The decentralized exchange Curve Finance added support for Lido’s wrapped version of stETH as collateral for the issuance and borrowing of the stablecoin crvUSD.
/1 Looks like we have the first looping happening with $crvUSD using wrapped $stETH collateral.
This addy started off with 21.8 $wstETH as collateral, and grew the position to 761k crvUSD and 381 wstETH. https://t.co/yQxue26Rax pic.twitter.com/sGhwR7mJH6
— DefiMoon ?? (@DefiMoon) June 8, 2023
The proposal received 100% backing in the vote, with a quorum of 84.5%.
Wrapped staking ETH, wstETH, is an asset from Lido for interacting with DeFi protocols. Staked ETH on the Ethereum platform is represented by stETH.
However, the token has a dynamic balance due to the accrual of staking rewards. Some decentralised platforms like Uniswap, 1inch and SushiSwap do not support this mechanism, and users may lose part of their yield by moving stETH to them. The use of wstETH resolves the issue.
The Curve Finance team on May 4 launched crvUSD on the Ethereum mainnet. The process required a restart due to a detected bug, which the developers implemented successfully.
The first collateral for issuing the stablecoin on the platform was sfrxETH from the Frax protocol. The asset is also used to earn Ethereum staking yield.
As of writing, the amount borrowed in crvUSD exceeded $14.5 million. With wstETH collateral, users borrowed $4.04 million. The annual rate for them stands at 6.04%, while for sfrxETH holders — 6.67%.
The crvUSD issuance mechanism uses an overcollateralization model akin to DAI from MakerDAO. The capitalization of this stablecoin is approaching $4.6 billion (DeFi Llama).
Earlier reports said two villas worth about $40m in Melbourne.