Curve USD (crvUSD) — Complete Guide

crvUSD is a decentralized overcollateralized stablecoin issued by Curve Finance DAO, launched in May 2023. Its unique feature is the LLAMMA (Lending-Liquidating AMM Algorithm), which replaces traditional liquidation with a continuous soft-liquidation mechanism using Curve's AMM. crvUSD can be minted against ETH, stETH, WBTC, wstETH, and other assets, with a current supply of $300–600 million.

Users deposit collateral (ETH, stETH, WBTC, etc.) into Curve's LLAMMA market to mint crvUSD. Unlike Maker's sudden liquidation, LLAMMA continuously adjusts the collateral ratio by trading in and out of the collateral. When the collateral price falls toward the liquidation threshold, LLAMMA gradually converts collateral into crvUSD (soft liquidation). When prices recover, it converts back (de-liquidation). This means borrowers lose some value to LLAMMA trading fees during volatile periods instead of facing sudden liquidation. The Monetary Policy contract dynamically adjusts the borrow rate to maintain the peg: rate increases when crvUSD trades below $1, encouraging repayment.

• +LLAMMA mechanism provides soft liquidation instead of sudden collateral seizure
• +Issued by Curve Finance — the most trusted AMM in DeFi by TVL for stablecoin liquidity
• +Dynamic interest rates managed by on-chain Monetary Policy controller
• +Deep native integration with Curve pools for crvUSD liquidity
• +Battle-tested Curve infrastructure underlying the protocol
• +De-liquidation mechanism allows borrowers to recover collateral when prices recover

• !Soft liquidation still causes value loss from LLAMMA trading fees during volatile periods
• !Smart contract complexity of LLAMMA is novel — less audited than simpler liquidation models
• !Limited collateral types compared to DAI (primarily ETH and BTC derivatives)