Cuve Finance, one of the heaviest players in the decentralized finance (DeFi) sector today has recently launched its algorithmic US dollar-pegged stablecoin. Dubbed as “crvUSD”, it has been launched on the Ethereum mainnet less than 24 hours ago and has minted crvUSD tokens worth over $22 million in the first 8 hours alone, according to a report by CoinTelegraph.
According to data sourced from blockchain explorer Etherscan.io, the contract has minted over $22 million worth of crvUSD algorithmic stablecoin in the first 8 hours of its launch, with $20 million being minted in the first 5 minutes!
Algorithmic stablecoins have not had too much of a positive sentiment in the market so far, ever since the depegging of the UST algorithmic stablecoin on the LUNA ecosystem, which led to the eventual collapse of the Terra platform. While the need for algorithmic stablecoins is well-established, the risks associated with them and their history is yet to be resolved.
Thus, the deployment of the crvUSD on the Ethereum network is a significant step toward the public release of the algorithmic stablecoin. crvUSD still remains inaccessible to general users, pending its integration with Curve’s front-end UI from its official website.
According to the CoinTelegraph article, Curve Finance responded to a query on the official Telegram chat, where an admin claimed that it will be coming “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
A certain amount of restraint to undertake checks and balances is a good thing in today’s world as it would help to repair the image of the system as a whole. However, this has begin to get some mainstream attention too as DeFi data aggregator platform, DefiLlama, also took to Twitter to announce that it is also actively tracking TVL of crvUSD.
Now tracking $crvUSD on @ethereum
crvUSD is a collateralized-debt-position (CDP) stablecoin pegged to the US Dollar pic.twitter.com/IOfAIBtB8u
— DefiLlama.com (@DefiLlama) May 4, 2023
As mentioned earlier, algorithmic stablecoins have been a point of contention in the crypto industry as a while, as the tragic depegging of the Terra USD (UST) algorithmic stablecoin and the eventual collapse of Terra, now known as Terra Classic (LUNC) – which resulted in over $60 billion being wiped out of the crypto market cap at the time in May 2022. UST as an algorithmic stablecoin was maintained by a complex arbitrage mechanism that was eventually brought down by a group of highly sophisticated traders.
crvUSD is an algorithmic stablecoin that is built very differently and instead uses a technique that is similar to MakerDAO’s DAI stablecoin – using a mechanism known as collateralized-debt-position (CDP). In fact, according to crvUSD’s whitepaper, it will function as a “collateralized-debt-position” stablecoin where there user must deposit a collateral in order to be able to take out a loan in crvUSD.
crvUSD will be facing competition in the space as others are attempting to bring their own versions of algorithmic stablecoins to the market too, one of the most notable one being Aave – which released a testnet version of its GHO stablecoin which would be a “native decentralized, collateral-backed stablecoin”.
As of writing this article, Curve Finance’s native crypto token, CRV is up over 6% and is currently trading around $0.95. CRV token has had a very strong rally this year, having gained over 80% since the beginning of 2023 and things are looking pretty optimistic going forward to!
Read to know more: Bitcoin Price Prediction
