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# System prepended metadata

title: Curve 3pool and stETH pool analysis

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# Curve 3pool and stETH pool analysis


Curve is a decentralized exchange for stablecoin exchanges. The Curve automated market maker provides extremely optimized, low risk exchanges by only accommodating pools of similarly behaving assets. Instead of using other prominent invariants such as constant-product, Curve uses the StableSwap invariant. You find the whitepaper and read the docs [here](https://curve.readthedocs.io/exchange-overview.html)

For week 1, this report will provide an analysis of two liquidity pools on Curve - the `3pool (DAI + USDC + USDT)` and the `stETH pool (ETH + stETH)`. They serve different purposes but bear a number of similarities 

To begin building up an understanding, we'll talk about some basic features of these pools. This chart below shows the distribution of event emissions from each of the pools. We can see that the three main operations are `removeLiquidity, addLiquidity` and `tokenExchange`

![](https://i.imgur.com/sMSjeC8.png)

On the Curve 3pool, there is a near 1:1 split between liquidity providers (LP's) deciding to add or remove liquidity. On the  stETH/ETH pool, there is substantially more activity adding liquidity compared to removing it (24.09% adding, 11.51% removing). The stETH/ETH pool has an APY of 2.92% (compared to 3pool's 0.19%) which explains why it is more attractive for LP's to add liquidity over removing. Keep in mind that these charts tally up a count of  event emissions and do not represent the magnitude of operations. We can also observe that the 3pool has far less swap activity (in proportion to other functions) compared to the stETH/ETH pool

Why do Curve pools have such seemingly low transaction activity? 

![](https://i.imgur.com/ipTG0Gx.png)

While the 3pool boasts a sizable TVL, the number of active addresses and transaction counts are within the 50-200 tx's on any normal day. Here are a few reasons:

- The 3pool is seen as a "DeFi savings account" where large players park their USD Stables in return for minor APY
- APY on 3pool is low (0.19%)
- Most of Curve's activity is on ethereum mainnet, which incurs large transaction fees
- Many Curve users are long term users who trust the battle-tested protocol and give up high degen APY in exchange for reliability and efficiency
- Aside from high transaction fees, there is often little reason to swap a stable for another stable (eg. USDC for DAI)


These pie charts below demonstrates that a vast majority of addresses opt to transact between 2 and 10 times only:

![](https://i.imgur.com/gQtAyRy.png)


### Links to referenced increment dashboards

- 3pool: https://www.covalenthq.com/platform/#/increment/pages/na-363/curve-3pool-mainnet/
- stETH/ETH: https://www.covalenthq.com/platform/#/increment/pages/na-363/curve-steth-mainnet/
