February 6, 2024: Sturdy Finance 🧱💸
Why $crvUSD is flying to Sturdy Finance's unique two-tiered lending market
Last fall we highlighted Sturdy Finance v2 as a notable lending market that was building interesting integrations involving $crvUSD. Over the past few weeks the team has officially been rolling v2, and it’s a hit!
About Sturdy Finance
Before its untimely hack in June of 2023, Sturdy Finance v1 proved it was onto something big. Despite having no token, their leveraged yield farming product reached over $30MM TVL.
Using the learnings from this v1 offering, the team went back to the drawing board after the hack and worked to build something more ambitious, “a new primitive for lending.”
They observed many lending protocols were effectively very centralized in their approach to launching lending products. In their words:
“As a user, it should be entirely up to you how much risk you tolerate and what you’re willing to lend against. Today, this is not the case. When a protocol offers vaults with rigidly defined collateral types, they tell you how much risk you can take on.”
https://sturdyfinance.medium.com/introducing-sturdy-v2-4a0135aca675
It would be a valid complaint against many lending protocols, including one leveled against $crvUSD in its rollout (albeit a complaint which could abate somewhat upon the launch of Curve Llama Lend)
In order to build out this vision, they deeply considered the architecture of sevearl lending protocols, and also heavily considered the user experience of DEXes which easily allow permissionless deployments.
In the end, they arrived with a unique two-tier architecture to balance flexibility and safety.
In the base tier are risk isolated pools, akin to the infrastructure popularized by Silo Finance. Users can lend and borrow directly against individual silos, which pair a single lending asset against a single collateral asset. This approach is well tested in DeFi lending markets, but can cause the issue of liquidity getting very fragmented.
Sturdy introduces a second aggregator tier which are Yearn v3 yield optimizers, which automagically reshuffle funds in an autonomous fashion.
v2 Aggregators Launch
Sturdy Finance v2 kicked off a few weeks ago. Aggregators went live on January 25th, and quickly attracted $2MM in TVL.
In subsequent weeks the yields of course dropped as one would expect from yield farms, but not substantially so. The current lend APYs for their four launch markets have fallen off, but remain more than competitive with the broader market.
The biggest market here is the $crvUSD aggregator, which has nearly $3MM deployed to across four whitelisted silos.
If the $crvUSD silo looks to be exquisitely crafted, it’s no surprise that the great Llama Risk team had a hand in architecting the strategy.
For more background on the partnership, read through their extensive forum discussion on the subject.
Of course we have a particular interest in the crvUSD aggregator, but we wouldn’t write off the other three aggregators just yet. The yields these aggregators are currently offering on ETH are enticing. Considering the mania around ETH staking and restaking, Sturdy aggregators have a timely product suite to jump on the narrative.
Check out their case study on Swell Finance integration with Sturdy for further thoughts on the subject:
Borrowing
As of February first, the team announced borrowing was live, with up to 10x leverage.
Here a more recent snapshot of their current silos
$STRDY
Finally, a note on tokenomics. The team’s token $STRDY was deployed almost exactly a year ago. Serving as the governance token, the total supply is 100,000,000 and is currently non-transferable until governance chooses otherwise.
Token holders vote on proposals using Snapshot after first submitting to the forum for discussion.
The $STRDY token can also be used for liquidity mining, as the result of two early governance proposals
Disclaimers, Wonderful Disclaimers…
Remember to ape responsibly, fam. This post is intended as an educational primer, not financial advice. We have no knowledge about the safety or innermost intentions of Sturdy Finance. The team boasts three audits from Zellic, Spearbit, and Chainsecurity as well as an ongoing Immunefi bug bounty competition.
As usually is the case, the author has no investment or interest in Sturdy Finance, but author writes because it’s interesting and relevant to the Curve ecosystem and it keeps him away from street gangs.
Even More Great Disclaimers…