Curve Finance (CRV) Plans to Launch Stablecoin crvUSD

Curve Finance launched stablecoin crvUSD. (Photo; dock. Siam Bitcoin)

JAKARTA – The leading decentralized crypto exchange platform Curve Finance (CRV) or commonly known as Curve.fi, is reported to have launched a whitepaper on Tuesday, November 23. The whitepaper is part of Curve's efforts to launch its own stablecoin called crvUSD.

Based on information in a whitepaper written by Curve founder, Michael Egorov, his party explained that the main idea of ​​the new decentralized stablecoin was the lending-liquidating AMM (Automated Market maker) algorithm (LLAMMA).

LLAMMA works by converting between a given collateral and a stablecoin, depending on which one is higher and which one is lower. For example, if the price of the collateral in the form of ETH is high, the user's deposit consists of only ETH. If the collateral depreciates, LLAMMA converts part of it to a stablecoin, helping to better manage collateralization risk.

Egorov explained that the LLAMMA mechanism is different from the traditional automated market maker (AMM) design where stablecoins are on top and collateral is on the bottom. Therefore, the plan is that crvUSD whose value is tied to the US dollar will be collateralized by crypto assets. This is not much different from Maker's stablecoin, DAI.

In the planned launch of the crvUSD stablecoin, Curve collaborated with crypto lending platform Aave on the release of a cryptocurrency-backed stablecoin as the collateral asset. In addition, Aave also plans to make the GHO stablecoin to be collateralized with more amounts so that users can mint directly on Aave.

Currently, the largest stablecoin based on market capitalization is still occupied by USDT with a market cap of IDR 1 quadrillion. While the second position is occupied by USDC with a market capitalization of IDR 684 trillion. Then BUSD is in third place with a market capitalization of IDR 357 trillion, based on CoinMarketCap data report, November 24, 2022.

More specifically, according to the DailyCoin report, the stablecoins backed by crypto assets are currently around US$6.7 billion according to DefiLlama data. DAI Maker managed to lead with a market cap of 5.5 billion US dollars.