The developers of Curve have just deployed their crvUSD stablecoin on the Sepolia testnet. The goal is verification on Etherscan. Pegged to the US dollar, the stablecoin has a similar design to MakerDAO’s DAI. It will be over-collateralized by some crypto assets and will use a new loan liquidation AMM algorithm.
The design of the new Curve Finance stablecoin
Michael Egorov is the founder of Curve. Last July, he revealed that his team was working on the development of a native stablecoin. As early as November 2022, the developers of Curve made the white paper public of the stablecoin as well as its initial code.
The crvUSD stablecoin will peg to the US dollar. It is similar in design to MakerDAO’s stablecoin DAI. As specified TheBlock, this means firstly that it will be over-collateralized by crypto assets supported exceeding the value crvUSD users wish to strike.
Next, the stablecoin will rely on a new algorithm called Lending-Liquidating AMM (LLAMMA). It allows continuous liquidation and automatic deposit of collateral to manage the risk associated with the stablecoin. It will be able to do this while maintaining its peg to the US dollar as indicated in its white paper.
What are the odds of crvUSD stablecoin success?
The stablecoin market is very competitive. And to make matters worse, the US government seems to be chasing stablecoins pegged to its dollar. crvUSD still has some strong assets. First of all, one of the most used DeFi protocols develop it. This gives it a significant advantage over USDT and USDC which dominate the market.
Recall that Tether’s USDT has a market capitalization of $81 billion while Circle’s USDC is at $30 billion. Given the fact that the whole stablecoin market ifvalued at $131.2 billion, crvUSD still has a long way to go to catch up with these two. At the moment, it could mostly compete with DAI, the stablecoin it most resembles and which has a market capitalization of $4.7 billion.
Ethereum developers use the Sepolia network to test code before rolling out the mainnet. After Etherscan verification, Curve Finance will definitely launch crvUSD on mainnet. But will it be as successful as its decentralized exchange?
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