$CRV DeFi Cheetah

Due to regulatory requirements, BlackRock's tokenized money market fund BUIDL holders can initially only transfer tokens to other pre-approved investors; this means they are completely isolated from the DeFi space. Thus Elixir emerged, allowing BUIDL holders to mint deUSD through sBUIDL (i.e., staked BUIDL). Most importantly, just like USDe, Elixir chose Curve as the main liquidity hub for deUSD. The anticipated $551 million from BUIDL is expected to be the first batch of institutional funds flowing into DeFi, followed by potentially billions of tokenized U.S. Treasury bonds.

Most of the incoming funds will likely purchase and stake crvUSD to earn approximately 15% returns, derived from the interest income of crvUSD. This initiates another flywheel effect. These interest revenues come from leveraged demand in a bull market, where users cycle through BTC, ETH, or other types of collateral using crvUSD via DeFi Saver. As BUIDL holders and other tokenized U.S. Treasury bonds mint deUSD or other stablecoins on Curve, they are likely to be used to purchase crvUSD and stake it to enjoy this approximate 15% yield, with no lock-up period!

You might ask: if more people participate in sharing this yield, won't the returns drop significantly? Here's where something magical happens: as more people buy and stake crvUSD, the price of crvUSD breaks above $1, and price fluctuations will lead Pegkeeper to mint more crvUSD. As PegKeeper's debt increases, interest rates will drop. In a bull market, the demand for borrowing is immense, which causes crvUSD to fall below $1 again. At this point, this will drive the yield of crvUSD up, leading more people to purchase crvUSD to earn yield, thereby pushing interest rates down and encouraging more borrowing. In fact, the current bottleneck for crvUSD is not the demand for borrowing, but the purchasing pressure or use cases that can absorb the selling pressure caused by cycling/leverage operations. If crvUSD is always below $1, the interest rates will be too high, preventing others from joining.