Decentralized finance (DeFi) protocol, Curve Finance, announced the launch of its native stablecoin crvUSD, on the Ethereum mainnet. The highly anticipated deployment of Curve’s stablecoin marked a significant milestone for the company, which is one of the largest decentralized marketplaces focusing on stablecoins, with assets worth around $5 billion locked in the protocol.
According to the company’s whitepaper, crvUSD is an overcollateralized stablecoin backed by crypto assets, with its price pegged to $1. Curve will control the crvUSD supply with a mint-and-burn mechanism, similar to MakerDAO’s DAI or Aave’s forthcoming GHO. Investors will be able to create crvUSD tokens by depositing digital assets as collateral in Curve’s smart contract through a collateralized debt position (CDP). When they close their debt position, Curve will destroy, or burn, the crvUSD tokens.
What sets crvUSD apart from competitors is its novel, lending-liquidating algorithm, called LLAMA, that constantly rebalances user collateral as crypto prices fluctuate. For example, if the price of the crypto asset posted as collateral falls below the liquidation level, the protocol will gradually convert the assets into crvUSD and, later, back to the collateral asset as the price recovers. This process offers a smoother, continuous liquidation process, as opposed to a single, drastic event that sometimes causes turmoil and huge losses on lending protocols when cryptocurrency prices crash.
The collateral is stored in an automated market maker (AMM) pool, which provides liquidity for trading purposes, instead of sitting in a vault or lending pool, resulting in overall system efficiency being high.
While Curve’s stablecoin has yet to be integrated into the user interface, it is expected to be available to the public soon. Despite the heavy competition, Curve Finance is expected to remain one of the top players in the DeFi space, continuing to attract users throughout the industry. The protocol’s governance token CRV has already jumped up to 97 cents following the announcement, and it is up 7% for the day, according to CoinDesk data.
Overall, the development of Curve’s crvUSD has highlighted the protocol’s innovative solutions and its capacity to offer new, game-changing products in the decentralized finance industry.
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https://www.coindesk.com/tech/2023/05/03/curve-finance-deploys-native-stablecoin-on-mainnet/