Five years ago, the decentralized exchange (DEX) landscape was dominated by Uniswap, Bancor, and clunky order-book-based platforms like EtherDelta. Back then, trading pegged assets (e.g., USDC/USDT) was highly inefficient—Uniswap V2’s constant product formula (x*y=k) distributed liquidity across an impractical price range (from 1 USDC = 0.0000000001 USDT to 1 USDC = 10000000000000 USDT).

Key Insight:

• 99.9% of liquidity in Uniswap V2’s USDC/USDT pool was wasted, as stablecoin pairs rarely deviate significantly from their peg.

• The only useful liquidity was concentrated around the 1:1 exchange point, a tiny fraction of the curve.

Curve Finance introduced StableSwap, a hybrid AMM model optimized for pegged assets. Its key innovations:

• 100x efficiency boost over Uniswap V2 for stablecoin trades.

• Lower slippage (0.05%) compared to Uniswap’s 10%+ deviations during events like USDC’s SVB depeg.

• Incentivized liquidity via veCRV and CRV rewards, crucial for sustaining low-fee stablecoin pools.

Uniswap V3 allowed LPs to customize liquidity ranges, dramatically improving capital efficiency. However:

• Higher impermanent loss for volatile assets.

• Best suited for "loosely pegged" pairs (e.g., wstETH/ETH, LUSD/USDC), where price drift is predictable.

The latest innovation comes from Fluid DEX and EulerSwap, which transform borrower debt into liquidity:

• How it works:

  • Borrowers deposit ETH and receive a mix of USDC/USDT as debt.

  • This debt pool doubles as a liquidity pool, earning trading fees that offset borrowing costs.

• Impact:

  • Near-zero-cost liquidity for stablecoin pairs, eliminating the need for traditional LP incentives.

  • Threat to legacy DEXs: Curve and Ekubo face existential risks unless they adapt.

• 0xOrb promises multi-asset stablecoin pools (up to 1,000 assets), though its impact on core pairs (USDC/USDT) remains uncertain.

• Cross-chain efficiency via CCTP reduces the need for bridge-based liquidity.

1. Curve: Game Over Without Reinvention

   • Must overhaul veCRV incentives, leverage crvUSD, and capture volatile asset volume to survive.

2. Ekubo: A Self-Destructive Price War

   • 95% of its volume comes from USDC/USDT at 0.00005% fees, unsustainable against Fluid/Euler’s near-zero-cost model.

The pegged asset trading war has evolved from wasteful liquidity (2018) to hyper-efficient debt-based models (2025). The winners? Protocols like Fluid and EulerSwap that minimize costs. The losers? Traditional DEXs clinging to outdated incentive structures.

"In DeFi, the only constant is disruption." —tokenbrice

Five years ago, the decentralized exchange (DEX) landscape was dominated by Uniswap, Bancor, and clunky order-book-based platforms like EtherDelta. Back then, trading pegged assets (e.g., USDC/USDT) was highly inefficient—Uniswap V2’s constant product formula (x*y=k) distributed liquidity across an impractical price range (from 1 USDC = 0.0000000001 USDT to 1 USDC = 10000000000000 USDT).

Key Insight:

• 99.9% of liquidity in Uniswap V2’s USDC/USDT pool was wasted, as stablecoin pairs rarely deviate significantly from their peg.

• The only useful liquidity was concentrated around the 1:1 exchange point, a tiny fraction of the curve.

Curve Finance introduced StableSwap, a hybrid AMM model optimized for pegged assets. Its key innovations:

• 100x efficiency boost over Uniswap V2 for stablecoin trades.

• Lower slippage (0.05%) compared to Uniswap’s 10%+ deviations during events like USDC’s SVB depeg.

• Incentivized liquidity via veCRV and CRV rewards, crucial for sustaining low-fee stablecoin pools.

Uniswap V3 allowed LPs to customize liquidity ranges, dramatically improving capital efficiency. However:

• Higher impermanent loss for volatile assets.

• Best suited for "loosely pegged" pairs (e.g., wstETH/ETH, LUSD/USDC), where price drift is predictable.

The latest innovation comes from Fluid DEX and EulerSwap, which transform borrower debt into liquidity:

• How it works:

  • Borrowers deposit ETH and receive a mix of USDC/USDT as debt.

  • This debt pool doubles as a liquidity pool, earning trading fees that offset borrowing costs.

• Impact:

  • Near-zero-cost liquidity for stablecoin pairs, eliminating the need for traditional LP incentives.

  • Threat to legacy DEXs: Curve and Ekubo face existential risks unless they adapt.

• 0xOrb promises multi-asset stablecoin pools (up to 1,000 assets), though its impact on core pairs (USDC/USDT) remains uncertain.

• Cross-chain efficiency via CCTP reduces the need for bridge-based liquidity.

1. Curve: Game Over Without Reinvention

   • Must overhaul veCRV incentives, leverage crvUSD, and capture volatile asset volume to survive.

2. Ekubo: A Self-Destructive Price War

   • 95% of its volume comes from USDC/USDT at 0.00005% fees, unsustainable against Fluid/Euler’s near-zero-cost model.

The pegged asset trading war has evolved from wasteful liquidity (2018) to hyper-efficient debt-based models (2025). The winners? Protocols like Fluid and EulerSwap that minimize costs. The losers? Traditional DEXs clinging to outdated incentive structures.

"In DeFi, the only constant is disruption." —tokenbrice