Curve Finance founder Michael Egorov has announced the upcoming launch of a Curve Finance stablecoin, catalyzing a 22 percent CRV token price increase within 24 hours.
Curve Finance has confirmed cryptocurrency community conjecture regarding a potential stablecoin issued by the DeFi protocol. The announcement of the Curve stablecoin saw Curve Finance’s CRV token push above other market-leading DeFi protocols such as AAVE, achieving the position of the 60th largest token with a total capitalization of over $760 million.
Confirmed by Curve Finance founder Michael Egorov at Web3 summit, the Curve Finance stablecoin will, similarly to both AAVE and MAKER, function as a decentralized, over-collateralized stablecoin.
Curve Finance Over-Collateralized Stablecoin Could Follow MakerDAO Model
Unlike Tether (USDT) or Circle’s USD Coin (USDC), which are backed via centralized reserves of fiat assets, over-collateralized stablecoins are backed via an algorithmic mechanism that leverages volatile assets such as Bitcoin, Ethereum, and other altcoins.
The issuance of an over-collateralized stablecoin by Curve Finance, if similar to MakerDAO’s collateralized debt position-based offering, could follow a model in which stablecoins are issued against liquidity provider positions.
Collateralizing a Curve Finance-issued stablecoin with liquidity provider positions could potentially render liquidity within the Curve Finance ecosystem more robust, as users would be required to pay down on a loan against a liquidity provider position before retrieving collateral.
A Curve Finance-issued stablecoin following a liquidity provider position-based collateralization model would allow users to borrow against liquidity provider positions, offering users the option to access liquidity without relinquishing control of fee-generating collateral.
Curve Finance Pursues 1 Million OP Token Grant
Additional changes within the Curve Finance ecosystem have seen the exchange liquidity pool submit a governance proposal for a 1 million OP token grant from layer two protocol and smart contract platform Optimism, suggesting the distribution of $850,000 OP tokens via Curve over a 20-week time frame.
The proposal will, if approved, deliver tokens to liquidity providers as incentives to promote participation in gauged Curve pools on the Optimism platform. Three pools on Optimism currently meet the requirements defined in the proposal — sUSD, sETH, and sBTC — each of which receives token emissions on a weekly basis.
