LlamaRisk Services Proposal April 2025-2026

Proposals
2

2024 Retrospective Details

You can read about our work over the past year in the collapsed text below:

1.1 Simulation Tooling Development for Protocol Optimization

Development of tooling and quantitative methodologies is one of our most exciting advancements over the past year. As Curve Research has disbanded this year, we have found there to be a need for quantitative R&D, and LlamaRisk has become a natural fit to continue their work.

We have pursued a specialization in quantitative tools that assist us in monitoring risk and optimizing protocol operation. This expertise has become essential as Curve has begun rolling out additional products like crvUSD and LlamaLend. Our proprietary agent-based simulation engine allows us to model the crvUSD protocol and all relevant agents (borrowers, lenders, arbitrageurs, PegKeepers, etc.) to optimize market parameters. Optimization involves minimizing borrower losses in soft liquidation and minimizing accrual of bad debt, while selecting for the most competitive parameter set.

We have published methodologies for our simulation and associated research, including:

We have begun applying our research toward tangible protocol enhancements:

1.2 Risk Portal and Market Health Scoring

We are expanding on our vision to improve transparency standards in DeFi risk evaluation with the introduction of the LlamaRisk Risk Portal. These are custom dashboards that combine real-time analytics, interactive risk models, and quantitative protocol risk evaluation. Several dashboards released this year are relevant to Curve’s users, including the Ethereum Staking Penalty Simulator (ESPS) and the Ethena Reserve Fund dashboard. The ESPS highlights the slashing and inactivity leak tail risks associated with LSTs and LRTs, which have significant presence in Curve AMM and LlamaLend. The Ethena portal involves a methodology to assess the health of its Reserve Fund, a protocol which likewise has significant presence on Curve AMM and LlamaLend.

Most relevant to Curve, of course, is the Curve Risk Portal, which currently includes crvUSD/LlamaLend market health scores and CurveSim AMM optimizations for select pools. The Market Health Scores use real-time market and global asset data to assess several categories of risk relevant to the specific market and dynamically outputs a market health score. This project allows Curve to showcase its commitment to informing users about risk with the goal to instill confidence in LlamaLend that drives adoption and reduces the cost of attracting liquidity. This may be particularly useful for integrating protocols like Resupply to evaluate markets suitable for onboarding. This product consists of a score that can be integrated to the Curve UI and a dedicated Risk Portal that gives granular insight into the scoring methodology and market health analytics.

1.3 Risk Curation/Strategy Management

Looking for ways we could support the growth of crvUSD, we began working with Sturdy Finance and Morpho Finance to design and manage vault strategies (vaults linked). We collaborated with Swiss Stake and C2tP (Convex) to develop solutions for suitable markets and incentivize those markets. Our strategies exclusively use Curve LPs as collateral (wrapped as Yearn vaults on Sturdy and Convex LPs on Morpho) with crvUSD as the borrowable asset. We contributed to smart contracts development for markets and financed code audits. We created public dashboards to monitor vault markets activity. We published multiple explainers on important topics regarding the markets, such as the oracle design or interest rate model, prioritizing transparency and educating users on risks. To date, there have not been any incidents involving our curated vaults that resulted in loss of user funds.

1.4 Curve Beneficiary Grants

Our experience with legal evaluations and ecosystem growth initiatives has positioned us as an essential service provider for intermediating ecosystem grants with Curve as the recipient. As a decentralized entity, there are challenges in meeting legal requirements stipulated in the terms of these grants, and there are challenges in accountability or leadership in pursuing such opportunities. LlamaRisk successfully brokered a grant from the Optimism Foundation for 504,828 OP (~$1.1m at the time of distribution), which was distributed as LP rewards to key Curve Tricrypto and crvUSD pools on Optimism.

We have also collaborated with Swiss Stake on several other successful grant applications on behalf of Curve DAO. A grant for 150k OP was approved to bootstrap LlamaLend on Optimism (this grant is prepped to begin distribution imminently). Another grant from Arbitrum successfully petitioned 237.5k ARB to match a donation by michwill to bootstrap the ARB/crvUSD, WETH/crvUSD, WBTC/crvUSD, and CRV/crvUSD lending markets on Arbitrum. We continue to pursue such opportunities as these on behalf of Curve.

1.5 Public Outreach

Our work is most effective and most positively impacts Curve when developers, DAO stakeholders, and end users are aware of our work and consider us a valuable resource. Outreach has been a priority for us as we strive to communicate our research and analysis to all relevant parties.

  • We have migrated our research to our new website www.llamarisk.com where we also host our new Risk Portal service. We also have a public Telegram channel where we offer consultation with developers and protocol users, especially support related to our managed vaults.
  • We have developed a partnership with Leviathan News to showcase our research on live stream. We schedule these shows on a biweekly basis and take the opportunity to offer our fair and objective analysis, consistent with the reputation we have developed for several years.
  • We have attended conferences such as Stable Summit and ETHcc in Brussels where we participated in panel discussions and networked with Curve ecosystem-aligned developers. Our goal here is to strengthen bonds that can be difficult to manage in a DAO structure, and to reflect positive impressions that expand the network of developers building on Curve.

1.6 PegKeepers Curation

We view PegKeepers as a critical dependency for crvUSD and have placed special importance on ensuring a safe and diverse PegKeeper set. The risk of stablecoin depeg has been mitigated with the introduction of PegKeepers V2, but we continue placing high priority on the stability and reliability of the PegKeeper stablecoins.

At times we recommend against inclusion of stablecoins that offer weak user assurances (e.g. TUSD [1], [2]), and based on our research conclusions we have involved ourselves in governance to reduce or remove exposure to such assets. Likewise, we aim to ensure a diverse PegKeeper set and have successfully brokered arrangements with stablecoin issuers (e.g. Mountain USDM) to make crvUSD pools possible in support of PegKeeper onboarding.

We continue to conduct risk reviews and participate in business development efforts to attract liquidity to suitable PegKeeper stablecoins that we believe contribute to the overall PegKeeper diversity and ultimately the stability of crvUSD. A selection of comprehensive risk evaluation for the purpose of PegKeeper onboarding include:

1.7 Protocol Teams Consultation

A critical aspect of our work that may be easy to overlook is the consultations we continuously manage with protocol teams that have Curve markets integrations. In accordance with our risk evaluations, we set clear expectations for security practices and work with teams in making improvements. Our work includes advocating for bug bounty programs, improved access controls, and increased transparency for end users.

A good example of such activity is our work behind the scenes on WBTC to ensure sensible and compliant steps in its custody restructuring partnership with BiT Global. This presented LlamaRisk an opportunity to showcase its expertise in evaluating regulatory risk and to diplomatically navigate a sensitive situation to protect the interests of Curve and its users.

1.8 Budget Breakdown: 2024

In prior years, LlamaRisk received its annual budget from the Curve Grants Council. We were approved a $568,200 annual budget for the 2024 calendar year, officially concluding at the end of December '24. Although we denominate our budget in USD, we have received payment in CRV and we do not swap tokens for stablecoins wherever possible. We received 1.5M CRV to conduct our operations. Core team members receive their entire compensation in CRV and we only swap for stables when paying incidental expenses where CRV receipt is not possible.

The majority of expenditure has been allocated toward dedicated team members. We began 2024 with a 4-member team and concluded the year with a 6-member team on payroll (1 full time manager, 1 part time manager, 2 research analysts, 2 dev-focused quantitative analysts).

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In general, we tried to stay well below our stated budget, mainly because of our exposure to CRV price volatility and the poor market conditions through much of 2024. This allowed us to end 2024 with remaining funds that we have been using to continue our service for Curve into 2025.

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1.9 Retrospective Conclusion

Thanks in large part to our support from Curve DAO, we have grown to be one of the most respected names in DeFi risk services. In this past year, LlamaRisk has expanded to nearly 20 contributors and diversified its pool of talent across quantitative risk analysts, full stack developers, business leads, and legal/regulatory experts. This has been achieved entirely on funding from our protocol partners, as we remain a non-profit without any VC funding or any outside investment.

Curve has given us the opportunity to realize this potential as our first and most important partner. The past year has been our most productive to date and Curve stands to benefit from this investment as it goes into the new year with the most dedicated and aligned risk team that our industry has to offer. This year we have laid the groundwork for a full-fledged suite of services across risk, research, and growth and we are dedicated to securing Curve’s role as the lifeblood of DeFi.

2025 Budget Details

You can read the breakdown of our proposed budget requirements in the collapsed text below:

3.1 Payroll Breakdown

The renewal allows us to fully dedicate an expanded team of quantitative and qualitative risk analysts who will devote full time availability toward simulations tooling, risk monitoring, quantitative analysis, and asset risk reports. Their focus will be on all core Curve products, including Curve StableSwap, CryptoSwap, LlamaLend, and crvUSD mint markets. We also continue to allocate payroll toward team management and legal counsel, roles that encompass Booster Foundation responsibility in addition to other operational duties.

Payment to core team members and to LlamaRisk analysts will be made monthly in CRV for the equivalent value in USD at time of payment. All other expenses will be paid in the same manner whenever possible. In cases where a third party is unable to accept CRV, we may swap the billable amount to stablecoin before transfer.

A brief description of roles and responsibilities within our team is given below.

  • Management (2 members):
    • Team management consists of a full time and part time manager who are responsible for strategy decisions, managing tasks of team members and analysts, reviewing and publishing reports, serving as representative of LlamaRisk when addressing Curve DAO, Curve team, and partner protocol team, and any other managerial or administrative duties.
  • Risk Analyst Team (4 members):
    • The Quantitative Lead is responsible for identifying and pursuing improved analytical approaches including to spearhead development of simulation modeling for parameter recommendation, establishing quantitative frameworks for risk review, overseeing analyst research, and ensuring data accuracy.
    • The Risk Portal Lead is in charge of the Risk Portal team development efforts by establishing methodologies for risk models, risk scores, analytics, and monitoring. Much of this work serves to communicate our simulations and other quantitative research in a public facing way. They also support risk research report topics with relevant analytics and historical models. Their work plays an essential role in developing automated risk curation systems that allow LlamaRisk to actively optimize Curve products.
    • The Research Lead develops methodologies for assessing risk and optimizing protocol operations. They apply their work directly toward simulations and quantitative risk assessment, in addition to academic-style report publication. They also conduct asset risk assessment and other qualitative risk evaluations.
    • The Quant/Qual Risk Analyst serves as an all-around researcher competent in simulations tooling development, quantitative analysis, and general risk assessment. They produce publications about research methodologies and lead research for publications concerning asset risk and qualitative risk scoring.
  • Legal Counsel
    • The Legal Counsel provides guidance on regulatory matters relevant to Curve, including to address onboarding considerations for regulated RWA assets. The Legal Counsel is responsible for leading grants initiatives on behalf of Curve, especially in establishing and overseeing a Curve Booster Foundation entity.
  • Dev Team:
    • We have a development team that manages our tech stack composed of one backend, one frontend dev, and one fullstack dev. These team members are responsible for handling development, pushing updates, and monitoring performance and data accuracy for the Risk Portal. There will be features continuously added to the Risk Portal and continuous maintenance is required to ensure product quality.

3.2 Operating Expenses

Operating expenses include expenses related to our work on behalf of Curve, including audits and deployment of vault strategy contracts, server costs, website maintenance, risk reports, and conference expenses.

A brief explanation of the operating expense line items:

  • Infra Expense: This includes costs associated with website development and maintenance, cloud server subscriptions, and other infra expenses. This also includes gas costs from contract/vote deployments, and audit expenses.
  • Events/Conferences: These funds pay for expenses related to attending and speaking at conferences. We plan to attend 2 conferences over the course of the year.
  • Risk Reports: At times we contract risk analysts to conduct risk reports when our core team has reached capacity. Risk reports will be conducted as needed, for example upon request by Curve team to review a stablecoin for PegKeepers or on behalf of Curve-related products.

Operational Commitments

3.3.1 Unused Funds

As was the case in previous years, this $725k budget represents our maximum allowable expenditure. Any unused budget from 2025 will either be returned to the Curve DAO or rolled into a future renewal, pending approval of the DAO.

3.3.2 Quarterly Reports

LlamaRisk will share a report of our activities and spending to the governance forum at the end of each quarter during our engagement. Reports will be posted in July 2025, October 2025, January 2026, and April 2026.