The token of stablecoin swapping service Curve (CRV) gained 11% in the past 24 hours amid a broader market demand for decentralized stablecoins.
While Curve does not offer native stablecoins yet, its upcoming curve USD (crvUSD) token is much awaited in crypto circles. Curve’s plans to deploy a dollar-pegged asset first became public in June, as CoinDesk reported.
Curve seemed to tease the upcoming issuance of crvUSD on Monday, stating an ongoing proposal would be “required for crvUSD to function autonomously.” The ongoing proposal would allow stablecoin pools to supply pricing data to external protocols.
Such a development likely served as a catalyst for traders as demand for CRV gained and the tokens saw over $770 million in trading volume on crypto exchanges.
Curve relies on smart contracts instead of middlemen to offer financial services such as stablecoin borrowing, trading and lending to users. Depositors on Curve earn annual yields of up to 4% from one of the many pools on the platform.
It is one of the most popular and influential protocols among the crypto community and locks up $4.6 billion worth of tokens.
CRV traded over $1 on Tuesday, reaching early-January levels and bucking an overall market decline as bitcoin (BTC) lost 1%. The move came as tokens related to decentralized stablecoins became the latest driver of crypto markets.
As per a WSJ report on Sunday, the U.S. Securities and Exchange Commission (SEC) Sunday alleges that BUSD is unregistered security. The news came days after CoinDesk previously reported Paxos is under investigation by the New York Department of Financial Services, though the scope of NYDFS’ investigation is unclear.
This caused bearish sentiment for centralized stablecoins such as BUSD, with traders likely looking for decentralized counterparts which will be less likely to face legal consequences in the future.
Decentralized stablecoins rely on a basket of cryptocurrencies to back their peg to a fiat currency, mostly U.S. dollars. They can either be algorithmic – wherein another token is issued and continually minted or burned to help maintain the stablecoin’s peg – or overcollateralized – where the basket of assets are far in excess to back a stablecoin’s net circulation.
“The crvUSD could be a very interesting development, as we haven’t yet seen a stablecoin that is issued by a major DEX,” (decentralized exchange) Daniel Zlotin, senior DeFi developer at Orbs, wrote in a Telegram message to CoinDesk explaining crvUSD’s utility.
“Connecting a stablecoin with a viable [decentralized finance] platform could open up some interesting possibilities in terms of new models (such as using LP tokens as part of the backing system),” Zlotin added, cautioning that there would “definitely be some challenges” in implementing such a concept.
