Analysis

Home » Analysis » Curve Finance Fork, Swerve, Attracts “Degen” Traders with up to 493% APY

Curve Finance Fork, Swerve, Attracts "Degen" Traders with up to 493% APY

Editorial Team

Sep. 8, 2020

DeFi forks are becoming an easy source of returns for speculators, but they have no future in their current form.

Curve Finance Fork, Swerve, Attracts "Degen" Traders with up to 493% APY

Key Takeaways

Swerve is a fork from Curve Finance that changes community distribution of governance tokens.
The fork has gained traction since launching four days ago, boasting over $400 TVL.
Still, these sums may only be temporary as DeFiers swarm the platform in search of high APR.

Curve Finance, DeFi’s leading stablecoin liquidity pool, has been forked as part of the recent swarm of so-called “fair launches.” While the fork, Swerve, has attracted over $400 million in liquidity, the community has already pointed out several significant concerns with the platform.

Swerve Starts Stablecoin Liquidity War

Swerve Fi is a fork of Curve with 100% of the tokens distributed to the community via liquidity mining and DAO rewards. The project aims to establish a community by improving upon Curve’s token distribution.

Curve had anything but the smoothest launch. A third party deployed the protocol’s token and DAO contracts, which led to a pre-mine of 80,000 CRV tokens. Further, a section of the DeFi community wasn’t thrilled with the allocation to the founder and investor.

Swerve launched as a fairly distributed version of Curve, just as SushiSwap defined itself as a fairly launched Uniswap.

The yield for providing liquidity is currently between 75% and 465% a year. Thanks to these high yields, Swerve has attracted $410 million of deposits in just four days.

But there are still major concerns with the platform.

The contract hasn’t received a formal audit, nor has it been battle-tested in the market for as long as Curve. It’s clear that Swerve is not yet a real alternative to Curve, and the market sees that too.

Although the fork has half the amount of Curve’s Total Value Locked (TVL), its trading volume is just 7% of Curve. Swerve’s high TVL is thanks to DeFi’s “degen” traders. If the yield fell to parity with Curve, it wouldn’t be the least bit surprising to see the fork lose more than half of its TVL.

Having high yields attracts traders and short-term liquidity. But a sound product with long-term liquidity will always reign supreme for users. The only way for Swerve to survive is to establish a loyal userbase and steal liquidity from Curve.

Disclaimer