What is crvUSD?
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🟢 The simple version
Plain English — no jargon. Start here.
crvUSD is Curve Finance's native stablecoin — pegged to $1 through a novel liquidation mechanism called LLAMMA (Lending-Liquidating AMM Algorithm) that continuously and gradually converts collateral to crvUSD as prices fall, rather than triggering sudden large liquidations that harm borrowers and destabilise markets.
The standard liquidation problem
In most lending protocols (Aave, Compound, MakerDAO), liquidation is binary and sudden. When a borrower's collateral falls below the liquidation threshold, a liquidator pays off the debt and receives the collateral at a discount (typically 5-15%). This sudden liquidation is painful for borrowers — a brief price dip can trigger permanent collateral loss — and destabilising for markets — large liquidations create sell pressure that can trigger more liquidations ("cascading liquidations").
crvUSD's LLAMMA mechanism proposes a fundamentally different approach: continuous "soft" liquidation. Rather than a threshold below which liquidation suddenly occurs, LLAMMA continuously and gradually converts collateral (e.g., ETH) into crvUSD as the price falls, and converts crvUSD back to ETH as the price rises. The collateral is never suddenly sold in a large liquidation; instead, it gradually transitions between ETH and crvUSD across a price range.
How LLAMMA works in plain English
A borrower deposits ETH as collateral and mints crvUSD. LLAMMA creates a concentrated liquidity AMM position for their collateral across a price band (e.g., ETH between $1,800 and $2,200). As ETH price falls within this band, LLAMMA continuously sells small amounts of ETH for crvUSD, accumulating crvUSD collateral. If ETH price recovers, the crvUSD is sold back for ETH. The borrower's position never suffers a sudden 10% liquidation penalty — instead, they experience gradual conversion across the range.
What crvUSD is used for
crvUSD is minted by depositing collateral (stETH, wBTC, ETH, and other assets) and borrowing crvUSD against it. It is integrated into Curve's AMM pools and available across DeFi. No governance token for crvUSD specifically — it is governed by CRV holders via Curve's existing governance.
Is it legal in India?
Yes. crvUSD and CRV are VDAs under Indian law. 30% tax and 1% TDS apply. See India regulation.
🟡 A bit more detail
For when you want to go a little deeper.
LLAMMA bands — the price range mechanism
LLAMMA divides the collateral price range into discrete "bands" — price intervals within which the soft liquidation occurs. Each band is a concentrated liquidity position. As the current ETH price falls into a band's range, LLAMMA sells ETH for crvUSD within that band (acting as an AMM market maker for the price within the band). When the price falls below the entire band, all collateral in that band has been converted to crvUSD. When the price rises back through a band, the crvUSD is bought back for ETH. The number of bands and their width determine how gradual the liquidation is — more narrow bands = smoother transition but more gas for rebalancing.
crvUSD launched in May 2023 and grew to billions in circulating supply within months. The primary use case: borrowing crvUSD against stETH and wBTC collateral with the LLAMMA protection. During the crypto market volatility of 2023-2024, crvUSD borrowers experienced significantly fewer harmful liquidations compared to Aave or MakerDAO borrowers — the soft liquidation mechanism functioned as designed, reducing the "cliff" effect of standard liquidations. crvUSD is integrated in multiple Curve pools, enabling efficient stablecoin trading with deep liquidity.
The PegKeeper — maintaining the $1 peg
crvUSD maintains its $1 peg through PegKeepers — smart contracts with permission to mint or burn crvUSD to maintain balance in crvUSD/stablecoin Curve pools. When crvUSD trades above $1 in a Curve pool (more demand than supply), the PegKeeper mints crvUSD and deposits it into the pool, increasing supply and pushing the price down. When crvUSD trades below $1, the PegKeeper withdraws crvUSD from the pool and burns it, reducing supply and pushing the price up. This automatic arbitrage mechanism keeps crvUSD within a tight band around $1.
Key crvUSD metrics: circulating supply, collateral composition, LLAMMA band depth per market (how much soft liquidation buffer exists), PegKeeper balance (positive = crvUSD above peg recently, negative = below peg), and liquidation event statistics (comparing hard vs soft liquidation frequency). Live data: CoinGecko · crvUSD.curve.fi.
🟣 The full technical picture
For the technically curious.
LLAMMA mathematical model
LLAMMA is a concentrated liquidity AMM where each band has a price range [p_low, p_high]. Within the band, the invariant is the standard constant-product formula: x·y = k, where x is the ETH amount and y is the crvUSD amount. At price p = p_high (top of band), all collateral is ETH (y = 0, fully in the long asset). At p = p_low (bottom of band), all collateral is crvUSD (x = 0, fully in the stable asset). Between p_high and p_low, the position continuously transitions between ETH and crvUSD according to the constant-product formula. The "price oracle" for LLAMMA uses an exponential moving average (EMA) of the market price, introducing a delay that reduces the impact of short-term price manipulation on liquidation triggering.
Source: Curve Finance crvUSD whitepaper. curve-stablecoin.pdf · crvUSD docs: docs.curve.fi/crvUSD
Loss in LLAMMA — why soft liquidation isn't free
LLAMMA's soft liquidation is not costless. As the price oscillates around the band boundaries, LLAMMA continuously buys and sells collateral. Each oscillation results in selling ETH low and buying back ETH slightly higher — small losses accumulate from the bid-ask spread of the AMM curve. These losses are the "price of protection" — borrowers avoid sudden 10% liquidation penalties but accumulate small gradual losses during volatile periods. In highly volatile markets, the accumulated LLAMMA loss can exceed what a single hard liquidation would have cost. This is a known trade-off explicitly documented in Curve's crvUSD whitepaper.
crvUSD's interest rate model uses a "monetary policy" controller — the borrow rate adjusts based on how far crvUSD is from its $1 peg in the monitored Curve pools. When crvUSD trades below $1 (excess supply relative to demand), the borrow rate increases, making borrowing more expensive and incentivising borrowers to repay loans (reducing crvUSD supply). When crvUSD trades above $1 (excess demand), the rate decreases, encouraging more borrowing (increasing crvUSD supply). This automatic rate feedback loop is analogous to how central banks use interest rates to maintain price stability — except it is autonomous and on-chain.
Key facts
- Type: CDP stablecoin (collateral-backed, $1 peg)
- Liquidation: LLAMMA soft liquidation (gradual, band-based)
- Peg mechanism: PegKeepers (automatic mint/burn)
- Rate model: Monetary policy controller (peg-responsive borrow rate)
- Collateral: stETH, wBTC, ETH, and others
- Governance: CRV holders
- Launched: May 2023