{"id":111762,"date":"2023-10-10T08:09:14","date_gmt":"2023-10-10T08:09:14","guid":{"rendered":"https:\/\/www.techopedia.com\/?post_type=definition&p=111762"},"modified":"2023-10-10T08:12:29","modified_gmt":"2023-10-10T08:12:29","slug":"tricrypto-pool","status":"publish","type":"definition","link":"https:\/\/www.techopedia.com\/definition\/tricrypto-pool","title":{"rendered":"Tricrypto Pool"},"content":{"rendered":"

What is a Tricrypto Pool?<\/span><\/h2>\n

A tricrypto pool is a decentralized finance<\/a> (DeFi) liquidity pool<\/a> offered on the popular automated market maker<\/a> (AMM) protocol, Curve Finance.<\/p>\n

The pool enables liquidity providers<\/a> (LPs) to deposit equal proportions of digital capital of three cryptocurrencies<\/a> for subsequent trading.<\/p>\n

Techopedia Explains<\/h3>\n

On Curve Finance, the tricrypto pool solely hosts Ethereum<\/a>-based digital currencies, including ether (ETH), wrapped bitcoin<\/a> (WBTC) \u2013 a DeFi-friendly version of the foremost asset, and the USDT<\/a> stablecoin<\/a>.<\/p>\n

The pool is Curve Finance’s innovative strategy to break away from the “like-minded” assets (DAI\/USDC) framework.<\/p>\n

Instead, it provides access to non-stablecoin-based liquidity pools where investors can deposit capital and pull funds for trading. This initiative is part of Curve V2’s range of products introduced two years ago.<\/p>\n

The tricrypto pool operates through smart contracts<\/a> \u2013 bits of computer code<\/a> that execute commands based on preset instructions.<\/p>\n

LPs deposit equivalent amounts across the three supported cryptocurrencies. The smart contract then automatically readjusts the asset’s price internally based on the current amount in the liquidity pool. This reduces the potential of creating losses within the pool.<\/p>\n

Much like every other DeFi pool offered on the Ethereum-based decentralized exchange<\/a> (DEX) platform, the tricrypto pool provides investors with an appropriate level of yields.<\/p>\n

At the time of writing, LPs earn a daily base annual percentage yield (APY) of 1.86% and 0.51% weekly.<\/p>\n

The rewards are also payable using Curve Finance’s native CRV token<\/a>, with LPs getting between 1.92% and 4.8% in the digital token.<\/p>\n

For its fees, Curve Finance charges 0.04% to 0.4% for each swap executed.<\/p>\n

History of Tricrypto Pool<\/span><\/h2>\n

Unlike other liquidity pools, the Tricrypto pool is a novel concept explored by the Curve Finance team.<\/p>\n

The pool officially kickstarted in August 2021 following the launch of Curve V2, and it quickly gained immense popularity within the DeFi community.<\/p>\n

The core reason for its launch was to offer more use cases for the entire Curve Finance ecosystem.<\/p>\n

In just two weeks, the DeFi liquidity pool garnered over $400 million in deposited funds. By the end of that month, it boasted an impressive $530 million in assets under management (AUM).<\/p>\n

However, its growth slowed significantly over the years following a decline in the broader crypto market.<\/p>\n

On 9 October 2023, the tricrypto pool held $64.7 million plus in total AUM. The digital asset<\/a> is split almost evenly, with the USDT stablecoin controlling 33.43%, WBTC holding 33.31%, and the ETH token closing with 33.26%.<\/p>\n

The total value in the pool is largely impacted by the current price of the individual asset (especially WBTC and ETH).<\/p>\n

WBTC is the DeFi version of the Bitcoin asset. It tracks the value of the original crypto asset and can be used in buying and selling in the DeFi landscape.<\/p>\n

In its original form, bitcoin<\/a> (BTC) is rigid and cannot be traded on the DeFi ecosystem due to the absence of a smart contract functionality on its base network. WBTC solves this challenge by wrapping the asset in a smart contract format.<\/p>\n

Hence, the value of the BTC asset is perfectly in sync with the WBTC, given that they are the same but operate in different ecosystems.<\/p>\n

While Curve Finance calls Ethereum its home, the AMM protocol has also extended its tentacles to other DeFi-oriented networks.<\/p>\n

In light of this, the layer-2 blockchain<\/a> protocol Polygon<\/a> network also offers a variant of the Tricrypto pool. The platform provides DAI, USDC, USDT, WBTC, and ETH liquidity<\/a>.<\/p>\n

What Makes Tricrypto Pool Unique?<\/span><\/h2>\n

The Tricrypto pool stands out by offering users exceptional value for their deposited funds.<\/p>\n

Below, we highlight some of its unique takes:<\/p>\n