Curve 3pool liquidity down 90% YOY to $600M

Curve 3pool’s liquidity currently stands at roughly $600 million, down approximately 90% from $5.5 billion recorded at the start of January 2022, according to Kaiko data.

Curve’s 3pool dashboard shows that USDT accounted for 32.6% of the reserve while USDC accounted for 35.37%, and DAI made up 32.02%, as of press time.

3pool is the largest liquidity pool on Curve’s decentralized exchange. The pool acts as a liquidity hub for the top three stablecoins — USDC, USDT, and DAI — used in decentralized finance (DeFi). In essence, the pool provides crypto traders with the most capital-efficient means of swapping between the stablecoins.

An imbalance in the pool can be used to determine stablecoin preferences during market volatility. For context, during the height of Terra UST’s collapse and FTX’s bankruptcy, crypto investors swapped their USDT holdings for other stablecoins in the pool.

At the time, reports revealed that USDT accounted for over 80% of the stablecoin pool.

During this period, the imbalance suggested an increased preference for DAI and USDC over Tether because of fears that it might lose its peg to the U.S. dollar. The imbalance could lead to a liquidity crisis if more traders attempted to withdraw funds in a different stablecoin than those deposited.

Meanwhile, with 3pool’s stablecoin reserve now back in balance, a researcher at Kaiko Riyad Carey said:

“Swaps of USDC for USDT have outpaced the inverse by nearly $120mn this year; $90mn difference this weekend alone.”

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