just so easy to dump it in convex. You don't have to wait four years. You can get your money back. Convex introduced a wrapped form of Curve called Convex Curve.

• 38:50Speaker 02

  You can always take your Curve, give it to Convex, and get a token back. The Convex Curve token can be staked into Convex to earn Convex Curve and Free Curve. So you get the dollars and trading fees that you would get from staking Curve. You also get Curve back from that, and you also get Convex back from that. And, and Convex takes that, of course. They then use that to increase their overall stash of the ECRV, thus increasing their voting rights. And this is actually able to maintain its peg in the same way that Steph does by having a Curve Factory pool between Curve and Convex Curve launched. So if you ever want to take your Convex Curve and trade it back to Curve,

• 39:35Speaker 02

  you can do that anytime as long as the Convex Curve Curve Factory pool maintains its peg.

• 39:41Ryan Sean Adams?

  It's kind of funny. We started part of this looking at the curve interface and how rudimentary it is, but it strikes me that's almost like the firmware level of this protocol, right? It's like you don't really have to, I mean, that can be abstracted through things like convex, and that's maybe more the user interface that people are actually using practically. But one thing I'm hung up on here still, Garrett, is like this idea of bribing. Like bribing doesn't have a positive connotation, does it, right? So like, okay, like, you're bribed, let's say this was a corporation and there were some, you know, voting shares in the corporation, and you are actually bribing shareholders

• 40:26Ryan Sean Adams?

  to say, you know, say it's Apple, to give you a contract, like, we are part of that supply chain that wants to make iPhones, and so rather than, you know, compete and win fairly at that game, I'm gonna just call up a whole bunch of Apple shareholders. I'm gonna bribe them in order to vote to assign my supply chain company the Apple contract. That doesn't seem ethical, right? I mean, like bribes are bad, aren't they? Or talk about this a little bit, are bribes bad in this system?

• 41:07Ryan Sean Adams?

  Or is this some sort of transparent bribe that is like, actually, okay? Yeah, it's a part of the game, or is bribe even the correct word here with all of the negative connotation?

• 41:18Speaker 02

  So if I said that a protocol was using its own native token to incentivize liquidity, would that sound bad?

• 41:25Ryan Sean Adams?

  No.

• 41:25Speaker 02

  No.

• 41:26Ryan Sean Adams?

  I would also call it a bribe.

• 41:28Speaker 02

  It doesn't have the same ring to it as bribery, and you know, bribery is effective, it works, we all know what it means. I think it's used a bit tongue in cheek, but like, what's the ethical issue that you would see with the way that this is happening?

• 41:40Ryan Sean Adams?

  I'm not sure. It's actually just the term bribe that I'm not comfortable with. Let me ask you, are there ethical issues? Are there corruption issues? Are there issues of some nefarious token trying to get liquidity that doesn't deserve it and like buying its way into that liquidity? Or like, is that a bad thing? Are there any, you know, hazards, moral hazards that they come about as a result of this?

• 42:07Speaker 02

  That's a good question. I am struggling to think of it, but I am not, uh, among my many accomplishments, I'm by no means an ethicist, so.

• 42:15David Hoffman?

  So there's this website that has been spun up, uh, Vodium, that I think has formally instantiated bribery, uh, in the Curve ecosystem. And so I kinda want to, uh, Ryan, if you could, uh, there we go. Uh, so this is kind of the end game, I think, of the Curve Wars. This is kind of where things have landed. Um, what, what are people doing here? Just take us, take us through what are people doing when they are bribing here and why are they doing that?

• 42:44David Hoffman?

  We might have already covered this.

• 42:46Speaker 02

  No, this is, you're absolutely right. This is, this is where the activity all flows on to. So if you take your convex tokens and you lock your convex tokens, it's only a 16 week lock. So it's not quite as severe as that four year curve lock. And then on, uh, this site, Vodium, you could use that vote locked convex to vote for which pools are going to receive rewards. Uh, and then also if you're a protocol, you can directly issue a bribe here on this site. So that people can go in and, um, people can go in and vote for the protocol that they think is best. Now, all the bribes are shared by everyone who votes for it. So if, uh, someone goes in and places in $1 million bribe and you're the only person that votes for it, then you would get that entire million dollars for yourself.

• 43:31Speaker 02

  Uh, so as a result, it tends to equalize out a little bit between the pools. And if you'd like to see, um, if you'd like to see some stats on this, I would suggest going to the, uh, Lama Air Force site. That's llama dot air force, llama like the little animal.

• 43:46David Hoffman?

  Of course, Lama Air Force, two L's.

• 43:49Speaker 02

  Two L's.

• 43:49David Hoffman?

  Lama, Lama, Ryan.

• 43:51Speaker 02

  Not the Dalai Lama, I should have been more explicit.

• 43:54David Hoffman?

  Thank you.

• 43:55Speaker 02

  The Lama Air Force is alphabetically Alanara, Benny and Fiddy, who are incredibly, incredibly active and geniuses in terms of programming. If you click on the Vodium tab up there, they have all sorts of stats for Curve Convex. And, um, you can see all the results of all the bribery rounds, if you want to call it that. Uh, we're currently on round number 10. And as you can see, Frax has deposited nearly $6 million worth of bribes.

• 44:25Speaker 02

  And this is going to get distributed amongst everyone who votes for Frax. If you go, uh, click on that dropdown, you can see the results of some of the previous weeks, because this one.

• 44:35Speaker 02

  Oh, actually, this one has concluded already too.

• 44:40Speaker 02

  You can see the dollars per vote locked C V X means the amount of dollars you take home at the end of the day. For if you voted for that, and you can see that they tend to equalize out between all the different pools. So because Frax bribed the most, they got the most votes. And this is the mechanism by which it evened out. Again, for the bear market crash, this is approaching nearly a dollar per vote lock convex.

• 45:04David Hoffman?

  That's incredible. Okay, so maybe we could talk about that for a minute. But it's like, again, we're using the term bribe. But really what these protocols are doing, like what Frax is doing is it's just paying for liquidity. Isn't it just the way

• 45:15Speaker 02

  That's correct. Yeah.

• 45:15David Hoffman?

  Buy liquidity from, you know, Tokamak or, you know, some other service.

• 45:20Speaker 02

  That's correct. And if you don't want to bribe people, you could buy a large stake in convex yourself. And you could use that convex or you could buy a large share of curve. So there's a lot of ways you can go ahead and and vote. Or sorry, there's a lot of ways you can influence the curve emissions. The podium angle is just one of many.

• 45:41David Hoffman?

  So this is the end state of the curve wars. I don't think it goes any further than this unless there's some sort of bribes for bribes. But that seems like one fractal too far.

• 45:52Speaker 02

  It might be, I mean, maybe someone's going to come up with some sort of lending protocol based on something within this. The ingenuity in this space is what keeps me glued to my screen 24 7.

• 46:03David Hoffman?

  Very, very cool. Garrett, there's a number of questions that that I have for you. There's like, I want to know who's playing the game. Because there's a lot of whales that are playing the the the curve wars game. And I just kind of want to know who's kind of who's won, who's won the most. And I also want to get into the topics of curve versus Uniswap. Because there's always the conversation of like, oh, well, will Uniswap V3 just like end this? So we're going to get to all of those questions just after we talk to some of these fantastic sponsors that make this show possible.

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• 49:18David Hoffman?

  And we are back with Garrett Hall, talking all about the Curve Wars, which seems to have evolved into its logical conclusion. And so Garrett, I want to ask about the Curve community, because this is such a vibrant ecosystem of just like data and, you know, tokens and shenanigans that is, of course, is attracted just a bunch of people around it. So how would you characterize the Curve community? Like, who are the types of people that are really interested in the Curve Wars?

• 49:48Speaker 02

  Yeah, so there's a number of ways to answer this, because there's the protocols, obviously, we talked about their role in the Curve Wars. They want to get their pools big, they want to maximize emissions, get a ton of liquidity. On the other side of this is just all the people who are kind of downstream of this and receiving some of the cash that gets thrown off from this protocol. Like, let's be honest, there's one thing that unites pretty much everybody in cryptocurrency, and that's greed. We're all extremely greedy. Curve has been making people, not only making people wealthy, but they don't rug them in the process. So anytime you see a site that's saying, you know, 5 million percent APY, of course, users throw money in, they lose all their money, and then they complain.

• 50:34Speaker 02

  Curve has been consistently delivering. Curve has been around for two years, an incredible security track record, so people feel really safe and comfortable putting their money into Curve and by extension, Convex, Ethereum. The people in the community, because you have to really be able to understand this, you get a lot of really smart people. So I tend to hang out mostly in like the dev channels, so I end up talking a lot with developers that are building really cool stuff on top of this. And I think that the kind of composability of all these various assets that Curve is creating is just really bringing out some of the best ingenuity and innovation within all of DeFi.

• 51:11David Hoffman?

  I think one of the biggest things I've taken away from this conversation is that Curve has really won the game of decentralization. It seems like this game that's being played has created a long-term, stable equilibrium of decentralization because we're talking about like the winner of the Curve War is another protocol. And that protocol is only giving out its spoils to bribes, then those are being bribed by other protocols. So when you peel back the layers on this thing, like is there Tetranode under the hood just like winning at this game? Or like are there humans playing like winning at the Curve Wars? Or is it actually a successful case of decentralization?

• 51:55Speaker 02

  So I think it's a, I happen to know the Curve Core team puts a lot of emphasis into decentralizing. So amongst other things, like the site is hosted on Flik, that can't be, or not through IPFS, so it can't be taken down. The, there was an issue a few weeks ago that got a lot of attention where there was a protocol that was trying, called Mochi, that was trying to basically like backdoor its way into cornering convex. And it was shut down by something called the Curve Emergency DAO. And what a lot of people don't realize is that the Curve Emergency DAO is none of the Core team. It's nine other completely different protocol, some are protocols and some are just very

• 52:38Speaker 02

  active community members that have like the sort of master key ability to shut down, shut down things in case of issue. So Curve has no capability of doing that. They completely decentralized that. If a asteroid wiped out all of, all of the, very tragically wiped out all of the Curve Core devs, the protocol would live on.

• 52:57David Hoffman?

  Amazing. I feel like that's just like sadly extremely unique in DeFi. I can't name another protocol that has this property.

• 53:10Speaker 02

  Nor can I, but I'm just an expert on Curve.

• 53:12David Hoffman?

  Okay, fair enough.

• 53:16Ryan Sean Adams?

  What's cool about this too is like, all of this stuff happens on-chain, like it's so transparent, even from the emission schedule, being able to forecast, you know, 300 years in the future of what the Curve token supply is going to be. The fact that all of these, like the bribes are on-chain, like everything is completely open and transparent on-chain, I do feel like that is very much the ethos of DeFi. I'm curious, one thing, when we were talking before the sponsor break, Garrett, about like the value of a Curve vote, and it was like 87 cents or something, according to the Lama, the Air Force Lama here, 87 cents per vote.

• 53:58Ryan Sean Adams?

  And I've read some things, like the little I've read about this lately, about convex itself and the value of convex, and there seems to be some idea within the community, and of course, you know, Bankless never provides financial advice, none of this is financial advice, but I've read a lot about like the valuation of convex. You can value it very much like a stock, a stock that is throwing off dividends. And when you look at the value of a Curve vote, it looks like the convex token itself is tremendously undervalued. Do you have any insights on that, or like what is the community saying about convex and its relative valuation?

• 54:44Speaker 02

  I think the thing that, like when I mentioned the kind of the core ingredients of the Curve token is there's the governments and then there's the cash flow, there's sort of an implicit third, which sort of every protocol or every kind of as which is this sort of multiplier effect, which is factoring in hypothetically things that might come in the future. And like by way of example on this convex, if you want to just value it based on this podium, the flywheel, the cash is currently throwing off. You would have missed, for example, that convex recently is not just going to be doing this convex magic sprinkling this magic pixie dust on curve. They're also expanding to Frax.

• 55:25Speaker 02

  So Frax has a V E F X S boat escrow Frax share that they announced they're basically moving their entire tokenomics to the V E C R V model and convex announced that they're going to pull them in their fold. So this is all of a sudden a second major massive protocol in DeFi that's going to be getting convex. How many protocols have you seen lately adopting this V E tokenomics model? What percent of those might end up under the convex, under this convex umbrella?

• 55:55Ryan Sean Adams?

  Like what is the the V E token model itself? Because that does seem to be something that a lot of criticals are, you know, switching to are considering or taking a look at. Is that just basically locking up, locking up your tokens in the way that that curve has in sort of this?

• 56:14Ryan Sean Adams?

  Yeah, this this staking type arrangement where you are able to receive token rewards and potentially dividends?

• 56:22Speaker 02

  So I don't think that this is just a copycat or a hype thing. And it's actually funny because at the beginning, this V E tokenomics was mocked mercilessly, but now it's kind of getting the last laugh here.

• 56:34Ryan Sean Adams?

  Why were people mocking it?

• 56:36Speaker 02

  The four year lock is too much. You know, the that's too complicated. It's too confusing. No one's going to use it. But nowadays, we're seeing protocols, not just really copying it, but tailoring it to their own needs, because protocols all have their own issues to deal with. And they might need a slightly different implementation of it. So if you look at the way that some of these different protocols are moving to adopt the V E tokenomics, they they are they are kind of moving in this way that would be compatible. Because once you have a V E token that controls governance rights, you can get it in the convex ecosystem. But it's not always the case that that it's good for everyone to adopt the E tokenomics.

• 57:18Speaker 02

  Like, I think that if you have a cash flow, for example, where you're able to return the fees to users in a substantial amount, I think it might work. If you don't have that, I'm not sure if the V E tokenomics is something that your protocols should necessarily adopt.

• 57:34David Hoffman?

  Gary, I want to open up the can of worms, which is Uniswap V3 versus Curve. Because Curve, really, this whole entire game, and the whole entire valuation of the CRV token, and also the convex token, is all dependent on stablecoin volume. And if stablecoin volume decided, for some reason, to migrate away from Curve, then that would be bad for a cascade of all the relevant tokens that extract value from the trading fees going through Curve. And so, in a world where Uniswap V3 actually becomes more efficient for stablecoins, that would be really bad news for Curve. Do you think there's a future version of the world where Uniswap V3 eats Curve's lunch?

• 58:19Speaker 02

  Well, I don't necessarily think that, because I really think that the past few years, Curve got to this level of dominance through the stablecoin swaps. But it's the Curve V2 pools that are, I think, going to be upending things. We haven't gotten a chance to talk much about the Curve V2, but it really is a seismic innovation. So essentially, the Curve V2 pools are pools that contain volatiley-priced assets. The first such pool that was released was essentially a pool that had US Tether, WBTC, and WETH. The pool is able to rebalance itself without the aid of an external oracle.

• 59:03Speaker 02

  So just by understanding internally the trading volume that's happening within the pool, it's able to determine what it believes the current price of Bitcoin and Ethereum actually is, and it's able to rebalance itself towards that, taking profit along the way. And what we've seen, this pool was launched in the summer of last year. This past few weeks was, obviously, some major bear activity.

• 59:28Speaker 02

  A lot of AMMs were unable to really accommodate the kind of massively fluctuating change in price. TriCrypto 2 was rebalancing itself in your real time and was one of the only sources of available liquidity if you needed to move uh real at them at the in the absolute swing of things between Bitcoin and Ethereum, for example.

• 59:50David Hoffman?

  Wow, wow. Okay, so one of the big drawbacks about Uniswap V3 was that you you can provide liquidity in a concentrated form, which is one of the perks. But then if the uh if the Uniswap markets for that particular trading pair moved outside of that concentration, so if you know, here's a concentration and then it moves outside of it, then all of a sudden, all the liquidity is gone. And people would have to withdraw their liquidity and then redeposit it based on new parameters. And you're telling me that Curve V2 does the same sort of phenomenon, but in an automated auto rebalancing fashion?

• 1:00:23Speaker 02

  Yes.

• 1:00:25Ryan Sean Adams?

  And you can also, the the other thing about Uniswap V3 is it's it's very much rewards more active liquidity providers, right? Like, you always have to be uh play in the game, you have to monitor it.

• 1:00:37David Hoffman?

  You also have to have opinions as to the future of the price as well.

• 1:00:40Ryan Sean Adams?

  Totally.

• 1:00:41David Hoffman?

  It's opinionated liquidity.

• 1:00:43Ryan Sean Adams?

  Yeah, but but with these V2 pools for something like this TriCrypto 2, which is, you know, Tether, Bitcoin, and ETH, that's pretty passive, I would I would suppose. Like, you don't have to play the active liquidity provider sort of role as you do in Uniswap.

• 1:01:02Speaker 02

  Right. So I'm a poor person and I can't afford to kind of constantly be rebalancing my position. But I can put some money into TriCrypto. And the only slight drawback to it is that there is imper uh impermanent loss, because of course, if the prices change, the balances change, and you might be withdrawing a different amount. But then the upside is uh the upside is that you, well, first of all, a lot of these pools are getting the curve rewards on top of it. You can somewhat time your trades on that. So for example, now would be a really good time to put dollars into the TriCrypto pool, because then if the price of Ethereum and Bitcoin go up, then you'll be able to pull out in theory more Ethereum and more Bitcoin.

• 1:01:44David Hoffman?

  And it's not like Uniswap V3 would have protected you against impermanent loss either, right?

• 1:01:49Speaker 02

  No, no, that's that's something that if someone solves that, you know, I'd like to, I'd like to see how.

• 1:01:54David Hoffman?

  Right. So is Curve V2 gonna eat Uniswap V3's lunch?

• 1:02:00Speaker 02

  I would, you know, I can't comment on Uniswap necessarily. I love, I know a lot of people are trying to push this battle between Curve and Uniswap, and I think it's a little bit forced. Because for example, like, it's been, this battle has been kind of pushed there for a long time. But the more AMMs that we have out there, isn't that the best for DeFi?

• 1:02:21David Hoffman?

  Absolutely.

• 1:02:22Ryan Sean Adams?

  I think people just like watching the, the money robots beat each other up.

• 1:02:27David Hoffman?

  Like BattleBots?

• 1:02:27Ryan Sean Adams?

  It's kind of entertaining. Yeah, a little BattleBots session here and there. It's kind of fun.

• 1:02:31Speaker 02

  Curve V2 have an internal accurate price oracle on chain. Is Curve going to eat Chainlink? No, probably not.

• 1:02:39Ryan Sean Adams?

  Right, I guess that's the main difference. We would never say that, by the way, frogs. Any frogs that are listening, any green frogs.

• 1:02:44David Hoffman?

  Don't, don't come cancel us. I'm tired of you guys. I guess that is the main difference between Uniswap V3 and Curve V2 is that Curve V2 depends on an oracle and Uniswap V3 doesn't. Is that correct?

• 1:02:55Speaker 02

  Yeah.

• 1:02:56David Hoffman?

  Yeah, okay. Trade offs.

• 1:02:57Speaker 02

  I'm sorry. You say Uniswap depends?

• 1:03:00Ryan Sean Adams?

  Curve V2 does not depend on an oracle, David.

• 1:03:03Speaker 02

  There's no oracle.

• 1:03:04Ryan Sean Adams?

  No oracle. That's what's cool. Well, I was, I was curious about these V2 pools. What other sorts of things could you put in them? Like, we're putting Dether, Bitcoin and ETH in one, but it probably doesn't work with, like, is it still kind of like-kind sort of assets? Or can you throw anything in these pools?

• 1:03:23Speaker 02

  You can put anything in it. So just last week, Curve launched the V2 Factory, and anybody can go on that and launch their own pool between any two tokens that they like. So far, about a half dozen of these pools have been launched. So we've seen a lot of pools with ETH and some other DeFi asset. Badger, which as you saw is a big player in the Convex wars, is created a Badger Bitcoin pool. And then there's been a few dollar pools created, like dollar plus some other asset.

• 1:03:55Ryan Sean Adams?

  That's cool.

• 1:03:56David Hoffman?

  Garrett.

• 1:03:56Speaker 02

  It's going to open up a lot of routing options because this means that with the more pools with these that get launched, the more that you can move high volume, low slippage between any assets in DeFi.

• 1:04:08David Hoffman?

  Garrett, let me guess, if I open up the Curve V2 whitepaper, it's just an insane amount of crazy math.

• 1:04:14Ryan Sean Adams?

  It's math.

• 1:04:15Speaker 02

  This one is like above university level math. It's really complicated.

• 1:04:21David Hoffman?

  Wow.

• 1:04:21Ryan Sean Adams?

  I'll be looking at that right after this podcast.

• 1:04:24David Hoffman?

  Oh, yeah. Some light night reading.

• 1:04:27Speaker 02

  The easiest part to understand is it uses an exponential moving average to keep track of the oracle price.

• 1:04:32David Hoffman?

  Okay.

• 1:04:34Ryan Sean Adams?

  I I'm also curious. I don't know if you have a perspective on on this, Garrett, but while we have you and you're thinking about Curve a lot. What is it like migrating from Ethereum main chain? I've noticed Curve being deployed on like Polygon. I'm not sure if it's on sub-layer twos right now, like Arbitrum. I believe that maybe happened recently. I can't keep up with it, but does that break the liquidity of Curve? Or how do you see it evolving beyond just Ethereum mainnet onto some of these layer twos to other chains?

• 1:05:06Speaker 02

  So Curve is currently on eight different chains, and this is just, just, you know, as a quick aside, that's so good for like the people who aren't whales, because the ability to kind of get access to this flywheel tokenomics outside of Ethereum is really helpful for a lot of people. And there's actually a few other ways that people who aren't whales can, even on Ethereum main chain, still participate. But on the subject of the sidechains, Curve has done a really good job of trying to keep its architecture

• 1:05:38Speaker 02

  easily launchable on any EVM compatible chain. And that's allowed it to kind of move very quickly between it. A lot of the bribes can be done towards pools on other chains. And some of the mechanics are not yet fully built out, but are being built out as we speak to kind of allow for kind of more and more cross-chain compatibility.

• 1:05:59David Hoffman?

  Garrett, this has been, I think, one of the most interesting and educational State of the Nations that we have ever done. So thank you for coming on and explaining the Curve Wars to us in such a digestible way. There's two last things I think we need to get in through on this episode, and both of them have to deal with you. And one is your PAC, your PAC dot XYZ. Can you, if we are listeners, explain what PAC dot XYZ is?

• 1:06:22Speaker 02

  Yeah, absolutely. And, um, you know, it's more on the subject of Uniswap that I think is actually like a kind of real timely thing to talk about because could you imagine if Uniswap wasn't headquartered in the United States, it was headquartered in another country? They'd be throwing the founder a parade and instead the United States, they're unbanking him or making him bankless. Like, it's just insane what's been going on.

• 1:06:43Ryan Sean Adams?

  Bankless in a good way, yeah.

• 1:06:45Speaker 02

  Yeah, the bad kind of bank.

• 1:06:46Ryan Sean Adams?

  This is literally for people who aren't following, uh, this is literally, I think this happened a week ago, like, uh, they, they canceled the, uh, Hayden Adams, the founder of Uniswap, they booted him from his, from his JP Morgan Chase.

• 1:06:57David Hoffman?

  Say the names, yeah. JP Morgan Chase canceled Hayden Adams. Jamie Dimon canceled Hayden Adams Bank account.

• 1:07:04Ryan Sean Adams?

  Their names? I'm cutting up my Chase card right now.

• 1:07:08Speaker 02

  Just, this whole thing is madness. One of the things that got me into stablecoins in the first place is I said, oh, this is probably a fairly safe place to be. Because stablecoins, um, if, like, it's, uh, I've heard it described as like an IQ test for the national government. A rational government would be embracing this. We have a huge lead. Every DeFi asset is nominated in dollars. And instead we're attacking it? Does that make any sense to you?

• 1:07:35Ryan Sean Adams?

  No, it makes no sense to me whatsoever. So tell us about PAC. How are you solving?

• 1:07:41Speaker 02

  So I've been so frustrated with what's going on in Washington DC that I just sort of floated this idea of could we get some on-chain cryptocurrency advocacy going? Because the crypto community is wealthy and you can buy house races for less than people are buying JPGs for.

• 1:07:58Ryan Sean Adams?

  Wait, bribes? Is that, we're back to bribes again?

• 1:08:02Speaker 02

  Well, thankfully, thankfully, the PAC community has a ton of lawyers and figured out how to make my wild ambitions like pass the legal test.

• 1:08:08Ryan Sean Adams?

  Okay.

• 1:08:10Speaker 02

  And, um, they've come across a number of mechanisms, uh, that we can use to be able to affect change within Congress. And one of the most important things that we've launched already is this on-chain congressional scorecard. So we are allowing anybody with a wallet to come in and vote for whoever they think is the best or the worst. And yeah, no surprise, Elizabeth Warren is a negative 4.91 out of 5.

• 1:08:33Ryan Sean Adams?

  Oh, wow. She's ahead of Brad Sherman at this point. It's pretty bad.

• 1:08:36David Hoffman?

  Impressive.

• 1:08:37Speaker 02

  It's a very close race, but the flip side of it is if you sort the other way, you can see that there actually is a lot of people that are doing a lot to help out cryptocurrency.

• 1:08:47Ryan Sean Adams?

  Tom Emmer at the top, he's coming on the podcast, by the way. Show the podcast. When's he coming on, David? End of February?

• 1:08:53David Hoffman?

  Sometime in February, yeah.

• 1:08:54Ryan Sean Adams?

  Yeah. Sorry, continue.

• 1:08:58Speaker 02

  No, this is, um, this is great because I think that as a community, we can actually affect some change in Washington because there's only two things that move politicians. One is votes and the other is money. And cryptocurrency is getting there in terms of votes, but we certainly have the money. So if there's, if we are not getting our message out to Congress, then that's our fault. But we're starting to get the, uh, starting to get the raw mechanics there. So this is one of the many initiatives that we're working on with Packed Dow. We're working on wherever we can apply on-chain crypto activism and use this to, uh, to best influence Congress.

• 1:09:36Ryan Sean Adams?

  Well said. So Gary, how can people get involved in this? If I'm a regular, you know, kind of crypto user, can I just connect my wallet and vote for some of these representatives? Is that one way to get involved? What are the others?

• 1:09:47Speaker 02

  Yes, you can. Uh, join our Discord. Our Discord's very active. We have community calls every Friday. Uh, we talk about the initiatives that we're currently working on. So, uh, I can't quite get into all the initiatives just because we, it's already getting close to our close time here.

• 1:10:03Ryan Sean Adams?

  Another podcast.

• 1:10:05Speaker 02

  I'd be happy to come back or we can get someone else from the community to talk about it because, um, there's just a lot of work that needs to be done. We need to, need to, need to recruit primary challengers for all the people who are the most hostile towards cryptocurrency.

• 1:10:20Ryan Sean Adams?

  We'll take a look at them again. This is the wall of shame right here.

• 1:10:23Speaker 02

  One more. So Elizabeth Warren leaves up for vote this year, but Brad Sherman actually has an incredible competitor in Erica Rhodes. I think she's going to pull it off.

• 1:10:34Ryan Sean Adams?

  We had her on the podcast. Big fan.

• 1:10:36Speaker 02

  Yeah, I listened to it. It was a really, really good. Um, Sherrod Brown, of course, was chairing the stablecoin, um, committee. Uh, he's not up for a little bit, but, uh, Stephen Lynch is the representative, reps her up every two years. So we could get, we could get pro cryptocurrency challengers for all these people. The primary race is what matters. Once they get through the primary, they don't feel the heat. And the primaries are coming up now.

• 1:11:00David Hoffman?

  I so so glad.

• 1:11:01Speaker 02

  Join the discord, join the discord, go ahead and connect on the site and vote and follow pack down on Twitter.

• 1:11:09David Hoffman?

  And we will get all of those links into the show notes for the listeners if they're not already there. Garrett, thank you so much for coming and just giving us so much education again with curve and also for fighting the fight in Washington because it's such an important fight.

• 1:11:22Speaker 02

  I'm in the I'm in the wrong Washington for the fight, but.

• 1:11:25David Hoffman?

  True, fair, fair enough. Garrett, if people want to learn more about you and follow your Substack and just see what you're up to, where can they go?

• 1:11:33Speaker 02

  It's curve.substack.com or follow on Twitter curve cap.

• 1:11:39David Hoffman?

  Lovely.

• 1:11:39Ryan Sean Adams?

  There you go. Thanks, Garrett. This has been fantastic. Bankless listeners, hope you enjoyed the 300 year curve war. May already be over. Convex may have already won. We're not so sure, but it's really cool to see how this plays out and I bet it will be full of surprises in the months and years to come. Of course, risks and disclaimers. None of this has been financial advice, not at all. Eth is risky, curve is risky, DeFi is super risky. You could lose what you put in, but we are headed west. This is the frontier. It's not for everyone, but we're glad you're with us on the bankless journey. Thanks a lot.

• 1:12:13David Hoffman?

  Hey, we hope you enjoyed the video. If you did, head over to Bankless HQ right now to develop your crypto investing skills and learn how to free yourself from banks and gain your financial independence. We recommend joining our daily newsletter, podcast and community as a Bankless premium subscriber to get the most out of your Bankless experience. You'll get access to our market analysis, our alpha leaks and exclusive content and even the bankless token for airdrops, raffles and unlocks. If you're interested in crypto, the bankless community is where you want to be. Click the link in the description to become a Bankless premium subscriber today. Also, don't forget to subscribe to the channel for in-depth interviews with industry leaders, Ask Me Anythings and weekly rollups where

• 1:12:56David Hoffman?

  we summarize the week in crypto and other fantastic content.