One of the largest DEXs and automated market makers (AMM) Curve Finance has published its long-awaited crvUSD stablecoin white paper on GitHub.
The whitepaper was written by Curve founder Michael Egorov.
The LLAMMA, or “Lending-Liquidating AMM Algorithm,” is the self-proclaimed most impressive feature of the entire DeFi protocol Curve ecosystem, a mechanism designed to improve on the clunky liquidation mechanisms of stablecoin competitors.
“If the LLAMMA observes the price of this collateral is dropping, it automatically liquidates your portfolio into crvUSD. If the price goes back up your collateral gets repurchased. Therefore, instead of an instantaneous liquidation, the process occurs smoothly over a continuous range,” the announcement wrote.
In September, Curve Finance uploaded the code of crvUSD (Curve’s Dollar) onto GitHub.
The LLAMMA ecosystem is structured in such a way that each type of collateral serves as its own publicly tradable AMM. Curve DAO tokens (CRV), Curve’s native token, which is issued as rewards to liquidity providers on Curve Finance, will be aided by the stablecoin.
The LLAMMA bridges the gap between the collateral asset and the stablecoin. Rather than isolated “vaults”, collateral provided to mint/borrow stablecoins is added to this market-maker.
This not only provides a liquid market for the collateral and the Curve stablecoin, but it also serves as a continuous liquidation mechanism for collateralized debt positions.
crvUSD will function similarly to MakerDAO’s stablecoin, DAI, in that it will be overcollateralized with crypto assets.
Many questions, such as the specific launch pairs, remain unanswered.
Curve DAO Token (CRV) has skyrocketed 16.67% in the last 24 hours, according to CoinMarketCap.
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