Bitcoin News Today: Curve DAO Splits Over 60M crvUSD Pre-Mint for Yield Basis Launch

Curve is facing intense governance debate over a proposal to pre-mint 60 million crvUSD to launch its new yield-generating AMM, Yield Basis. The initiative, led by Curve founder Michael Egorov, aims to deploy BTC in wBTC, cbBTC, and tBTC pools using leveraged positions, with the allocated crvUSD to be borrowed and paired with BTC within the Curve ecosystem without selling the stablecoin into the open market. This mechanism is intended to overcome demand-side absorption challenges and expand crvUSD’s usage within the protocol’s stablecoin footprint [1].

CrvUSD, currently valued at around $127 million in market capitalization, ranks 25th among stablecoins and is the third-largest decentralized stablecoin after USDS/DAI and GHO. Proponents argue that the pre-mint operates as a borrowing cap, akin to Curve’s existing PegKeepers, which maintain pre-allocated stablecoin balances without increasing circulating supply. Community member Llamaste described the allocation as a way to facilitate liquidity without diluting the token’s value through market sales [1].

Critics, however, have raised concerns about the risks of minting an unbacked supply of crvUSD, labeling it a potential “upgradability risk.” TokenBrice, a developer of DeFi transparency platform DeFiScan, noted that the proposal reflects Curve’s powerful DAO permissions, including the ability to mint crvUSD arbitrarily. This factor contributed to Curve’s “Stage 0” decentralization rating on DeFiScan, which highlights the centralization of governance control [1].

Despite Curve contributor Saint Rat defending the DAO’s structure, they acknowledged that perception matters, emphasizing that minting an excessive supply—such as $1 trillion of crvUSD—would harm the DAO’s credibility. Calls for tighter risk controls have emerged from various community members. Several, including benoxmo, krypthye, and Saint Rat, advocate for the pre-mint to be structured as a capped, on-demand credit line with per-pool limits and a kill-switch under DAO governance [1].

Such measures would help mitigate systemic exposure and align with past lessons, such as the June 2025 Resupply exploit, which led to nearly $10 million in losses due to a vulnerability in a crvUSD-adjacent vault. This incident underscored the importance of robust backstops, especially when protocols hold active balances of the stablecoin. In response, Yield Basis contributor ybllama stated that the system has undergone six audits and is currently running a Sherlock bug bounty contest. They reiterated that crvUSD will only be minted upon BTC deposits, with hard caps enforced at launch [1].

Nevertheless, the proposal does not include a first-loss insurance vault or a risk fee paid to the DAO for underwriting systemic exposure. Some participants in the governance thread are urging these additions, alongside telemetry dashboards and a staged rollout, such as launching with WBTC first. Yield Basis is being introduced as a separate protocol with its own token (YB), which has raised concerns, as the systemic risk is borne by crvUSD. Supporters argue that Curve will benefit from a portion of YB emissions, which will be used to incentivize voting in crvUSD/USDC and crvUSD/USDT pools, thereby enhancing liquidity and fee generation for veCRV holders [1].

The debate reflects a broader tension within the Curve DAO: how to scale crvUSD safely while maintaining governance integrity. With veCRV voting power already fragmented across liquid lockers and low participation rates in high-stakes votes, the outcome may depend on whether the proposal is revised to incorporate stricter constraints and additional safety mechanisms to address systemic risk. As the discussion unfolds, the community appears divided between innovation and caution, with the final decision likely to shape the future trajectory of Curve’s stablecoin strategy [1].

Source: [1] Blockworks (https://blockworks.co/news/curve-debates-60m-pre-mint)