What is Curve Lend (Llama Lend)?
Curve Lend (or Llama Lend) is a lending platform from the creators of the decentralised exchange Curve Finance. At the time of writing, the service is fully live on Ethereum mainnet as well as Arbitrum and Fraxtal. New markets are being added on Optimism and Sonic.
Curve Lend lets users borrow the stablecoin crvUSD against any token (and vice versa) using a liquidation-protection mechanism. Platform users can earn by supplying loans.
Who created Curve Lend and when?
Curve Lend was developed by the creators of the decentralised protocol Curve Finance. The project’s ecosystem also includes the Curve DAO (CRV) governance token, the crvUSD stablecoin and its yield-bearing version, scrvUSD.
The Curve Finance team deployed the Llama Lend smart contracts in late February 2024, and in mid-March unveiled the platform’s user interface.
What is the liquidation-protection mechanism?
Liquidation protection is the process of automatically converting collateral into crvUSD as its price falls. When the price rises, the system converts back into the collateral asset.
The mechanism is based on the LLAMMA concept (Lending-Liquidating Automated Market Maker Algorithm), introduced in 2022 by Curve Finance founder Mikhail Egorov in the crvUSD white paper.
The main idea of LLAMMA is to offer a safer way to use cryptocurrency as collateral for loans and margin trading. Unlike existing solutions where collateral may be partially or fully liquidated as the price falls, LLAMMA automatically converts it into the borrowed asset, avoiding such losses. If the collateral price rises, the process reverses and the system restores the initial position.
Example: Bob deposited 1 ETH into a LLAMMA pool at an oracle price of $2,000, evenly distributing the collateral from $1,900 to $1,801 across five steps of the liquidation range. The number of steps varies depending on the loan settings chosen by the borrower.
When the AMM price hits $1,900, the liquidation-protection mechanism kicks in.
If the oracle price falls to $1,800 within the $1,900–$1,801 range, Bob’s 1 ETH is converted into crvUSD.
When the AMM price rises above $1,801, de-liquidation occurs: crvUSD is converted back into ETH. At an oracle price of $1,991 with a $1,900–$1,801 range, all of Bob’s stablecoins are swapped back into collateral tokens.
“Unlike typical lending platforms that instantly liquidate collateral when the price falls, Curve Lend gradually sells it off and buys it back when it rises. This allows one to ride out steep drawdowns from a week to a year or longer depending on risk tolerance,” commented Mikhail Egorov.
How to borrow assets on Curve Lend
Available markets are listed on Curve Lend’s home page. They are isolated, meaning each accepts collateral and issues loans in a single asset. Anyone can launch new markets if a suitable oracle exists.
To borrow an asset, connect your wallet by clicking Connect Wallet and choose a market on the Borrow tab, for example to borrow crvUSD against CRV.
For each market, the interface shows:
- Collateral — the collateral asset;
- Borrow — the token that can be borrowed;
- Borrow APY — the annual percentage yield;
- Available — the amount available to borrow;
- Borrowed — the current sum outstanding;
- Supplied — the total amount supplied by users for lending;
- Utilization (%) — the ratio of borrowed to supplied tokens.
A user can enable Advanced mode to choose between four and 50 steps in the liquidation range. This affects the width of the range, the smoothness of liquidation and the magnitude of losses while inside it. If Advanced mode is off, 10 steps are used. The number of steps is controlled by the N parameter (which may be renamed later for clarity).
When posting collateral you must specify:
- the amount of collateral in the chosen asset;
- the size of the debt to create in crvUSD;
- the number of steps in the liquidation range (N).
Based on the selected parameters, Curve Lend will compute the ranges, place the funds and send the user crvUSD.
How to supply assets for lending on Curve Lend
To provide liquidity on Curve Lend, go to the Supply tab on the platform’s home page.
For each vault, the interface shows:
- Supply — the base token;
- Total APR — the current annual rate. Additional rewards in CRV for providing liquidity may be available;
- TVL — total value locked.
Curve Lend uses ERC-4626 vaults: they earn automatically with no need to claim rewards. Users receive shares for deposits. The value of these shares rises in line with interest-rate dynamics. Shares can be transferred to other users.
To withdraw tokens from a vault, go to the Withdraw tab. Curve Lend will burn the shares and convert them into the underlying asset.