Terra’s New Stablecoin “4Pool” In a Bid To Make Waves In DeFi

Terra’s new stablecoin “4Pool” is in a bid to make waves in the DEFI system and the proposal will add more fuel to the fiery competition between MakerDAO’s DAI and UST so let’s read more in today’s latest cryptocurrency news.

On April 1^st, the Terra community wrote another chapter and introduced something called the “4Pool” which seems to be a move to make UST and FRAX stablecoin the leading players in the niche. TErra’s new stablecoin “4Pool” pool is expected to bring a lot of novelties to the market. But first, let’s take a closer look at Curve Finance.

By my hand $DAI will die.

— Do Kwon 🌕 (@stablekwon) March 23, 2022

Curve Finance became a battleground for whichever projects can provide the most liquditiy to the pool and the prize for the biggest liquditiy is token rewards. The lucrative rewards are dolled out in the forms of CURVE’s native governance token CRV and when you collect enough tokens, you can vote to have more token rewards distributed to a specific pool. This created a huge incentive to add liquditiy and to gather tokens but the whole project emerged to game this simple mechanism.

Curve is quite important for stablecoins because it also provides the deep liquditiy necessary for maintaining a token’s dollar peg but the low liquidity stablecoins can be disrupted if the whale decided to buy or sell a huge amount of the token. The stablecoin providers have also a unique incentive to take part in the Curve Wars. The biggest stablecoin pool is called “3Pool” and provides deep liquidity for USDT, USDC, and DAI while the deep liquditiy means $3.2 billion in this case.

Terra’s soon-to-launch pool is much similar and includes USDC, FRAX, UST, and USDT but to attract more people to join, they will be trying to max out the token rewards on Curve. By eliminating the dAI and trying to maximize the total rewards given to the provision liquidity of the pool, the new funds could have added a 3pool depth that will not arrive and potentially disrupt DAI. It is however very hard to imagine Maker taking these attacks by lying down.

Also, Terraform Labs partnered with Longhash ventures which is a Web3 investment fund that can increase the development activity on the Terra blockchain. As a part of the partnership, the Accelerator LonghashX will support Web3 development and crypto startups that will open up to the building in the Terra ecosystem.