LlamaLend

Llamalend is the lending engine that powers CurveUSD, the decentralized stablecoin by Curve Finance.

Unlike traditional lending systems that rely on hard liquidation thresholds, Llamalend introduces a unique approach called LLAMMA (Lending-Liquidating AMM Algorithm), which enables soft liquidations and smoother price stability.

LLAMMA is a new kind of automated market maker that acts like a lending + liquidation system rolled into one. Instead of waiting for your collateral to hit a risky price and then liquidating it suddenly (like Aave or Maker would), LLAMMA:

• Gradually sells your collateral into CurveUSD as its price drops

• Gradually buys it back as the price recovers

This creates a more stable experience for borrowers and avoids the painful liquidation spikes.

How LlamaLend works:

• You deposit collateral (like wstETH, sfrxETH, or ETH)

• You borrow CurveUSD against it

• Behind the scenes, your collateral is placed in a LLAMMA band, which defines a price range

• If the price drops into that band, your collateral starts being converted into CurveUSD

• If the price rises again, it’s converted back to the original token

This means your position is constantly being rebalanced based on market movement without harsh liquidations or big penalties.

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