crvUSD PegKeeper flow

Overview

The PegKeeper is the stabilizer mechanism used by crvUSD to maintain its peg to the dollar. The Peg Keepers are a collection of contracts with associated crvUSD paired stableswap pools that monitor crvUSD’s price relative to the other stablecoins in the pools. These contracts are able to mint and burn crvUSD to help stabilize crvUSD’s price to maintain its peg.

The PegKeeper flow indicator monitors the daily and cumulative flow of crvUSD minted and burned in each of the stableswap contracts. Positive or negative trends in netflows of crvUSD in these contracts are tied to trends in the borrow rates for minting crvUSD. Large fluctuations in netflows can result in volatile borrow rates in crvUSD markets. If one of the stablecoins paired with crvUSD for a PegKeeper stableswap pool struggles to maintain its own peg to the dollar, minting and burning of crvUSD in this pool will be highly volatile and will affect crvUSD’s peg as well as borrow rates in the markets.

How can I use it?

The above chart shows the daily flows of the PegKeeper for all stableswap contracts. The period between June and August 2023 saw large fluctuations in crvUSD minted and burned to each pool. These large swings in netflows of crvUSD correlate to large swings in the borrow rates for crvUSD. As these fluctuations are often connected to crvUSD depegging slightly from the dollar, it can be beneficial for borrowers to buy back crvUSD off the market in volatile times and partially or fully repay their loans to reduce their exposure to the changing borrow rates.

The same chart can be used to monitor crvUSD in a higher timeframe by switching to the cumulative view. Here we see that the cumulative netflows should always return to zero if the peg is restored. If netflows are not returning to zero for an extended period of time, this could indicate that crvUSD is having a larger systematic issues that could result in a larger depeg.