# Onboard sreUSD-long LlamaLend Market

**URL:** <https://gov.resupply.finance/t/onboard-sreusd-long-llamalend-market/75>\
**Category:** General\
**Created:** [September 15, 2025, 10:20pm UTC](https://gov.resupply.finance/t/onboard-sreusd-long-llamalend-market/75 "2025-09-15T22:20:03Z")\
**Posts on this page:** 1\
**Page:** 1

<div class="post-metadata">

**Author:** ![LlamaRisk](https://yyz1.discourse-cdn.com/flex009/user_avatar/gov.resupply.finance/llamarisk/32/11_2.png) [@LlamaRisk](https://gov.resupply.finance/u/LlamaRisk)\
**Post date:** [September 15, 2025, 10:20pm UTC](https://gov.resupply.finance/t/onboard-sreusd-long-llamalend-market/75/1 "2025-09-15T22:20:04Z")

</div>

## Summary

Add the [sreUSD-long LlamaLend market](https://www.curve.finance/lend/ethereum/markets/one-way-market-41/create) with vault address `0xC32B0Cf36e06c790A568667A17DE80cba95A5Aad`, allowing users to mint reUSD and leverage supply to the market.

Set the market with a max 95% LTV, 5% liquidation fee, and 10m reUSD max borrow.

## Abstract

The sreUSD-long market has been configured similar to previously deployed stablecoin markets, allowing for high leverage looping while accounting for direct redemption from the protocol for a redemption fee. The sreUSD-long market utilizes a custom oracle contract deployed by Resupply that prices reUSD/USD from the Curve reUSD/scrvUSD pool with the aggregated price of crvUSD and a minimum price bound at 0.99. It applies the sreUSD vault rate, a fork of sfrxUSD that has been deployed very recently.

## LlamaLend Market Specification:

### Market Parameters

| Parameter | Value |
| --- | --- |
| A | 200 |
| fee | 0.2% |
| liq\_discount | 1.5% |
| loan\_discount | 2.0% |

### Parameter Optimization Methodology

We parameterized the **sreUSD → crvUSD** LLAMMA market before sreUSD launched. Given the absence of live sreUSD data, we constructed a synthetic price series that approximates the stability characteristics of the intended market.

#### Data Selection and Preparation

**Base Dataset Selection:** We use the _REUSD/SCRVUSD_ (`0xc522A6606BBA746d7960404F22a3DB936B6F4F50`) Curve pool as the base series, as it mirroring the structure of the future sreUSD/crvUSD market by capturing:

- REUSD’s stability properties.
- SCRVUSD’s yield-bearing behaviour, while accounting for underlying crvUSD dynamics.

These properties make it a natural fit.

**Proxy Pair Identification:** To extend the dataset beyond reUSD’s launch in April, we identify a _yield-bearing stable → non-yield bearing_ pool (ideally paired crvUSD/scrvUSD) with at least 12 months of price history to capture crvUSD price dynamics. Through the Curve UI we identified the following pools as possible candidates by scanning for pools with \> 1m TVL:

| Pair | Pool Address | Deployment Date |
| --- | --- | --- |
| sUSDe/crvUSD | [`0x57064F49Ad7123C92560882a45518374ad982e85`](https://etherscan.io/address/0x57064F49Ad7123C92560882a45518374ad982e85) | Jun-01-2024 |
| FRAX/sDAI | [`0xcE6431D21E3fb1036CE9973a3312368ED96F5CE7`](https://etherscan.io/address/0xcE6431D21E3fb1036CE9973a3312368ED96F5CE7) | Dec-16-2023 |

Candidate proxies of the underlying are ranked against REUSD/scrvUSD primarily based on volatility profile.

![image](https://canada1.discourse-cdn.com/flex009/uploads/resupply/original/1X/775cbf11bf972fdaa0acca59e0c1f1399ccc49bb.png)

The closest statistical match was the crvUSD/sDAI pair constructed from the from following pairs CRVUSD\_USDC \* FRAX\_SDAI / FRAX\_USDC.

**Synthetic History Construction:** Extract returns from the selected proxy series and rescale to match the volatility profile of REUSD/SCRVUSD. Merge the scaled proxy history with the REUSD/SCRVUSD data to produce a continuous ≥ 12-month series.

**Simulation Preparation:** Ensure price direction is consistent with LLAMMA requirements (collateral per debt unit).Produce both:

- **Raw** short-history dataset (REUSD/SCRVUSD only).
- **Extended** merged dataset (proxy + REUSD/SCRVUSD).  
These datasets will be run through the LLAMMA simulator, with parameter selection favouring configurations that perform safely on both.

The synthetic price path can be used for simulation can be observed below:

 ![image](https://canada1.discourse-cdn.com/flex009/uploads/resupply/original/1X/af74eddb8dffb32185f1e54a2ba5c2b8b520ba83.png)

_ **Note:** The price path start at 0.92 due to scaling of the sDAI series. As we more interested in the volatility profile rather absolute price level it is acceptable for the purpose of the analysis._

### Results

We inform the fee empirically by setting it on par with the competing pair, allowing the swapping of reUSD/crvUSD.

#### Fee

 ![image](https://canada1.discourse-cdn.com/flex009/uploads/resupply/original/1X/46269cf00a53d1f54023ec385c382bedd5fe1ef6.png)

We see two candidates for the fee parameter, which minimize loss at a fee tier of 4bps and 20bps. Naturally, the higher fee tier is more favourable for the borrower. The borrower effectively acts as a liquidity provider in the LLAMMA. Consequently, a higher fee tier translates to more rebates to the borrower paid by arbitrageurs.

#### Amplification Factor

 ![image](https://canada1.discourse-cdn.com/flex009/uploads/resupply/original/1X/05bd0ad2b460f19b7d9a321e1f882a77362b8a8f.png)

We select an A ≈ 200 (specifically A=206 from our grid). It sits on the Pareto frontier, delivering low tail loss (~1.08%) while keeping the liquidity discount (~2.04%) close to its practical minimum; higher A reduces haircut but raises the loss.

#### Liquidation Discount

Given that we estimate 95 ES and using a synthetic dataset, we very conservatively round up the liquidation discount from 1.08% to 1.5%.

#### Loan Discount

The purpose of the Loan discount is to avoid immediate liquidation when a loan is configured. Given that we are working with a stable asset, we add a 0.5% policy buffer as margin. This is in line with previous experiments conducted on sUSDe.

loan\_discount = liquidation\_discount + policy\_buffer

The resulting loan discount is 2%, ~(1.5 + 0.5).

### Monetary Policy

| Parameter | Value |
| --- | --- |
| Alpha (min multiplier) | .2x |
| Beta (max multiplier) | 7.2x |
| Target Utilization | 85% |
| Rate shift | 0 |

The market uses the [EMAMonetaryPolicy contract](https://etherscan.io/address/0xde802eb384e111692493fcc1bb82370812ceb586) for use with sreUSD. This contract calculates the sreUSD APR and uses this value to calculate the rate at a target utilization (85%). It applies a hyperbolic curve with multipliers on the max and min rates, striving for a relatively stable rate below target utilization and aggressive rate increase above the target. This contract is deployed with the same configuration as the sfrxUSD market monpol, including the calculator (this is possible since sreUSD is a fork of sfrxUSD).

### Oracle

Proxy: [Address: 0x8535a120...f41ca2887 | Etherscan](https://etherscan.io/address/0x8535a120f6166959b124e156467d8caf41ca2887)  
Implementation: [Address: 0xc5BA754C...16e52C954 | Etherscan](https://etherscan.io/address/0xc5BA754C3DadA47E32710eBC17361Ed16e52C954)

In line with the deployment of recent LlamaLend markets, the implementation of an oracle proxy allows the Curve DAO to set a new oracle implementation without requiring a market migration. The implementation _SreusdFromOracleVault_ is a custom implementation that uses Resupply’s own [oracle contract](https://etherscan.io/address/0x07Ac1E016D4335FB833666ed5C43846162d2B7e8) to price reUSD in USD using the Curve reUSD/scrvUSD liquidity hub, the aggregated price of crvUSD, and imposes a 0.99 minimum bound on the returned price.

The underlying pools and contracts used in the oracle include:

- [reUSD/scrvUSD](https://www.curve.finance/dex/ethereum/pools/factory-stable-ng-392/deposit): $54.1M TVL
- [sreUSD Vault](https://etherscan.io/token/0x557ab1e003951a73c12d16f0fea8490e39c33c35)
- [Resupply Oracle Contract](https://etherscan.io/address/0x07Ac1E016D4335FB833666ed5C43846162d2B7e8)

The TVL history for each of the pools used in the oracle implementation are shown:

**reUSD/scrvUSD**

 ![image](https://canada1.discourse-cdn.com/flex009/uploads/resupply/original/1X/5195b0a6739d287704efcc7978b522960ea25500.png)  
Source: [CurveMon](https://curvemonitor.com/platform/pools/ethereum/0xc522A6606BBA746d7960404F22a3DB936B6F4F50/overview)

## Risk Considerations

**Reflexivity Risk** : Borrowers minting reUSD on Resupply sell it into crvUSD, and then loop into the sreUSD LlamaLend market, whose underlying is also reUSD. This creates a feedback loop where borrowing increases sell pressure on reUSD while sreUSD simultaneously depends on reUSD’s stability. In a peg stress or liquidity shock, that circular dependence can amplify volatility, unwind pressures, and liquidation cascades more severely than in non-endogenous markets.

**Stacked dependencies** : reUSD solvency depends on the health of external lending venues and the constituent markets (LlamaLend, Fraxlend), the collateral stables (crvUSD, frxUSD), and the yield-boosting platform (Convex). A venue-side shortfall or depeg propagates into reUSD and therefore into sreUSD.

**Insurance capacity** : Liquidations are intended to be a rare circumstance, and are funded by the Insurance Pool. If losses exceed the reserve capacity, the protocol assumes the extra bad debt (effectively socializing losses). Note that liquidations are most likely to be necessary due to contagion from a failed lend market, but may also be necessary if a position’s borrow cost puts it at risk of undercollateralization.

**Soft Peg** : The redemption mechanism enforces a price floor near $1 minus the redemption fee; it doesn’t prevent upward depegs (which is considered acceptable). The redemption mechanism is dynamic and involves several factors such as a base fee, pair usage weight, and reUSD price premium. These factors adjust the cost to redeem depending on how frequently redemption is done through a specific market and based on the price of reUSD. These parameters and dependencies are settable by the contract owner and can change assumptions about the strength of the soft peg.

**Governance** : The Core contract authorizes privileged roles and can execute on protocol and non-protocol assets. The Voter is assigned to the smart contract described above. Although an onchain DAO, governance risk may arise from stakeholder concentration, especially given the relatively low staking period required to participate in governance (14 days).

**Privileged Roles** : There’s also a Guardian multisig managed by the Resupply team that can pause/cancel onchain proposals. Signers consist of reputable Convex and Yearn devs. This mitigates the governance attack vector described above but also represents a multisig trust assumption over DAO operations.

**Bridging / OFT (LayerZero)**: sreUSD has native support for LayerZero’s OFT standard. OFT relies on LayerZero for message delivery and verification. Mis-config (e.g., DVN settings) or endpoint issues can stall or misroute transfers.