- Curve has deployed crvUSD smart contracts on the Ethereum Sepolia testnet.
- crvUSD will be backed by various crypto assets.
- The new stablecoin will use a novel lending-liquidating AMM algorithm.
The current bear market in the crypto industry has made multiple companies bankrupt, and stablecoins lose their pegs. These incidents have shown that the perfect stablecoin has yet to be created.
However, this might change soon as Curve, a decentralized finance platform, is preparing to launch its own decentralized stablecoin crvUSD.
Curve Tests New Stablecoin crvUSD
Curve, one of the oldest and most battle-tested decentralized finance (DeFi) platforms, is about to launch its new stablecoin crvUSD.
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The platform deployed the smart contracts for crvUSD on the Sepolia testnet on Tuesday in preparation for launch on Ethereum mainnet.
crvUSD is a decentralized stablecoin that will be pegged to the U.S. dollar and overcollateralized by various crypto assets. This approach is almost identical to how DAI, another decentralized stablecoin created by Maker, works.
However, there are specific differences between the two. crvUSD will use a lending-liquidating AMM algorithm, or LLAMMA, which works by converting between the provided collateral and the stablecoin, depending on which is higher and which is lower.
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For example, if the price of the collateral in the form of ETH is high, users’ deposits are comprised solely of ETH. If the collateral depreciates, LLAMMA converts some of it to the stablecoin, helping better manage collateralization risks.
Curve is the largest decentralized exchange in terms of total value locked (TVL). It currently has a TVL of $4.29 billion and is deployed on 12 different blockchains, according to data from DefiLlama.
On the Flipside
- It will be tough for crvUSD to outcompete MakerDAO’s DAI, which currently has a market capitalization of $4.71 billion.
Why You Should Care
USDC and USDT, the two dominant centralized stablecoins in the market, have both depegged during the current crypto bear market. A new decentralized stablecoin might prove to be vital for the market.
Read more about Circle CEO’s thoughts on stablecoins in the U.S.:
Circle CEO: U.S. Needs Stablecoin Legislation to Combat de-Dollarization
Read more about Polygon’s partnership with Google Cloud:
Polygon Labs Partners with Google Cloud to Drive Ecosystem Growth
