Terraform Labs has entered a new alliance with Frax Finance and Redacted Cartel to win the so-called “Curve Wars”. OlympusDAO, a DeFi protocol, is also expected to join the 4pool alliance. The 4pool is a four-token liquidity pool on Curve. It includes decentralized stablecoins UST and FRAX. It is working towards dominating Curve’s stablecoin market with more than $21 billion in assets under management (AUM).
Do Kwon, Terraform Labs CEO, highlighted that curve wars are over and all emissions are going to the 4pool. He was referring to the heated race between protocols competing for higher rewards on Curve Finance. Kwon wants to sway investors away from the 3pool. He hopes to achieve this by offering them incentives that drive more liquidity toward the new coalition pool.
He pointed out that in the future, they will direct emissions to other stablecoins that pair against the 4pool. They intend to starve the 3pool. Kwon hopes Terra, Frax, Redacted and Olympus will use their significant holdings of Convex’s CVX. This token empowers holders to vote on key decisions on Curve and bring deeper liquidity to 4pool. Moreover, with Convex, users can access liquidity and earn fees on Curve. This accounts for about 40% of voting power on the protocol. But some say that it is only 14%.
Kwon called on every CVX holder and Curve user to the 4pool. He said this gives Convex Finance significant leverage in terms of deciding the pool. The more liquidity, the greater the reward. So far, 3pool has received more than $3.3 billion – it has been dominated by DAI. Observers say the 4pool alliance could change this.