The decentralized cryptocurrency trading protocol Curve has recently launched a new decentralized stablecoin, Savings crvUSD (scrvUSD), and initiated a proposal to change its revenue model. The proposal aims to allow 10% of the fee income generated from crvUSD borrowing to flow into the scrvUSD Yearn vault, enabling scrvUSD holders to earn continuous returns.
The proposal entered the voting process on November 3rd, and by the deadline, it had received about 92% support from the votes. Voting will conclude on November 9th.
According to information on GitHub, scrvUSD represents users’ crvUSD deposits, allowing depositors to earn revenue from the fees generated by the crvUSD controller. Curve’s governance page states that the controller serves as an on-chain interface for creating loans and managing existing positions.
Curve founder Michael Egorov stated that the proposal aims to drive the growth of the crvUSD stablecoin, which currently has a market capitalization of $60 million. Last week, he explained on the social media platform X how the proposal would lower the borrowing rate for crvUSD, making borrowing costs cheaper and helping to increase the supply of crvUSD.
In theory, if the proposal is passed and the scale of crvUSD indeed expands, in the long term, the protocol will generate more income for governance members, but not in the short term. Curve community member crv.mktcap.eth stated that this proposal will be unfavorable for veCRV holders in the short term (veCRV represents the locked tokens of Curve’s governance token CRV).
Crv.mktcap.eth explained that the protocol currently distributes all interest rate fees from crvUSD to veCRV holders. If the new proposal is accepted by Curve’s governance body, 10% of the borrowing fees will flow into the scrvUSD vault, meaning that veCRV holders “must give up some income to pay this savings rate.” However, crv.mktcap.eth believes that the ultimate goal of increasing stablecoin supply will, in the long term, allow veCRV holders to accumulate more absolute income.
According to data from CoinMarketCap, the price of CRV has fallen by 9.7% over the past month, with a trading price of $0.2315 at the time of writing.