The crvUSD stablecoin white paper was released on GitHub by Curve Finance, one of the major DEXs and automated market makers (AMM).
Before diving into this piece, you may want to catch up on some relevant stories, like how the CFTC is pushing FTX whistleblowers to act and is advocating for cryptocurrency regulation and the launch of the USDA Cardano stablecoin in early 2023.
DeFi protocol Curve's "Lending-Liquidating AMM Algorithm" (LLAMMA) is a method that aims to streamline the cumbersome liquidation processes of competing stablecoins and is therefore billed as the ecosystem's crowning achievement.
The LLAMMA will convert your holdings into crvUSD automatically if it detects a decline in the value of your collateral. Your collateral is repurchased if and only if the price increases again. Thus, the operation is carried out continuously throughout a continuous range rather than all at once, as stated in the release.
The crvUSD (Curve's Dollar) source code was released on GitHub in September by Curve Finance.
Through the design of the LLAMMA ecosystem, every kind of collateral acts as its own publicly tradable asset management instrument (AMM). The stablecoin will support Curve's native token, the Curve DAO token (CRV), which is distributed as incentives to liquidity providers on Curve Finance.
Between collateral assets and stablecoin, the LLAMMA acts as a link. The collateral required to mint/borrow stablecoins is added to this market-maker, making the "vaults" unnecessary.
This not only functions as a continual liquidation mechanism for collateralized debt situations, but also as a liquid market for the collateral and the Curve stablecoin. Like MakerDAO's DAI stablecoin, crvUSD will be overcollateralized with crypto assets to ensure its value.
There are still a lot of unresolved issues, such as which launch pairings will be used. According to CoinMarketCap, the value of one Curve DAO Token (CRV) has increased by 16.67% in the previous 24 hours.
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