Crypto Glossary

Curve AMO

Curve is a software that uses multiple cryptocurrencies to operate an automated market maker (AMM) service focused on stablecoins (cryptocurrencies programmed to mimic other assets).

What Is the Curve AMO?

Curve is a software that uses multiple cryptocurrencies to operate an automated market maker (AMM) service focused on stablecoins (cryptocurrencies programmed to mimic other assets). It is an AMM platform that provides a highly efficient way to exchange tokens while maintaining low fees and low slippage by only accommodating liquidity pools made up of similarly behaving assets. While the approach does lead to lower prices for the liquidity providers who supply the pools with tokens, Curve has an incentive model which increases participation by integrating with external decentralized finance (DeFi) protocols and delivering rewards in the form of Curve DAO (CRV) tokens and interest.

For example, in the case of FRAX, a fractional algorithmic stablecoin, the Curve AMO utilizes the stablecoin and USDC collateral to provide liquidity for the protocol and tighten the peg. This allows the Curve AMO controller to set and collect admin fees for the FRAX stablecoin holders and various future functions. The protocol can also move idle USDC collateral or new FRAX to its Curve pool to create even more liquidity and tighten the peg while earning trading revenue.

Author: Sam Kazemian is the Founder of Frax, the world’s first fractional algorithmic stablecoin that is partially backed by collateral and stabilized algorithmically. Frax is open-source and permissionless, bringing a truly trustless, scalable, and stable asset to the future of decentralized finance. Kazemian brings a wealth of experience as a leading blockchain entrepreneur and crypto enthusiast, as the co-founder of the blockchain-based knowledge base, Everipedia.

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