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Curve Finance Adopting crvUSD for Fee Distribution
Jun. 28, 2024. 2 mins. read.
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Curve Finance is shifting fee distribution from the 3cr token to its native stablecoin, crvUSD, enhancing its utility and integration within the Curve Finance ecosystem.
Curve Finance is shifting its fee distribution mechanism from the 3cr token to its native stablecoin, crvUSD, to enhance the stablecoin’s utility and better integrate it into the Curve Finance ecosystem.
Curve Finance has announced a major change in its fee distribution process. The decentralized finance (DeFi) platform will now use its native stablecoin, crvUSD, instead of the 3cr token for fee distribution. This transition aims to improve crvUSD’s utility and further integrate it within the Curve Finance ecosystem.
According to a press release shared with Cointelegraph, this switch will create an “additional supply sink for the stablecoin,” potentially increasing the total value locked (TVL) in the platform. Uncollected fees are a significant factor in this “supply sink,” the release noted.
Michael Egorov, the founder of Curve Finance, highlighted the benefits of this transition for users: “The transition to crvUSD means that users will now obtain fees in a dollar-denominated stablecoin. This shift simplifies the process significantly, as crvUSD doesn’t have to be converted to anything else to be utilized in Curve Finance products.”
The new fee distribution mechanism is also expected to incentivize users to engage more with the Curve Finance ecosystem. Egorov elaborated, “Curve users can deposit crvUSD into the ecosystem using fees earned.” He added that the value of 3crv, while generally increasing, has a variable conversion rate, necessitating additional steps for users to convert 3crv into a more stable or usable form of currency.
Despite the anticipated benefits, there are some risks associated with the transition. Egorov acknowledged that while the 3crv token has been operational for over four years without issues, crvUSD is relatively new, having been in use for just one year. It has undergone multiple audits and has been deemed fit for deployment but is inherently less time-tested compared to 3crv.
Operational risks were also a concern during the “preparation phase” for on-chain votes required for the change. However, Egorov assured that these risks have been mitigated since all relevant votes have passed.
This strategic move by Curve Finance underscores its commitment to enhancing the utility of crvUSD and fostering a more integrated and user-friendly ecosystem.
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