Curve, a popular automated market maker platform, has published a whitepaper featuring its upcoming stablecoin and sent the CRV token price soaring. Being the second largest decentralized ETH exchange platform, Curve provides a systematic way to exchange tokens with low fees. Curve’s native token, CRV, has shown a declining graph in the last week, but again within 24 hours of releasing the white paper, it bounced back by 15%, thriving as the outstanding crypto token.
According to the white paper, the crvUSD would employ a lending-liquidating AMM algorithm (LLAMMA) to protect borrowers if collateral fell below the liquidation price. As soon as the Ethereum collateral drops below its liquidation price, the protocol will convert it to US dollars. Similarly, with the rise in ETH, the dollars would again be converted to ETH.
The new release, according to crypto developer foobar, would change a spiking, all-or-nothing, all-at-once liquidation into a smooth transition, which might also reward the collateral holder swap fees in the event of volatile weather. The launch of Curve’s stablecoin would likely coincide with an increase in interest in stablecoins and a company’s desire to safeguard its place in the cryptocurrency market.
The market value of stablecoins has decreased this year, along with the market-leading Tether, which has plummeted more than 20% since May. In contrast, Aave is developing a lending protocol that will use its own dollar-pegged stablecoin, called GHO. Binance has recently delisted many competing stablecoins and converted user holdings to BUSD stablecoin.