DeFi protocol Curve Finance has deployed its native stablecoin pegged to the U.S. dollar on the mainnet.
In an update on Wednesday, Curve confirmed that the crvUSD stablecoin’s smart contracts had officially been deployed, with a front-end interface soon to follow.
As many figured – deployment of crvUSD smart contracts has happened!
This is not finalized yet because UI also needs to be deployed. Stay tuned!
— Curve Finance (@CurveFinance) May 3, 2023
Curve’s founder Michael Egorov executed an inaugural $1 million loan for crvUSD, blockchain data shows.
crvUSD is a collateralized-debt-position (CDP) stablecoin, pegged to the U.S. dollar and backed by crypto assets. According to the stablecoin’s whitepaper, it will utilize a novel Lending-Liquidating AMM Algorithm, or “LLAMA.”
Users can mint crvUSD with a CDP by depositing assets on Curve’s smart contract as collateral. This crvUSD will be burned when borrowers close their position and reclaim collateral.
LLAMA will constantly rebalance collateral, swapping it for what users borrowed if the collateral value dips. In this way, collateral will be slowly and continuously liquidated as the loan approaches a liquidation price – something that will likely be a welcome development in a particularly volatile market.
“When the system is “underwater”, the user already has enough USD to cover the loan,” explained Egorov in the whitepaper.
While this mechanism reduces the risk of complete liquidation, it could potentially lead to permanent loss as opposed to impermanent loss, which can be rectified on-chain.
At the time of writing, four liquidity pools for crvUSD had been set up, adding liquidity for the stablecoin and USDT, USDC, USDP and TUSD. Blockchain data on Etherscan shows around $20 million crvUSD minted shortly after deployment, but according to DeFiLlama’s “0Xngmi,” these tokens aren’t actually circulating just yet.
seeing many ppl quoting there being 20m crvUSD
while these have been minted, they seem to just have been deposited into the protocol to be borrowed, so they arent circulating/issued yet
Releasing the proper number in our stablecoin dashboard shortly
— 0xngmi (@0xngmi) May 4, 2023