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Decentralized finance (DeFi) protocol Curve Finance has launched its own U.S. dollar-pegged algorithmic stablecoin dubbed “crvUSD” on the Ethereum mainnet — over $22 million worth of crvUSD has been minted so far.
According to blockchain explorer Etherscan, over $22 million worth of crvUSD was minted in the last 8 hours of the contract, of which $20 million was minted within the first 5 minutes.
The deployment of crvUSD on the Ethereum network is an important step towards the public issuance of an algorithmic stablecoin. Notably, the stablecoin remains inaccessible to regular users pending integration with the Curve user interface on the official website.
When asked about when users can expect the public release of the stablecoin in the official Telegram Curve Finance chat, the admin stated that it would happen “soon.”
As many figured – deployment of crvUSD smart contracts has happened!
This is not finalized yet because UI also needs to be deployed. Stay tuned!
— Curve Finance (@CurveFinance) May 3, 2023
At press time, Curve Finance is one of the largest DeFi protocols in the industry, with a total value of approximately $4.4 billion (TVL) locked down, according to data from DeFiLlama.
Algorithmic stablecoins have been the subject of industry-wide criticism following the collapse of the Terra ecosystem in May 2022, when the TerraUSD (UST) stablecoin lost its peg and the value of its sister token, Terra, later renamed Terra Classic (LUNC), plummeted by over 99%. The value of UST was supported by a complex arbitrage mechanism that was eventually brought down by a group of sophisticated traders.
Curve’s crvUSD differs from the now defunct UST in that it uses a similar design similar to the MakerDAO (MKR) DAI (DAI) stablecoin. According to the crvUSD white paper, crvUSD will function as a stablecoin with a “collateralized debt position”, which means that users must post collateral in order to borrow crvUSD. Curve Finance has not yet determined a preferred asset to use as collateral.
Curve is not the only DeFi protocol aiming to bring an algorithmic stablecoin to market. Rival protocol Aave (AAVE) released a test version of its “native decentralized, collateral-backed stablecoin,” dubbed GHO, in February of this year.
Related: DeFi boosts zkSync growth as 1inch rolls out on Ethereum’s Tier 2 scaling platform
Curve’s plan to issue an algorithmic stablecoin was first announced by Curve team member @mrblocktw in a Twitter post on July 21, 2022.
you know you know
curve – stablecoin incoming $CRV #stablecoinWAR pic.twitter.com/sYg13WRLYz
— 區塊先生 ⚠️ (rock #58) (@mrblocktw) July 21, 2022
Later that day, Curve founder Mikhail Egorov confirmed at the ReDeFine Tomorrow Web3 summit that the stablecoin would be overcollateralized.
Following the launch of the new stablecoin, the Curve DAO protocol’s native token (CRV) jumped about 7%, according to TradingView data. CRV is currently changing hands for $0.96.