Curve Finance Plans to Increase AMM Fee, But For Good Reasons

Curve DeFi Ethereum
Last updated:
Author
Author
Dalmas Ngetich
About Author

Last updated:
Why Trust Cryptonews
Cryptonews has covered the cryptocurrency industry topics since 2017, aiming to provide informative insights to our readers. Our journalists and analysts have extensive experience in market analysis and blockchain technologies. We strive to maintain high editorial standards, focusing on factual accuracy and balanced reporting across all areas - from cryptocurrencies and blockchain projects to industry events, products, and technological developments. Our ongoing presence in the industry reflects our commitment to delivering relevant information in the evolving world of digital assets. Read more about Cryptonews

There is a new proposal to raise the Automated Market Maker (AMM) fee in LLAMMa (crvUSD), a liquidity pool, on Curve Finance, a leading decentralized exchange (DEX) popular for stablecoin swaps.

Proposal to Raise AMM Fee In LLAMMa to 1.9%

A Curve team member suggests a fee increase from 0.6% to 1.9%. If the community accepts this, borrowers leveraging the protocol will benefit. This increase will mitigate ‘soft liquidation losses’ during Ethereum gas fee spikes, enhancing the overall user experience. Like other public ledgers, Ethereum relies on a community of validators to approve transactions and secure the network. These validators charge a fee, payable in ETH, which varies based on the level of demand. Gas fees tend to rise whenever there’s a surge in prices and on-chain activity.According to YCharts data, the average gas fee on Ethereum was 63.68 GWei as of March 11, an increase from around 22 GWei in early January. With Ethereum prices approaching $4,000 and the total value locked (TVL) in decentralized finance (DeFi) nearly $100 billion, gas fees will likely expand further. 

This Is How Curve Finance Borrowers Will Benefit

This situation will directly affect user experience and potentially lead to more soft liquidations for LLAMMa borrowers.In the proposal, increasing the fee would create a buffer. Subsequently, this will reduce losses posted by arbitrage traders who must pay high gas fees to execute their trades.It is not immediately clear if the proposal will be adopted and later executed. Voting is currently open and will close on March 16.DeFiLlama data on March 11 shows that Curve Finance is one of the largest DeFi giants. It manages over $2.9 billion of assets and is the 13th largest, trailing others like Uniswap and EigenLayer. While most are on Ethereum, a significant portion is managed on Arbitrum, a layer-2 scaling platform.

More Articles

Bitcoin News
GameStop Plans to Invest in Bitcoin, Shares Surge 20% in Extended Trading
Sujha Sundararajan
Sujha Sundararajan
2025-02-14 05:50:46
Altcoin News
SEC Acknowledges Grayscale’s Filings to List XRP, Dogecoin ETFs
Shalini Nagarajan
Shalini Nagarajan
2025-02-14 05:38:36
Crypto News in numbers
editors
Authors List + 66 More
2M+
Active Monthly Users Around the World
250+
Guides and Reviews Articles
8
Years on the Market
70
International Team Authors