Before we get started, this is not a recommendation or endorsement to buy any token(s) mentioned.
In May, the team at Curve launched their highly anticipated stablecoin crvUSD. Curve is a stablecoin-focused decentralized exchange, offering low-fee swaps and boasting nearly $4.27B in total value locked cross-chain. However, crvUSD is a stablecoin built on the Curve protocol and relies on a novel lending-liquidating AMM algorithm (nicknamed LLAMA). LLAMA automatically swaps between collateral and the crvUSD stablecoin to avoid frequent liquidations, which in turn offers more stability to the crvUSD peg. crvUSD is one of a new class of decentralized stablecoins native to popular DeFi protocols that promises to disrupt the stablecoin sector and grow the DeFi stablecoin market exponentially in the next crypto bull run.
The current crvUSD app dashboard (see above) on the Curve website allows users to mint crvUSD against sfrxETH (a liquid staked form of ETH by Frax Finance) at a borrow rate of 10% or wstETH by Lido at a rate of 9.23%. In the future, Curve will not only allow users to mint crvUSD against single collateral assets like these ETH LSTs but also Curve LPs.
While it’s still early for crvUSD, the new stablecoin is showing real promise for mass adoption in DeFi with $37.6M crvUSD minted, backed by $53.6M in collateral, across 253 crvUSD holders (see below).
Source: crvUSD Dune Dashboard
Today, I’ll show how I can simply earn yield in the form of trading fees, CRV, and CVX thanks to demand to trade crvUSD with FRAX and other stablecoins on Curve.
How to Earn Up to 19% vAPR with a crvUSD-FRAX LP
Before we get started, please be aware of these risks.
- Smart contract risk in Curve and crvUSD contracts
- Smart contract risk in Convex Finance
- Smart contract risk in Frax Finance
- Front-end spoof attack on the Curve or Convex websites
- An economic design exploit in the design crvUSD
- A stablecoin like FRAX or crvUSD could de-peg
Here’s how I get started!
- First, I deposit FRAX and/or crvUSD here in the Curve factory pool. If I need either token, I can simply use the Curve Swap here to swap for it. I follow the prompts to Approve Spending and Deposit before returning to the Convex staking app with my Curve FRAX-crvUSD LP.
- Lastly, I search crvUSD here on Convex and find the FRAX+crvUSD LP and follow the prompts to Approve and Deposit & Stake to start earning CRV and CVX rewards on top of my Curve trading fees.
That’s it! I’m earning substantial yield on Curve’s new flagship stablecoin.
For more DeFi video tutorials, podcasts, and insights, follow me @DeFi_Dad on Twitter and subscribe to my YouTube channel, my new podcast The Edge Podcast, and The DeFi Podcast with DeFi Dad at defidad.com. If you’re a crypto builder raising capital, my team and I would love to talk at 4RC (Fourth Revolution Capital).
Disclaimer & Risks: This is not financial advice or a recommendation/endorsement to buy any token mentioned in this post. You should approach all crypto applications, wallets, protocols, and tools with caution. Please be aware there is always risk in crypto, including technical risks (ie smart contracts bugs), financial risks (ie liquidity crises), systemic risk due to DeFi composability, and potentially admin key compromise or governance…
DeFi Dad is one of the earliest power users of DeFi, having worked with early Ethereum startups going back to 2018, including Zapper.
