Curve Finance recently launched its algorithmic U.S. dollar-pegged stablecoin, dubbed “crvUSD”, on the Ethereum mainnet. Within the first 5 minutes of the launch, over $20 million were minted, with a total of $22 million minted so far. The stablecoin is not yet accessible to general users, waiting to be integrated with Curve’s front-end user interface. With their algorithmic stablecoin, Curve Finance is competing with other DeFi protocols, who are also developing their own versions.

The protocol’s stablecoin, crvUSD, works in a fashion similar to DAI, MakerDAO’s stablecoin. This means that users must deposit collateral in order to take out a loan in crvUSD and the type of asset used for it has not yet been specified. This mechanism differs from the TerraUSD (UST) stablecoin and the complex arbitrage mechanism utilized for its maintenance, as UST collapsed in May 2022, when the first person traders brought it down.

The plan to release crvUSD was first introduced in a Twitter post by Curve Team member, @mrblocktw on the 21st of July 2022 and the following day founder Michael Egorov made it official on the ReDeFine Tomorrow Web3 Summit. Following the launch of the new stablecoin, Curve DAO (CRV) token spiked by 7%, trading at $0.96 per token.

The success of Curve’s stablecoin will depend on the user’s confidence in the adaptive ability of its mechanisms, especially since the TerraUSD collapse is still fresh in the community’s minds. If all goes smoothly, the protocol’s native token may be expected to be on the rise in the near future, but only time will tell.



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