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

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Curve 3pool’s liquidity currently stands at around $600 million, down about 90% from the $5.5 billion recorded in early January 2022, according to Kaiko Data.

Curve’s 3pool dashboard shows that USDT was 32.6% of the reserve while USDC was 35.37% and DAI was 32.02%, at press time.

3pool is the largest liquidity pool on the Curve decentralized exchange. The pool acts as a liquidity hub for the three main stablecoins – USDC, USDT and DAI – used in decentralized finance (DeFi). Essentially, the pool provides crypto traders with the most capital-efficient ways to trade between stablecoins.

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

At the time, reports revealed that USDT made up over 80% of the stablecoin pool.

During this period, the imbalance suggested an increased preference for DAI and USDC over Tether due to fears that it could lose its peg to the US dollar. The imbalance could lead to a liquidity crisis if more traders attempt to withdraw funds into a different stablecoin than those deposited.

Meanwhile, with 3pool’s stablecoin pool now rebalanced, researcher Kaiko Riyad Carey said:

“Trading of USDC against USDT has exceeded the inverse by almost $120 million this year; $90 million difference just this weekend.

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