Summary
Upgrade the oracle implementation for the sreUSD LlamaLend market to cap the collateral price feed at a maximum of 1.0 * PPS. New oracle implementation deployed here.
Abstract
The proposed upgrade modifies the price feed logic for the sreUSD LlamaLend market, introducing a hard cap of 1.0 * PPS on the price oracle. It uses the same logic as the old implementation, reading the price of reUSD/USD from Resupply’s own oracle contract at 0x07Ac1E016D4335FB833666ed5C43846162d2B7e8. This contract applies a min price at the redemption rate of reUSD, an effective lower value of reUSD relative to its underlying crvUSD.
Before applying the sreUSD vault rate, the new implementation bounds the upper price of reUSD/USD at 1.
Motivation
- Improved Stability: Removes transient collateral appreciation during upward peg deviations.
- Operational Simplicity: Proxy architecture enables immediate upgrade without market migration.
- Pilot for Future Policy: Enables governance to assess capped oracle performance as a template for broader rollout across all stable-backed LlamaLend markets.
This change reduces the sensitivity of both markets to temporary upward volatility in the collateral assets, improving liquidation and borrowing stability during turbulent market conditions. By bounding the oracle-reported price of reUSD/USD at $1.00, the markets are protected from scenarios where a short-term oracle deviation artificially improves the health of loan positions. Price dislocations of over 1 can create opportunities to open undercollateralized loans, which can lead to bad debt for the lending market.
Capping the oracle value at 1.0 prevents these short-term distortions, ensuring that liquidations and borrow limits reflect valuations consistent with the design intent of stablecoin-based markets.
Scope & Rationale
This change affects only the sreUSD market.
This market uniquely uses an oracle proxy pattern, which allows for seamless on-chain upgrades without deploying a new LlamaLend market.
Most other markets currently lack proxy-based oracles and would require redeployment to implement the same logic.
Therefore, this proposal serves as a pilot implementation for capped oracle design, allowing governance to evaluate performance before expanding to other LlamaLend markets in the future.
Impact on Borrowers
No borrower action is required.
This change is non-disruptive and does not affect current loan health, collateral ratios, or borrowing limits.
At the time of proposal, crvUSD and reUSD are trading at or below peg, so the capped price logic does not modify any active market pricing.
The update is preventive in nature, intended to strengthen oracle stability under future stress conditions.
Specification
Oracle Implementation Changes
| Parameter | Current | Proposed |
|---|---|---|
| Stablecoin price cap | None | min(price, 1.0) |
| Assets capped | none | reUSD |
| Markets affected | n/a | sreUSD |
| Oracle proxy pattern | n/a | Proxy upgraded to new implementation |
Proxy Address
| Market | Oracle Proxy | New Implementation |
|---|---|---|
| sreUSD | 0x8535a120f6166959B124E156467d8cAf41ca2887 |
sreUsdFromOracleVaultCapped.vy |
(The same proxy pattern as recent LlamaLend deployments allows the DAO to switch implementations without requiring full market migration.)
Vote Actions
# Example pseudocode for governance vote payload
ORACLE_PROXY = "0x8535a120f6166959B124E156467d8cAf41ca2887"
NEW_IMPL = "0x9f1e719F4287078645BE35211860892642d32976"
ACTIONS = [
(ORACLE_PROXY, "set_price_oracle", NEW_IMPL),
]