On September 19th, haowi.eth, Director of Business Development at Curve, announced on X that Curve is soon to release an update: Forex Swap.

Curve founder Michael Egorov, at the TOKEN2049 conference, gave a speech titled “Stablecoin Exchange: From Arbitrage to Forex Markets.”

He stated that, from 2020 to 2022, Curve’s 3pool (USDT-DAI-USDC) helped users from three different markets fulfill their need to exchange to other USD stablecoins. Through a “leveraged version of Uniswap v2,” Curve addressed the pricing issue between pegged assets. Despite being pegged, these assets still experience price discrepancies in the secondary market due to demand, underlying structural differences, and liquidity reasons. Competitors generally do not consider this issue. After years of operation, Curve has essentially mastered the liquidity between pegged assets.

However, this does not solve the pricing problem for non-pegged assets. Curve innovated upon stable swap, implementing algorithmic automatic rebalancing to achieve concentrated liquidity for AMMs based on non-pegged assets.

Curve will use the crvUSD system to mint other synthetic currencies, such as crvEUR, crvCNH, etc. Part of the interest income generated by the currency minting module will be allocated to synthetic stablecoin pools. LPs can simultaneously earn trading fee rebates and lending interest income. Through this structure, LPs can achieve far better market-making returns in forex than traditional markets.

Simulation data shows that, under the same trading volume, assuming Uniswap v2 would generate a 100% trading slippage, using Curve stable swap would result in slippage below 1% (but cannot meet the needs of exchange rate fluctuations between currencies). Using Curve v2 Cryptoswap would generate 30% slippage, whereas the new forex swap structure would result in slippage below 2%.