Curve, an on-chain Ethereum liquidity pool, could be in the plans of making its own stablecoin. Curve Finance is a widely popular platform used for stablecoin trading. However, a tweet from SCB 10X, a holding company of the SCBX group, reveals that a stablecoin from Curve could be imminent.
Curve Finance allows for the exchange of ERC-20 tokens from different ecosystems with low fees and low slippage.
If true, it will be the second major stablecoin released in a short period of time. AAVE also announced the launch of its stablecoin, GHO.
What A Curve Stablecoin Could Look Like
In an interview with Kelvin Koh, co-founder of the Spartan Group, the CEO of Curve, Michael Egorov, hinted at the launch of a stablecoin. He also revealed in the interview that the token would be over-collateralized. However, he did not reveal any more information about the project.
Mrblocktw, a member of Curve Finance, also shared an image that displays a project with the name “curve-stablecoin”. Another Curve discord member revealed that the stablecoin will be first released on their Github.
According to Yahoo Finance, the token will be minted against liquidity provider positions, making it similar to the MakerDAO stablecoin DAI. DAI is also created through an overcollateralized loan and payment. It is also based on an ERC-20 that makes sure that its value is pegged to $1.
The Controversy Surrounding Stablecoins
Stablecoins aims to reduce the volatility of trading in the crypto market. Its value is often pegged to an underlying asset such as a dollar or euro.
Stablecoins recently came in the news due to the infamous Terra and LUNA crash. Terra was an algorithmic stablecoin, that crashed due to the loss of its peg to the dollar. Many believe that the Terra crash was the event that brought about the ensuing crypto bear market.
While any opinion on the stability of Curve’s stablecoin is not possible without more details, Egorov was asked in his interview about the difference between Terra and DAI. He revealed that Terra was collateralized by LUNA, which in turn depended on Terra’s success. On the other hand, DAI is backed by assets that do not depend upon its success.
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