Curve Finance a leading decentralized exchange for stablecoins may be on the verge of launching a new dollar-pegged stablecoin after its developers uploaded the stablecoin’s code onto GitHub.
Curve protocol founder Michael Egerov confirmed the new dollar-pegged stablecoin at a Web3 summit back in July.
Curve uses an automated market maker (AMM) to manage liquidity and on August 2020 launched a decentralized autonomous organization (DAO) and a governance token called Curve DAO token (CRV) for purposes of decentralized governance.
The new Curve’s dollar-pegged stablecoin
Although details are still scanty at the moment, the new code that was posted on GitHub has given a glimpse of how the several smart contracts of the new stablecoin shall function with an indication that the stablecoin shall be over-collateralized.
The new stablecoin shall be known as Curve’s dollar (crvUSD)
Unlike centralized stablecoins like Tether’s USDT and Circles USDC, which are backed by real assets and cash, the value of the crvUSD stablecoin will be underpinned by a cryptocurrency treasury that exceeds the total value of the crvUSDs in circulation.
The over-collateralization is done purposefully to ensure that it does not de-peg from its $1 peg. A good example of an over-collateralized stablecoin is Maker’s DAI stablecoin.
Curves crvUSD will compete with Aave’s over-collateralized GHO stablecoin whose launch was approved after the DAO governing Aave ran a poll on its launch. The GHO is collateralized by half of the AAVE tokens.
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