Decentralized exchange Curve Finance is currently voting on a governance proposal to accept Wrapped Ether as collateral for minting and borrowing its decentralized stablecoin, crvUSD.
If approved, the measure will enable platform users to utilize WETH as collateral and mint a corresponding amount in the exchange’s native crvUSD stablecoin. The WETH token represents tokenized Ether on the Ethereum blockchain, and the value of WETH is pegged to the value of ETH one-to-one.
The debt ceiling for WETH collateral is set at $200 million, meaning that only 200 million crvUSD stablecoins can be minted with WETH as collateral.
Curve currently accepts Wrapped Staked Ether and Staked Frax Ether as collateral for minting its stablecoin. Both are Ethereum derivatives.
The crvUSD stablecoin was first launched on the Ethereum mainnet last month by Curve Finance developers. Employing a token design akin to MakerDAO’s DAI stablecoin, crvUSD does not rely on dollar reserves, but rather is over-collateralized by supported crypto assets that surpass the value of issued crvUSD.
Much like DAI, crypto users can mint crvUSD stablecoins through over-collateralized loans on the Curve platform. Curve Finance developers first deployed crvUSD on the Ethereum mainnet in May.
This stablecoin is underpinned by an algorithm called Lending-Liquidating AMM that works by continuously liquidating and automatically depositing collateral. Known as LLAMMA, it manages the risk associated with the stablecoin while maintaining its peg to the U.S. dollar.
Sourced from cryptonews.net.