GM!
The emergence of $crvUSD in the #DeFi space has created a significant impact.
With its innovative soft-liquidation mechanism and the battle-tested stableswap from @CurveFinance, it has become a strong contender in the stablecoin sector.
Let's explore together!
Disclaimer:
Kindly be advised that this thread is intended solely for the purpose of sharing information and should not be construed as financial advice.
Disclosure:
I am financially invested in @CurveFinance and its ecosystem.
Preparatory Reading:
For a more comprehensive understanding of the subject matter being discussed, we suggest acquainting yourself with the following topics through pre-reading
Table of Contents
🟡 What is $crvUSD?
🟡 $crvUSD Mechanics
🟡 What is LLAMMA?
🟡 LLAMMA and Price Oracles
🟡 Soft-Liquidation
🟡 PegKeeper
🟡 $crvUSD vs Other CDPs
$CrvUSD, a stablecoin developed on @CurveFinance, utilizes a unique AMM algorithm called Lending Liquidation AMM Algorithm (LLAMMA).
This algorithm and innovative arbitrage employs a soft liquidation mechanism, contributing to enhanced stability for the $crvUSD peg
The diagram below illustrates how $crvUSD maintains its peg and initiates LLAMMA to convert collateral deposited.
LLAMMA is a cutting-edge liquidation mechanism that converts the borrower's assets within different price brackets.
It checks collateral ranges against the price oracle to see if liquidation is possible. This borrower-focused approach allows for a gradual liquidation process
If the price rises again, $crvUSD will be converted back to collaterals, unless it has been fully liquidated. This is known as a rehypothecated position
The new position may not have the same amount as before the soft liquidation due to the conversion and rebalancing process
In the event of the price rises again, $crvUSD will be converted back to collaterals unless it has been fully liquidated, called rehypothecated position
However, the new position might doesn't have same amount prior soft liquidation. This is due to conversion and rebalancing
To uphold its peg, Curve's PegKeeper contract can mint and burn tokens as necessary.
Additionally, the protocol employs a monetary policy to establish dynamic borrowing rates.
To summarize the preceding explanation, we can compare $crvUSD with other CDPs protocols in the diagram below.
References (Link in ALT)
If you enjoy reading in-depth articles, I recommend checking out the insightful blog by my friends at @blocmatesdotcom. They provide a comprehensive explanation of $crvUSD in a beautifully written format.
blocmates.com/blogmates/everything-you-need-to-know-about-crvusd/
If you're interested in delving into the technical aspects and exploring further, I recommend checking out the publication by @galaxyhq. They provide in-depth insights and analysis on the subject.
galaxy.com/research/whitepapers/curve-stablecoin-crvusd/
Tagging #DeFi friends:
@blocmatesdotcom
@rektdiomedes
@ChadCaff
@0xTindorr
@ThorHartvigsen
@Louround_
@jake_pahor
@CryptoShiro_
@SmallCapScience
@Flowslikeosmo
@stacy_muur
@defi_mochi
@Slappjakke
@crypto_linn
@Cryptotrissy
@Crypt0_Andrew
@ArbiAlpha
You can read the unrolled version of this thread here: typefully.com/eli5_defi/xpEjCZW