crvUSD is a collateralized-debt-position (CDP) developed by . Similar to 's , crvUSD enables users to stablecoins by depositing volatile collateral, with an initial focus on accepting assets like . [1]


CrvUSD is a CDP-style stablecoin in the space, operating on the principle of assets such as ETH or derivatives of ETH to generate crvUSD loans. Its distinguishing feature, the Lending-Liquidating AMM Algorithm (LLAMMA), offers a borrower-friendly approach, enabling continuous collateral rebalancing through soft liquidations. LLAMMA transforms into a position within a specialized , facilitating gradual rebalances as prices fluctuate. Curve aims to facilitate a product that helps users completely avoid instantaneous liquidations leading to 100% losses by mitigating potential losses and minimizing the protocol's bad debt accumulation, offering a borrower-friendly alternative. [5]


, a well-known in the ecosystem, emerged in early 2020, aiming to optimize swaps among identically pegged assets, particularly . As it grew in prominence, Curve introduced its native token, , for governance and liquidity provision. VeCRV holders, typically , directed CRV incentives via gauge weight voting, sparking the '' [2][3]

crvUSD was first revealed by Curve Finance Founder in July 2022, followed by the release of the crvUSD whitepaper in November of the same year. Its official public launch was announced on May 17, 2023. [4]

"crvUSD UI wen? now! Ape responsibly"


Loan Creation

Users can initiate loans by specifying the amount of to be pledged and the desired quantity of crvUSD for borrowing. In the standard mode, the user interface (UI) provides details such as the maximum available borrowing sum, health, and borrow rate. For those seeking additional insights, an advanced mode offers a more comprehensive view, revealing information about the distribution across LLAMMA bands. This interface showcases essential parameters like and band range, number of bands, borrow rate, and Loan to Value ratio (LTV). Moreover, users can manually adjust the number of bands to influence potential losses during soft-liquidation mode, with the option to choose between a maximum of 50 and a minimum of 4 bands. [6]

Loan Management

The crvUSD loan management interface encompasses, facilitating Borrowing, Debt Repayment, and Self-Liquidation options. Users can also control their by adding or removing it from a loan. Deleverage, another available option, enables users to optimize their loan position. It's essential to note that during soft liquidation, users can neither add nor withdraw collateral, and their choices are limited to repaying debt or self-liquidating the loan. In the event of self-liquidation, the loan is entirely repaid, and the residual amount is returned to the user. [7]

Leveraging Loans

For users looking to amplify their loans, the UI presents a Leverage tab, allowing for increased leverage by engaging in a series of crvUSD-to-collateral trades and additional deposits to bolster the collateral position. It's imperative to exercise caution, as a dip in collateral price necessitates full repayment to reclaim the initial position. The user interface provides insights into the price impact, trade route, and actual leverage when toggling to the advanced mode, offering a comprehensive view of loan details. [8]

Deleveraging Loans

Deleveraging is a flexible option, whether the loan is leveraged or not, accessible through the UI's 'Deleverage' tab. Users input the amount of collateral allocated for deleveraging, which is converted into crvUSD to facilitate debt repayment. When a loan is in soft liquidation, deleveraging is viable only upon full repayment of the loan. In other cases, users can deliberately deleverage by any desired amount. The UI supplies users with updated loan details, encompassing liquidation and band range, borrow rate, health, and LLAMMA changes in collateral and debt. [9]

Loan Details & Concepts

Loan Details

In the loan creation process, is dispersed across various liquidation price bands. A price drop within the allocated range triggers soft-liquidation mode, preventing users from adding additional collateral. Repaying with crvUSD or self-liquidation becomes the sole recourse. The user interface displays comprehensive information about the LLAMMA system, including total debt and individual wallet balances. Advanced mode offers additional insights about collateral bands and LLAMMA as a whole. [10]

Loan Parameters

The amplification parameter A defines liquidity density and band size, while the base price signifies the price of band number 0. The price, derived from the collateral's current price as determined by the oracle, influences collateral value and loan health. Borrow rates, expressed as annual interest rates, vary according to market conditions and are subject to change. [11]

crvUSD Concepts


Collateral distribution is divided into multiple bands, each with a specified price range for the asset. Bands play a crucial role in liquidation, and the number of bands significantly affects potential losses during self-liquidation. When soft liquidation occurs, bands may comprise a mixture of crvUSD and the original collateral, with hover-over details providing insights into specific positions and asset prices. [12]

Borrow Rate

The borrow rate remains variable and adjusts based on pool conditions: collateral price fluctuations and positions in soft liquidation impact the rate. A declining rate encourages borrowing and selling, while an increasing rate incentivizes crvUSD purchase and repayment. Users can delve into the formula for calculating the borrow rate and utilize a tool for experimentation. [13]


Soft liquidation poses the risk of converting collateral within a band into crvUSD, with potential recovery when prices rebound, albeit at a reduced level. During soft liquidation, collateral modifications are prohibited, leaving users with the choice of partial or complete debt repayment or self-liquidation. If a borrower's health deteriorates, they may face a 'hard liquidation,' resembling standard liquidation, which eradicates their position. [14]

Loan Health

The user interface presents the Health score and status, contingent on a user's collateral and borrowed amount. A warning is displayed in self-liquidation mode. When a loan's health reaches 0%, it becomes eligible for hard liquidation, marking the culmination of loan management in the crvUSD ecosystem. [15]

Maintaining the Peg

crvUSD's stability is susceptible to market volatility and liquidity fluctuations. To safeguard its peg to $1, crvUSD employs a two-fold approach. [16]


LLAMMA serves as the initial line of defense. This mechanism is meticulously designed to maintain the crvUSD peg by ensuring that all crvUSD debt remains suitably collateralized. It also incentivizes arbitrageurs to mitigate disparities between collateral prices in LLAMMA's and external price sources over time. [4][16]

Automatic Stabilizer (PegKeeper)

Complementing LLAMMA's efforts, an automatic stabilizer, known as 'PegKeeper,' plays a pivotal role. PegKeepers possess the ability to or burn crvUSD, thereby modulating the stablecoin's price during periods of deviation. If crvUSD's trading price surpasses $1 due to heightened demand, PegKeepers can mint uncollateralized crvUSD and deposit it into the stableswap pool. This single-sided deposit action acts as a corrective measure, realigning the price to $1. Conversely, if crvUSD trades below $1, PegKeepers can withdraw crvUSD from the pool and burn it, addressing the price imbalance. This stabilizer, alongside Algorithmic Market Operations (AMO), assists in maintaining the peg without relying on capital-intensive PSM pools. At the inception of crvUSD, four PegKeeper contracts were established, and external entities can execute PegKeeper actions to earn profits in the form of LP tokens. [4][17]

Monetary Policy (Interest Rates)

Furthermore, interest rates are an integral component integrated into the . These interest rates dynamically adapt based on the variance between crvUSD's value and its $1 peg. Borrowing rates on crvUSD fluctuate in response to its price relative to $1, effectively encouraging or discouraging borrowing. Borrow rates decrease as crvUSD exceeds $1, stimulating user borrowing and expanding the supply of crvUSD. Conversely, when crvUSD trades below $1, borrow rates escalate to incentivize borrowers to repay their loans, thereby reducing the crvUSD supply and elevating its price. The Borrow Rate Formula considers various factors, including the total debt incurred by PegKeeper, the total debt generated by users via the Controller, the price of crvUSD, and a benchmark interest rate (rate0), to calculate the dynamic borrowing rates. This monetary policy adds a layer of defense in maintaining the crvUSD peg to $1. [17]

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December 14, 2023


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