Key facts
- Curve Finance has launched Llamalend v2 on the Optimism Layer 2 network.
- Llamalend v2 offers a more flexible lending system, allowing various collateral and borrowing asset combinations.
- Users can now use Curve LP tokens as collateral.
- The launch was supported by a 250,000 OP token grant from the Optimism Foundation for liquidity incentives.
- LlamaRisk will act as the market curator for the new lending protocol.
- The Ethereum mainnet deployment is anticipated in the latter half of the year.
Curve Finance has initiated the first phase of its lending infrastructure upgrade with the launch of Llamalend v2 on the Optimism Layer 2 network. This new version aims to provide a more flexible, risk-aware, and capital-efficient lending system by removing the previous restriction to crvUSD pairs. Markets can now be created with a wider range of collateral and borrowing assets.
Curve founder Michael Egerov stated that Llamalend v2 is designed for ease of use, catering to users with large positions and complex strategies. A key innovation allows users to deposit Curve LP tokens as collateral, enabling liquidity providers to maintain their trading exposure while borrowing against these positions. This feature is expected to foster new capital-efficient strategies and strengthen Curve's role as a stablecoin trading hub.
LlamaRisk will function as the market curator, providing qualitative evaluations for new collateral types, such as Pendle's principal tokens (PTs), and managing market lifecycles. This curated approach contrasts with Llamalend v1, where anyone could create isolated markets, which, while preventing systemic risk, introduced user friction. Egerov emphasized that the curated markets offer better risk evaluation, making it safer and more convenient for users.
The launch on Optimism is supported by a 250,000 OP token grant from the Optimism Foundation, intended to incentivize early liquidity and activity over approximately two months. Deploying on a Layer 2 network first is part of Curve's security strategy, allowing for observation in a contained environment before the Ethereum mainnet release. Markets on Optimism will initially have zero borrow caps, subject to a seven-day DAO voting period, with a rewards campaign planned to commence on June 16 after the votes pass. The Ethereum mainnet deployment is anticipated a month or two after the Optimism launch.