Curve Finance accepts crvUSD for payment distribution
Curve Finance has changed its payment distribution method, from the 3cr token to its native stablecoin, crvUSD.
The move aims to improve the crvUSD service and integrate the stablecoin into the Curve Finance ecosystem to incentivize users.
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What users should know
According to a press release shared with Cointelegraph, the switch to crvUSD will create an “additional supply sink for the stability coin.”
The release explains that uncollected payments are primarily responsible for “supply sink,” which is Total Value Locked (TVL).
Michael Egorov, founder of Curve Finance, spoke with Cointelegraph about how the switch will affect Curve Finance users:
“The transition to crvUSD means that users will now receive payments in a stable coin that is denominated in dollars. This change greatly simplifies the process, as crvUSD does not need to be converted to something else to be used in Curve Finance's products.”
Related: Curve Finance Runs Smooth Liquidation, But CRV Falls 28%
Encouragement of community participation
According to the press release, the distribution of payments in crvUSD promotes the use of a stable coin, which encourages users to be more involved in the products and services they use.
On community incentives during the transition, Egorov told Cointelegraph that Curve users will be able to deposit crvUSD into the ecosystem using earned fees.
“The value of 3crv, while generally increasing, has a variable conversion rate (currently around 1.03). This volatility required additional steps for users to convert 3crv into a stable or usable currency for other activities.”
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Transitional risks
In a press release, Curve Finance stated that it plans to address liquidity issues and concerns associated with the transition that some users may be experiencing.
Speaking about the risks, Egorov told Cointelegraph that there are “a few potential risks to bring with this transition”, which include operational risks and asset age.
“The 3crv token has been in operation for over four years and has not shown any problems. […] CrvUSD is only a year old and has not fully proven its reliability. It has undergone extensive auditing and is deemed fit for deployment, but is inherently more time-tested than the 3crv.
Egorov discussed operational concerns during the “preparatory phase” of the on-chain votes needed for the change, but they were reduced because “all relevant votes” had passed.
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