Curve Finance has successfully implemented the smart contract for its stablecoin, crvUSD, on the Ethereum platform. The stablecoin was created using the innovative Lending-Liquidating Automated Market Maker Algorithm (LLAMMA), which combines traditional AMM functionality with a lending market.
LLAMMA operates with the assistance of an external oracle that verifies that crvUSD pools are composed of two distinct assets: the stablecoin itself and the asset used to generate the stablecoin (such as ETH or BTC). This makes LLAMMA distinct from other AMM models where the assets are exchanged at prices set by the AMM curve. The oracle will transform all user deposits into the deposited collateral when the price is higher, but as the price falls, the user’s deposit will be converted to crvUSD.