Stablecoin protocol Reserve invests $20M in Convex, Curve and Stake DAO

Stablecoin protocol Reserve is investing $20 million into the governance tokens of yield farming apps Curve (CRV), Convex (CVX) and Stake DAO (SDT), according to a June 20 announcement. The investment is intended to increase the liquidity of Reserve’s stablecoins, called RTokens. It will also increase Reserve's voting power within these apps’ governance systems.

Reserve is a stablecoin protocol that allows users to create their own coins backed by any asset they wish. Electronic USD (eUSD), High-Yield USD (hyUSD), Reserve (RSV), Reserve Dollar (RSD) and ETH+ are a few examples of stablecoins that have been created through Reserve.

Reserve Protocol's "Register" app used to create stablecoins. Source: Register

Before the announcement, Reserve was already the seventh-largest holder of Convex tokens, behind only Mochi, Redacted, JPGd, Badger, Clever and FRAX. The protocol gained these tokens through its extensive use of Convex to earn yield for its users.

Related: Yield farming app accumulates $12M TVL 2 weeks after launch

The Reserve team stated that this new $20 million investment may allow for new features for RTokens, including “collateralized loans, wallet products, tokenizing real world assets, and more transparent fintech systems.”

The protocol’s highest market cap coin, eUSD, is backed by dollar derivatives from Compound and Aave. It has a market cap of over $20 million. The team claims that eUSD has done over $5.7 billion in cumulative volume due to its use in the Android and iOS payment app RPay, which is often used in Latin America for remittances, shopping and payroll.

The protocol’s second-highest market cap coin, High-Yield USD, is backed by a basket of dollar derivatives through Convex and Flex Finance.

The $20 million investment may be welcome news to holders of CRV tokens, as CRV reached a one-year low on June 15. The new low was partially attributed to controversy surrounding Aave loans allegedly taken out by Curve's founder.