We published research showing an increase in the aggregate deviation across crvUSD pools for the period after the launch of YieldBasis, when compared to the equal period of time before.
Whilst there are many factors that could contribute to peg instability, such as increased market volatility, our previous research has shown structural flows between YieldBasis and crvUSD pools which can impact peg stability if liquidity is insufficient to handle this volume, or if flows are unidirectional for prolonged periods due to one-sided BTC price action.
This phenomenon is also recognised in a previous proposal from Mich, which aimed at scaling crvUSD to enable safely raising the YieldBasis cap. However, our research has shown that whilst incentives did temporarily increase liquidity, this has not proven sticky.
We believe that further analysis is needed before proceeding with the cap raise to better understand the causes of peg instability, the relationship to Curve borrowing rates, and the effect of incentives in scaling liquidity. We will be working with LlamaRisk to conduct this analysis and suggest improvements to ensure caps can be raised safely, without negative impacts on crvUSD or Curve borrow markets.