CrvUSD Adds a New PegKeeper

Saint Rat -

The Curve DAO has approved and implemented a major governance proposal to integrate Mountain Protocol's USDM stablecoin into the crvUSD PegKeeper system, establishing a 10 million crvUSD debt ceiling. The proposal was executed on the 23rd of October. This marks a new expansion of Curve's crvUSD ecosystem, where PegKeepers play a crucial role in maintaining crvUSD's dollar peg.

About USDM

USDM is a regulated, permissionless, and yield-bearing stablecoin, fully backed by US Treasuries. USDM follows a proven security model used by all the well-known stablecoins, sharing yield with holders, currently at a 5% APY. USDM is issued by Mountain Protocol is a prudentially-regulated financial entity, compliant with the regulations of the Bermuda Monetary Authority.

Launched in September 2023, it currently maintains a total supply of approximately 59.3M with 42.6M on Ethereum, and a further 16.8M on L2s. USDM differentiates itself by ensuring robust overcollateralization with US Treasuries, allowing token holders to benefit from a secure, stable, and compliant digital asset.

Integration Details

The governance proposal implements three key changes:

  • Adds the USDM Pegkeeper to the PegKeeper Regulator, allowing it to function
  • Sets a 10M crvUSD debt ceiling for USDM, so this crvUSD can be swapped to USDM in the event crvUSD depegs upwards
  • Incorporates USDM PegKeeper into crvUSD monetary policies, using USDM as a USD price oracle moving forward.

This positions USDM alongside other major stablecoins in the crvUSD PegKeeper system:

As part of this restructuring, the DAO voted to offboard TUSD from the PegKeeper system, reducing it's debt to 0 due to regulatory and solvency concerns.

Attractive Yields for LPs

The USDM/crvUSD pool currently offers compelling returns for liquidity providers with the recent introduction of a Reward Gauge and the commitment by Mountain Protocol team to promote the pool:

  • Base yield: approx. 1.9% (primarily from USDM's current 5% yield from rebasing)
  • CRV rewards: approx. 5% to 14% (depending on boost)
  • Total liquidity: $1M

This integration strengthens crvUSD's peg stability by enhancing the PegKeeper system, reflecting Curve DAO's agility in adapting to evolving stablecoin risks and opportunities. The addition of USDM brings Treasury-backed yield generation to Curve's stablecoin infrastructure, backed by Mountain Protocol's commitment to promote liquidity growth.