crvUSD: 2 Years On

Today, 14 May 2025, marks the second anniversary of crvUSD and six months since the launch of scrvUSD. Over this time, both systems have undergone multiple small refinements and are proving their resilience across diverse market conditions. Just this week, crvUSD reached a new all-time high supply of $181 million, demonstrating growing confidence in the design and utility of the protocol.

The Beginning: crvUSD Launch and LLAMMA

Launched on May 14, 2023, crvUSD entered the market as a truly decentralized and overcollateralized stablecoin. What set it apart from the start was its innovative liquidation mechanism, LLAMMA — offering a fresh alternative to traditional systems. Even now, crvUSD remains one of the most capital-efficient stablecoins available.

Unlike other platforms where liquidations can be sudden and unforgiving, crvUSD is designed to give borrowers more flexibility and stability. With loan-to-value (LTV) ratios of up to 91%, users can borrow more against their assets while facing less disruption during periods of volatility. This makes crvUSD particularly attractive for advanced strategies or long-term positions. Learn how it works here.

The Three Pillars of crvUSD Stability

crvUSD is built to be truly decentralized — with no centralized oracles and no manual interventions. Every aspect of the system is managed by smart contracts operating on transparent, permissionless logic. This ensures that crvUSD remains resilient, censorship-resistant, and credibly neutral — a stablecoin governed entirely by code and the DAO.

• Interest Rate Adjustments
  Borrowing rates automatically drop when crvUSD trades above its peg and rise when it trades below peg. This creates self-correcting incentives that help balance supply and demand — without external interference.
• Stabilization Reserve (formerly PegKeepers)
  The Peg Stabilization Reserve helps keep crvUSD close to $1.00 by adjusting the supply in Curve pools. When the price goes above $1.00, crvUSD is added to the pool; when the price falls below $1.00, crvUSD is withdrawn. These actions help balance the price — and anyone can trigger them through smart contracts.
• Savings-crvUSD (scrvUSD)
  scrvUSD is the yield-bearing version of crvUSD. Users can deposit crvUSD into the Savings Vault to earn a share of the interest paid by borrowers. When the price of crvUSD drops below its peg, the yield on scrvUSD becomes more attractive — because borrowing rates increase, and so does the return for scrvUSD holders. This increased yield drives demand for scrvUSD, which theoretically leads users to buy crvUSD in order to deposit it — helping to restore the peg.

crvUSD Supply Growth

Two major catalysts have driven crvUSD supply growth even amid challenging DeFi market conditions:

• The launch of scrvUSD
• The launch of Convex and Yearn’s Resupply Protocol

Together these mechanisms enabled crvUSD to surpass previous supply highs and continue expanding.

Borrowing Rate Stability and Peg Strength

Before scrvUSD, borrowing rates were quite volatile, rollercoasting up and down. A single large borrower could trigger sharp interest rate spikes by selling their borrowed crvUSD into the market. scrvUSD was specifically designed to stabilize this by increasing organic demand for crvUSD.

As shown in the chart below, borrowing rates peaked shortly after scrvUSD’s introduction and have since settled at levels consistently below those of competitors like Aave’s USDT and USDC markets.

Similarly, scrvUSD materially tightened the crvUSD peg. Price volatility has steadily decreased since scrvUSD launched and making the peg around $1 very resilient.

What was once a premium lending product thanks to its soft-liquidation protection is now also a market leader in borrowing rate competitiveness and peg stability.

At the same time, total crvUSD liquidity in the Stabilization Reserve (referred to as "pegkeeper liquidity" in the chart) has steadily increased, enabling the system to absorb greater borrowing demand without destabilizing the peg.

scrvUSD Usage and Returns

scrvUSD currently holds 20–30% of circulating crvUSD, fluctuating with the prevailing staking APR.

Since its launch, scrvUSD has delivered an approximate 3.8% total yield over six months to depositors.

Resupply as a crvUSD Sink

The Resupply protocol provided an additional sink for crvUSD, dramatically increasing the amount supplied into Llamalend via Resupply mechanisms.

Future Outlook

While crvUSD was launched two years ago, its adoption, scaling, and development are far from complete. Both the technical foundation and the user interface are continuously evolving to make the borrowing experience as seamless and intuitive as possible.

Some upcoming developments and expectations:

• More Markets
  Creating lending markets on LlamaLend is fully permissionless — anyone can deploy a new market to borrow crvUSD (note: borrowing and not minting).
• LP Tokens as Collateral
  New markets will soon make it possible to use liquidity provider (LP) tokens as collateral for borrowing (not minting!) crvUSD. For example, users will be able to borrow against Tricrypto LP tokens — a pool consisting of BTC, ETH, and USD. This mechanism will be used by YieldBasis, a protocol built a that plans to borrow crvUSD against LP tokens in order to maintain leveraged positions.

Note: This involves borrowing crvUSD from lending markets, not minting it. However, increased borrowing demand indirectly drives more minting of crvUSD..

• Expansion of Resupply
  The resupply mechanism continues to grow, helping to efficiently manage crvUSD distribution across lending markets.