crvUSD

crvUSD is a stablecoin designed to maintain a peg to the US Dollar. It operates using a collateralized-debt-position (CDP) model, allowing users to mint crvUSD by locking up other crypto assets as collateral.

Collateralized Debt Positions (CDPs)

The core mechanism of crvUSD involves CDPs. Users deposit approved cryptocurrencies into a smart contract as collateral and, in return, can borrow crvUSD. This process creates a debt position that is overcollateralized, meaning the value of the deposited collateral exceeds the value of the crvUSD borrowed.

Peg Stability Mechanisms

• Lending-Liquidating AMM (LLAMMA): crvUSD utilizes a unique Automated Market Maker (AMM) called LLAMMA. This system helps manage liquidations smoothly and aims to reduce price impact during volatile market conditions, contributing to the stablecoin's peg.

• Interest Rates: Variable interest rates on borrowed crvUSD can be adjusted to incentivize or disincentivize borrowing, influencing the supply and demand dynamics to help maintain the dollar peg.

Integration with Curve Finance

As a product of Curve Finance, crvUSD is deeply integrated within the Curve ecosystem. This allows for various use cases within decentralized finance (DeFi), including trading, lending, and liquidity provision on the Curve platform.