The long-awaited stablecoin of Curve Finance, $crvUSD, was launched on the mainnet this wednesday.
Before we move on to technical analysis, I would like to share some information about stablecoins with you.
With this new stablecoin, the lending-liquidating automated market maker algorithm (LLAMMA), PegKeeper, and Monetary Policies are mentioned in the whitepaper.
What is LLAMMA? Simply put, it automatically swaps between collateral and stablecoin based on the price of the asset that backs $crvUSD.
LLAMMA has a price range for the collateral to decide when the swap should happen. An external price oracle is used to determine the price of the collateral.
The contract known as ‘PegKeeper’ mints uncollateralized #crvUSD and can only deposit it into a single-sided stablecoin pool. PegKeeper can also asymmetrically withdraw and burn the minted token.
If price>1, the contract will mint tokens into the pools to lower the price. If price<1, the contract will burn tokens from the pools.
The goals of the CrvUSD mechanism are to allow for a stable peg without holding large amounts of Peg Stability Modules/Vaults, compared to some stablecoins in the market.
Curve Finance has partnered with many stablecoins such as $DAI, $USDT, $FRAX, $USDC. Curve already has a lot of synergy with big stablecoin players, the release of $crvUSD will benefit the stablecoin ecosystem in general.
After the launch of the stablecoin, it showed a 10% increase shortly afterwards. As we can see, it faced resistance and was rejected. The price is currently in a range-bound market. The nearest resistance level is around $0.980. If it surpasses this level and closes above it for 4 hours or daily, it may try to test the $1.040 level. The support level I have identified is around $0.881. If this support level is lost, the next support level I have identified is around the $0.840 level.
The decreasing trust in banks globally may turn the focus towards DeFi products. I believe that DeFi projects should be closely monitored during this period. If the market does not experience a downturn and continues to rise, we may see some movement in DeFi products.
The analyses shared here are not investment advice, but rather support and resistance levels that are believed to provide short-to-medium term trading opportunities in the market. The responsibility for taking trades and managing risk lies with the user. It is strongly recommended to use stop loss in the trades shared.