April 1, 2024: A Bridge to Sell πποΈ
Llama Lend goes crosschain in Arbitrum deployment. Plus Prisma updates...
Help us by sharing this thread on π
Llama Lend
Curve Llama Lend officially released on Arbitrum since our last update, along with a corresponding UI showing off initial markets for CRV, WETH, WBTC and ARB:
The screenshot, spoofing Michβs wallet, shows that much of the early borrow activity in the initial four markets is in fact organic.
Curve also bootstrapped the process on the supply side with healthy $ARB incentives to suppliers, before regular $CRV emissions presumably kick in though the slower process of governance.
Many DeFi users have been effectively priced out of mainnet due to high gas prices, but nonetheless eager to experience the soft liquidation mechanism of LLAMMA. On mainnet, the predecessor crvUSD can often cost hundreds of dollars to manage a position, rendering even the more affordable Llama Lend a challenge for retail.
In the wake of Dencun, managing a loan on Arbitrum is cost-effective for the median DeFi user. Little surprise to see Curveβs TVL soar so quickly to Curveβs first major cross-chain deployment. The protocol sat at $7.5MM as of publication (relative to $15MM on mainnet).
Will more sidechains flow soon? We can certainly imagine itβs on the agenda. That said, also note that although the Llama Lend ecosystem is permissionless to deploy and utilize, governance still plays a part in fine-tuning the market parameters.
Dozens of sidechain deployments mean hundreds of governance votes. We wouldnβt be surprised if a few more weeks of βtesting in prodβ on both Ethereum and Arbitrum were in order, to observe performance and consider tweaks before rolling out more broadly.
Already, Curve has posted some thoughts on interest rates in Llama Lend:
Llama Lend borrow rates are a simpler formula from the original crvUSD markets. Whereas the predecessor adjusted interest rates to promote the stablecoin peg, Llama Lend markets have no minting permission and thus have no such incentive. Instead, the target is market utilization.
The post contained an implicit βApril Foolsβ joke, in that it was simple enough that most readers could readily understand the mathβ¦
For the tBTC market example, a spread of interest rates by utilization
The goal of the exercise is described in a few posts:
For some comparison, Aave has an interest rate structure that spikes heavily at 90% utilization. Their lending markets would be presumably optimized if they sat at the market equilibrium rate just around the bend in this curve.
Curveβs Llama Lend is of course quite different from Aave. Aave earns with a direct fee, whereas Curve profits indirectly from stimulating more existence of $crvUSD.
One imagines these parameters will be revisited often as the protocol evolves and new markets get added. Worthwhile to read up and learn more while the market is in this early phase!
Prisma Updates
Over the weekend, much more drama unfolded around Prisma.
While much of the back and forth may play as comedy, we know that despite the fact that today is April 1st, the aftereffects are certainly no laughing matter to the many ordinary DeFi users caught in the middle.
Our sympathies to anybody caught in the crossfire, we join the wider community in praying for a successful resolution!
Since our updates before the weekend, Prisma published an extremely detailed accounting of the root cause, which was primarily a lack of input validation in the onFlashloan
function.
The text was extremely detailed about the root causes. As a technical document, itβs remarkable, particularly being released with such swift turnaround time.
However, the document was unsatisfactory to several parties. Outside the scope of the document was the thorny question of whether or not the contracts were sufficiently audited. Some onchain communication on such sticking points made for the sort of popcorn-grabbing spectacle too common in crypto.
Prisma responded with edits to the post-mortem, as a βshow of good faith.β
As of publication, the most recent message posted in the thread:
Prisma is also pondering changes to the protocol for the βrecovery phase.β After initially considering reducing all fee distributions to zero, the team took to the governance forum to suggest a reduction to 50% fee distribution.
Given the poor state of crypto news, it can be tough to get decent reporting on these recesses in DeFi. Leviathan News has been filling this void. We recommend to subscribe to their primary Telegram channel for updates.
Our prior coverage on the initial hack:
Plus watch our Llama Party on Friday with Noah and Wavey, the latter of whom was the primary author on the post-mortem which happened to be released live mid-stream: