Activate the stETH/ETH Llamalend v2 Market on ETH main net

Proposals
1

Summary:

Activate the stETH/ETH Llamalend v2 Market on Ethereum Main net.

Abstract:

This proposal aims to activate the Llamalend v2 market on stETH/ WETH pair. stETH /WETH is a heavy market, used by yield arbitrageur who wants to increase the staking yield of stETH by borrowing ETH and looping.

The leverage of this strategy is influenced by the spread staking / borrowing.

Motivation:

stETH is a huge lending market and has looping strategies tend to capture the spread difference between staking and lending.

stETH has26 B$ marketcap

Staking yield is around2.2 to 3%

For similar pools on Morpho, the borrowing rate is around 2% and borrowing of 130 m$ worth of ETH

In case of depeg of stETH versus ETH, huge liquidation cascade are performed.

For people using leverage looping strategies, llamalend soft liquidation could save their position.

Curve DEX has around 130m$ of liquidity stETH/ETH inside Pool 1and Pool 2. There is also other liquidity available on other DEX.

Specification:

-Use similar paramaters than the stETH/WETH lending pool on Optimism

-Max borrow cap 10 000ETH / 20 000 000 $ initially (then raise the borrow cap to 30 000 ETH)

-activate looping with similar leverage than the strategy on Optimism

For:

Expansion of llamalend lending market, Synergy wit Curve Dex liquidity.
A similar pool is already active on Optimism.

Against:

?

Poll:

  • Yes
  • No
0 voters
2

On the Against line: the stETH/ETH price is not the only thing that can move this market. Two protocol-side facts from our Lido reading on foreshock.tech, published 6 September 2026 and unchanged as of today:

  1. The accounting oracle that reports validator balances, and so sets every stETH balance, is a 5-of-9 committee of externally owned keys.
  2. stETH is controlled by a contract we could not identify: no single key can act alone, but its signers and any delay are unverified.

Neither is a reason not to launch. Both argue for holding the borrow cap at 10,000 ETH until the market’s price feed is named in the proposal. Which feed will it use: the Curve stETH/ETH pool oracle, or another?

1 Like
3

This curve pool with 100 m$ (18 490 ETH / 20 280 stETH ) / can be used as price oracle

4

That settles the feed, and for a depeg it is the right shape: a pool EMA follows the market the loan is collateralised against, so soft liquidation tracks a bid that exists.

Two things it does not cover. Both are from our Lido reading on foreshock.tech, published 6 September 2026 and unchanged as of today.

  1. A pool price is not an stETH balance. Balances are set by an accounting oracle that is a 5-of-9 committee of externally owned keys, and that committee is not a price feed. A late or wrong report changes what a unit of stETH is before anyone trades on it, and a pool oracle sees it only once someone does.

  2. The feed is as deep as the pool. On the figures in your post, 18 490 ETH and 20 280 stETH, the initial cap of 10 000 ETH is a little over half the ETH side, and the 30 000 ETH the specification raises to is more than all of it.

So, two closed questions the specification can answer in a line each:

  1. Which contract is the oracle, and over what EMA window?
  2. Is the raise to 30 000 ETH conditioned on a stated liquidity floor in that pool, or on time?
Business Developper for Llamalend
5

same IDEA