Decentralized finance protocol Curve has launched a new type of token swap using the Synthetix protocol as a bridge. Not all is what it seems with the new offering, and it is only likely to appeal to whales.
Before the degen farmers flock to the protocol seeking their next quick buck, there are a few things that should be clarified. In its documentation on cross-asset swaps, Curve explains that there are a few caveats with them that the average DeFi user needs to be aware of.
Cross-asset swaps via @synthetix_io are live! pic.twitter.com/LHBRt2zLSO
— Curve Finance (@CurveFinance) January 17, 2021
Best for Whales Only
The swaps utilize routing protocols on Synthetix, which bounces assets through their own stablecoin, sUSD, or others. This can be costly when gas prices are at a premium, which has been pretty much for the last month. The blog post estimated around $80 for a swap and suggested that they’re only really suited for large trades. Additionally, there is a 0.38% trading fee to swallow.
With that in mind, cross-asset swaps have very little slippage. Therefore, they can handle seven and eight-figure trades with no slippage. However, they take six minutes due to the Synthetix settlement period, so prices are likely to move around during that period. Again, whales are unlikely to be disconcerted by this.
There are two separate trades involved and, upon confirmation, the user will receive an ERC-721 unique NFT (non-fungible token) which represents the trade. After the lengthy wait, the trade can be completed as the target asset can then be issued. Any asset that shares a pool with a synth (such as sUSD, sETH, and sBTC) can be traded.
It used the example of DAI to renBTC, which has to jump to sUSD and then to sBTC before being issued in renBTC. Curve confirmed that only those with big trades will benefit from such a system;
“The benefits from these swaps are most apparent when the exchange amount is greater than $1m USD equivalent. As such, the initiation of a swap gives a strong indicator other market participants that a 2nd post-settlement swap will be coming.”
Synthetix is in the process of deploying its Layer 2 platform for those that don’t have gas to burn.
CRV Price Update
Curve Finance is one of the most popular DeFi protocols currently in use but that has not been reflected in its token price performance in 2020, which has been woeful, to say the least.
Currently, however, Curve DAO Token (CRV) prices are on the up, having gained 20% over the past 24 hours to reach $1.63, according to Coingecko.
CRV has shaken off its 2020 performance issues and surged a whopping 115% over the past seven days. It is still a long way off its all-time high in mid-August 2020 of over $54, however.
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