Curve Finance has switched from using the 3cr token to its own stablecoin, crvUSD, for the distribution of fees. In order to encourage users, the move attempts to increase the usefulness of crvUSD and incorporate the stablecoin into the Curve Finance network.A press release that was shared states that the move to crvUSD for fee distribution will result in “an additional supply sink for the stablecoin.” According to the statement, the “supply sink” is mostly caused by unpaid fees, which could raise the total value locked (TVL).
Curve Finance’s creator, Michael Egorov, discussed the implications of the transfer with Cointelegraph: With the switch to crvUSD, customers will now be able to receive fees in stablecoins valued in dollars. Due to the fact that crvUSD doesn’t need to be changed in order to be used in Curve Finance products, this change greatly streamlines the procedure.
As per the press release, the distribution of fees in crvUSD is expected to encourage users to engage more with companies and services that use the stablecoin. According to Egorov, Curve users can use their earned fees to deposit crvUSD into the ecosystem as community incentives during the changeover. This was disclosed to Cointelegraph. “The value of 3crv has a fluctuating conversion rate (now approximately 1.03), despite generally growing. Because of this volatility, users have to take extra efforts to change 3crv into a more reliable or practical form of money for other uses.
In the press release, Curve Finance said that it intended to handle potential user concerns about liquidity as well as transitional risks. Regarding the concerns, Egorov stated to Cointelegraph that operational risks and asset age are two of the “few potential risks to bring up with this transition.”
“After more than four years of operation, there have been no problems with the 3crv token. In addition, CrvUSD has just been around for a year and has not yet proven to be completely reliable. Although it has been approved for deployment after undergoing several audits, it is essentially less time-tested than 3crv. Egorov also talked about the operational risks that were there during the “preparation phase” of the onchain votes needed to make the move, but that are now lessened because “all relevant votes” have been approved.