Curve Finance to Raise AMM Fee with Positive Intentions

A new proposal has emerged within the Curve Finance ecosystem regarding the Automated Market Maker (AMM) fee in LLAMMa (crvUSD) liquidity pool. This proposal aims to address challenges related to Ethereum gas fee spikes and enhance user experience.

Details of the Proposal

A member of the Curve team has suggested an increase in the AMM fee from 0.6% to 1.9%. If accepted by the community, borrowers utilizing the protocol will benefit from this adjustment. The primary goal is to mitigate ‘soft liquidation losses’ during periods of high Ethereum gas fees.

Impact on Ethereum Ecosystem

Ethereum, like other public ledgers, relies on a network of validators to approve transactions and ensure security. Gas fees, payable in ETH, fluctuate based on demand levels. Recent data indicates a significant rise in average gas fees on Ethereum, reaching 63.68 GWei as of March 11.

Implications for Curve Finance Borrowers

The proposed fee increase will create a protective buffer for borrowers on LLAMMa. This adjustment is expected to reduce losses for arbitrage traders facing high gas fees for trade execution. The potential impact on user experience and soft liquidations is a key consideration.

Community Voting and Future Steps

The proposal is currently open for community voting and is scheduled to close on March 16. The decision to adopt and implement the fee adjustment remains uncertain at this stage, pending the outcome of the voting process.

Curve Finance in DeFi Landscape

Curve Finance, a prominent player in the decentralized finance (DeFi) sector, manages assets exceeding $2.9 billion. Ranked as the 13th largest DeFi platform, Curve Finance operates primarily on Ethereum, with a notable presence on Arbitrum, a layer-2 scaling solution.