🟣 Deploying more crvUSD—steady lads

Although the stablecoin narrative has calmed down, the crvUSD supply is increasing.

GM readers! No better way to start your Friday than our newsletter.   The total supply of Curve's stablecoin, crvUSD, passed the 50M mark on Thursday. Although TUSD is in deep water as the token is allegedly undercollateralized, and the overall stablecoin narrative from a few months ago has calmed down, the demand for crvUSD hasn't faded away. In the past week, the amount of crvUSD minted has increased by ~15M tokens, to a circulating supply of ~53M.   The stablecoin maintains its peg through dynamic borrowing rates and Pegkeepers. The latter works by minting and burning crvUSD in its AMM pools. When crvUSD trades above its peg, more tokens are minted and recorded as Pegkeeper debt. The inverse applies when crvUSD is below its peg. The dynamic borrowing rate is calculated based on how far the crvUSD price is from its peg and the amount of Pegkeeper debt in the system.   A decrease in the crvUSD price or Pegkeeper debt outstanding would result in an increase in the borrowing rate, and vice versa. This is because if the debt is close to zero, the protocol can't put a lot of upwards pressure on the crvUSD price by removing supply if needed. When the crvUSD price starts decreasing, a higher borrowing rate forces stablecoin holders to redeem tokens. In other words, borrowing rates increase to encourage debt reduction and decrease to encourage borrowing.   Even though the supply has increased by ~15M tokens, there is still ~512M crvUSD that could be borrowed. Since the stablecoin is minted and borrowed exclusively through Curve, a larger amount of circulating crvUSD would directly increase protocol revenue. The demand for leverage will surely go up as market conditions improve, and it'll be interesting to see how well Curve can take advantage of this. If you want to learn more about the project, we recently released an in-depth report on Curve's stablecoin and lending market.   That's enough rambling from me—enjoy your weekend!   – Brick The world's biggest DeFi event, brought to you by Blockworks and Bankless is taking over Austin, TX September 11-13.   Join us at Permissionless II for 3 days filled with:   🧠  Panels, firesides and keynotes from web3 thought leaders 🔓  Unfettered access to the biggest names in our industry 🤝  Top-tier networking 🎉  Unforgettable parties & activations 🍺  Good ol' Texan beer & bbq   Register today!   With rollups being continuously improved, and Arbitrum having managed to capture market share through an arguably successful airdrop strategy, Ethereum's share of the total DEX activity has decreased. At the beginning of the year, the L1 had a ~75% share of DEX volume, compared to the current share of ~60%.   Interestingly, although Optimism has started closing the gap on Arbitrum on the number of blockchain transactions, DEX volume has not yet followed. Presently, ~18% of the volume occurs on Arbitrum while only ~2% is on Optimism. This is likely due to Arbitrum having a more robust DeFi ecosystem and implies that Optimism could grow meaningfully by attracting more DeFi users to the chain.   Time will tell whether or not Arbitrum can maintain its DEX volume share. In the long run, most of Ethereum's DeFi activity can be expected to move to rollups. Although cheaper to transact on than Ethereum, rollups don't offer comparable security and usability presently. Security is especially important for high-net-worth individuals and entities. These users make up a meaningful share of onchain activity and will likely avoid moving large amounts of funds to L2s before rollup security reaches par with Ethereum.   Polygon 2.0: Protocol Vision and Architecture Censorship Resistance in On-Chain Auctions – Elijah Fox, Mallesh M. Pai, Max Resnick  The paper quantifies censorship resistance and how it could be improved on Ethereum. Monolithic vs. modular blockchain – Mustafa Bedawala The post discusses the blockchain trilemma and explores the differences between monolithic and modular blockchain designs as well as their respective advantages and challenges. Ribbon: The Rebirth of Onchain Options? Ribbon is pivoting its core offering from structured option products to the newly launched onchain derivatives exchange, Aevo. Read More → Osmosis: Q2 Update Osmosis has grown beyond its DEX roots to become a DeFi Hub and has introduced a revamped tokenomics model. Read More → Coinbase offering 4% yield on USDC held by customers, rivaling major banks Coinbase Advanced will also have access to the 4% rewards for USDC held on the platform or in open orders Read More → So your layer-2 is 'secured by Ethereum' — what does that mean? The leading rollup solutions are all in their early stages, despite the top 4 alone attracting over $9 billion in value Read More → The insights, views and outlooks presented in the report are not to be taken as financial advice. Blockworks Research analysts are not registered broker/dealers or financial advisors. Blockworks Research analysts may hold assets mentioned in this report, further outlined in the Firm's Financial Disclosures. 133 W 19th St, New York, NY, 10011 Manage your email subscription preferences here.