Are the two DeFi giants Uniswap and Curve "fighting" each other? Which one do you prefer?

Written by: Master of Five Fireballs, Plain Language Blockchain

Recently, discussions about Uniswap VS Curve have gradually increased on major media platforms, especially Twitter, with KOLs on both sides arguing heatedly, making it hard to tell whether they are driven by their biases or their reasoning.

Undoubtedly, Uniswap and Curve are the current "duopoly" in the Dex field of the Defi circle. So, is it a case of "one mountain cannot hold two tigers," or will it maintain this duopoly like most traditional fields? (For example, in the mobile operating system field with iOS and Android, or in chip manufacturing with Intel and AMD, etc.)

Let's take a look together.

01 Who Took Whose Cake

Originally, the two companies coexisted peacefully, with Uniswap focusing on regular asset DEX, while Curve specialized in stablecoin and pegged asset swaps.

However, any company or project has an inherent impulse to grow stronger, so after the birth of Uniswap V3 and Curve V2, they both extended a foot into each other's territory.

Uniswap V3 captured the stablecoin swap business by customizing price ranges and fees.

Curve V2, on the other hand, made full price range coverage possible through new curves and dynamic balancing capabilities, along with collaborations like SNX atomic swaps and the emergence of Tricypto pools such as WBTC/ETH/USDT, making swaps of blue-chip assets on Curve completely feasible.

Since then, both began to focus on their own fields while "stealing business" from each other.

02 What Happened This Time

Recently, two events have been particularly eye-catching. Individually, either one might not spark controversy, but viewed together, they easily lead to mutual accusations.

First, the long-standing issue of Uniswap's token value capture problem, isn't it time to open the fee switch for voting? Then a bunch of KOLs started arguing that opening the fee switch wouldn't have much effect because LPs would just run away, and with that little fee capture, Uniswap's P/E ratio is still sky-high.

Second, the LSD track has been extremely hot lately, with assets like stETH and frxETH thriving on Curve, along with a new batch of small ecosystem projects around cvx like Clever and Concreator, making the entire Curve ecosystem appear "vibrant," which inevitably makes Uniswap quite envious.

Then someone noticed that the token inflation caused by Curve's new emissions in 2023 exceeded 20%. With so many tokens, they either get mined and sold to suppress prices or locked in veCurve, significantly diluting the fees + bribery income of existing veCurve holders. In short, it doesn't look good from any angle.

Thus, the verbal sparring between the big players on both sides, Uniswap and Curve, gradually increased, each pulling at each other's weaknesses while detailing their own advantages. It must be said that most arguments are quite reasonable; after all, sometimes the ones who know you best are your opponents. Both sides are well aware of the strengths and weaknesses of the two protocols; it just depends on which aspect you value more.

03 Highlights of Both Sides' Arguments

Uniswap Side:

• Critique Curve

• Curve, you keep emitting tokens every year, inflation never stops; isn't this a Ponzi scheme…?

• Can your income (fees + bribery) cover the value of the new tokens you emit each year?

• The ve staking model can only delay selling pressure; it doesn't really solve the problem.

• Praise Uniswap

• Uniswap's business model is better!

• The new products emerging from the Uniswap ecosystem are all innovative, while Curve's Curve War ecosystem is just a continuation of Ponzi schemes.

• Uniswap has lower liquidity costs.

Curve Side:

• Critique Uniswap

• Uniswap, do you dare to open the fee switch? If you don't, your assets are worthless; if you do, do you believe your LPs (liquidity providers) will run away with a large portion?

• Uniswap V3 directly leads to a loss of pricing power; a DEX without pricing power has no future!

• The liquidity management of Uniswap V3 is a nightmare for retail investors; 70% of the trading volume in V3 is algorithm-driven, and 43% of the trading volume consists of toxic trades like Mev Bots. Overall, most LPs earn fees that don't even cover their impermanent losses.

• Praise Curve

• Curve tokens provide dividends and income, unlike Uni's governance-only "air tokens."

• Curve's emissions are not Ponzi; they are a game-theoretic solution that establishes competitive barriers through token economics.

• Curve offers a genuine liquidity solution; every CRV released in the Curve War is pre-paid by project parties as the cost of liquidity.

You see, both sides are stating facts and making reasonable arguments. So what to do? Which side to choose?

04 User Perspective on the Two Protocols

In my opinion, you don't need to choose a side because it's highly likely that both projects, as the dual leaders of infrastructure DEX, will continue to "love and kill" each other.

If you must choose a side, you can select two aspects from the following four perspectives that you consider important and then take a stand.

User Count: Uniswap Wins

This is beyond doubt; Uniswap's daily active users are on a completely different scale compared to Curve. However, this is also related to their positioning; Uniswap targets mainstream retail investors, more like Taobao, while Curve targets institutions and large holders, giving it a bit of a Vipshop feel.

Ecosystem Count: Curve Wins

This is basically the opposite of the previous point.

Uniswap has almost no supporting projects; the only ones I can think of are just two or three, and they are all quite new, emerging only in the past few months.

One is Arrakis, a project that automatically manages V3 LP price ranges, which many market makers should be using; another is GammaSwap, which offers an option to "bet" against Uniswap V3 LPs (V3 LPs essentially short volatility, while the counterpart can long volatility). What are they betting on? They bet that the money you earn as an LP won't cover your impermanent losses, so your impermanent loss minus your fee income equals my "impermanent profit."

However, the way this project operates is quite amusing. Suppose I am an LP, and the person betting against me is called B. B's way of betting against me is to pay me some fees, then dismantle my LP stored in Uniswap and take it back, leaving it idle, and finally calculate how much my impermanent loss would be if I hadn't withdrawn… This is too simple and crude! Of course, for LPs, this is a good thing; after all, I can earn the original LP's money plus the fees from B.

There's also Panoptic, which does options based on V3 LPs; I haven't studied it in detail, but given that V3 LPs are essentially options, it intuitively makes sense.

On the Curve side, there’s no shortage of projects… because Curve keeps emitting tokens, and emissions can be controlled through voting, the tokens themselves can capture fees + the impressive ve model, allowing for various creative plays, leading to the birth of various ecosystem support projects.

The most famous is naturally Convex, which significantly lowers the barrier for users to stake and lock veCurve while also solving the liquidity issue of veCrv, making it a "brilliant solution."

Besides Convex, Yfi and StakeDAO can also be considered competitors in the veCurve liquidity and yield track.

Then there are platforms like Voltium, which emerged during the Curve War.

Now there are a few new ones, such as:

• Concreator

A yield aggregator and auto-reinvestment tool based on Convex.

• Clever

A platform that allows early withdrawal of future governance rewards + a continuous, automated way to earn bribes and rewards, also based on Convex.

• Conic

A new liquidity guiding method, which can be understood as Tokemak+YFI on Curve; users deposit assets, and it helps them earn by LPing on Curve. Due to governance reasons, there might be a Conic War in the future.

In short, it's a variety of nested projects, but they are all reasonably structured…

• User Experience: Uniswap Wins

This one needs no explanation… Anyone who has used both knows that while Curve's complexity in ecosystem nesting is daunting, just the dozens of pools can leave first-time users bewildered.

Moreover, while swapping is manageable, if you choose to be an LP… well, Curve is truly a rhythm of "no professionalism, no survival."

Also, regarding gas fees, gas costs on Ethereum can be a bit high, and doing LP on Curve can really make you wince at the gas spent, so it's basically a paradise for institutions and large holders, while newbies and "low-net-worth players" should stay away!

• Political Correctness: Curve Wins

This also needs no explanation; Uniswap fears attracting the attention of the SEC and has stubbornly refused to distribute any value to token holders except for governance. On the other hand, Curve is thriving with dividends, bribery, staking, and voting, showcasing a complete set of crypto-native practices.

Additionally, considering Uniswap's relatively centralized review mechanism in 2021 and the recent controversies surrounding A16Z's vote manipulation, Curve undoubtedly wins in terms of political correctness.

• Protocol Revenue: Subjective

However, from the perspective of protocol revenue, Curve has distributed $100 million to veCurve holders, while Uniswap has never given a cent to Uniswap token holders, so, Hmm…