# Xerberus Proposal for Scope 2: Llamalend / Isolated Markets Risk (plus a systemic-risk layer for the whole Curve perimeter) **URL:** \ **Category:** Grants\ **Created:** [July 19, 2026, 8:56pm UTC](http://gov.curve.finance/t/xerberus-proposal-for-scope-2-llamalend-isolated-markets-risk-plus-a-systemic-risk-layer-for-the-whole-curve-perimeter/11122 "2026-07-19T20:56:16Z")\ **Posts on this page:** 1\ **Showing post:** 4
**Author:** ![strky](http://gov.curve.finance/letter_avatar_proxy/v4/letter/s/c6cbf5/32.png) [@strky](http://gov.curve.finance/u/strky)\ **Post date:** [July 22, 2026, 2:24pm UTC](http://gov.curve.finance/t/xerberus-proposal-for-scope-2-llamalend-isolated-markets-risk-plus-a-systemic-risk-layer-for-the-whole-curve-perimeter/11122/4 "2026-07-22T14:24:02Z")
Thanks for the clear answer, Simon — and it’s the right one. A standing, per-market line item that keeps the measured hole visible even where it has no owner is exactly the structural fix; carrying it in the findings register rather than an appendix is what stops these losses from quietly aging out. That’s a real contribution independent of who wins the mandate. One refinement, and it comes straight out of your own tape. The pool’s growth is being read in places as evidence the hole is closing; your reconstruction shows the opposite. Depth went ~$198 (Apr 27) → ~$63k (May 6) → ~$613k this morning — and the post-gauge leg alone ($63k → $613k after the 0.45% weight went live) is a ~10× deepening. Across that whole arc the clearing price never left the high-60s: 36 sellers out at an average of 67.9¢, buy-side matched, trades landing 4–6¢ under the 71% static mark throughout. If depth pulled price toward par, a 10× deeper book would have moved it. It didn’t, and structurally can’t: the pool is zero-sum and bounded by backing — anyone adding crvUSD so a holder can exit ends up holding the same ~71¢ claim, and an AMM can’t sit above true backing without being arbitraged. So the two things are genuinely separate. R1 — route a capped fee stream in as a DAO LP — resolves illiquidity, and that’s worth doing. But it leaves the ~$826k solvency gap you measured (26 of 73 positions, ~71% backing) 1:1 intact. Funding exits doesn’t shrink the hole; it changes who stands in front of it. Two things a measurement layer is well placed to hard-code: First — carry the two numbers separately in the register, per market, never netted: (a) liquidity / exit-capacity, and (b) the unremediated solvency gap in dollars. Once the DAO’s own surface separates them, “pool funded to $X” can’t be reported as “hole closed” — which is the exact slippage that lets a ~32% haircut get reclassified as resolved. Second — a scoping question on R1 that’s really a design question. If a capped fee stream is going to be routed anyway, is it best spent only funding discounted exits at ~68¢, or should a share also retire the measured gap for the original impaired positions directly — a snapshot facility keyed to the pre-freeze position, not to current holdings? [sDOLA-long2](https://gov.curve.finance/t/sdola-long2-repayment-funds-source-proposal/11069) is the on-record template for the capped-emission mechanics; the difference is only where the DAO’s capital lands — closing the measured hole for the positions that took the loss, versus subsidizing whoever shows up to buy the discount. R1 reads better as the on-ramp than the destination. And if the answer is “whether the DAO closes that gap at all is a values decision, not a monitoring one” — that’s still a useful result. It puts on the record that the solvency gap is a distinct, still-open, unowned liability rather than something the pool quietly dissolves. Better to name it now than to rediscover it in month two. Either way — genuinely strong work, and the per-position reconstruction is exactly what this has been missing. --- _[View the full topic](http://gov.curve.finance/t/xerberus-proposal-for-scope-2-llamalend-isolated-markets-risk-plus-a-systemic-risk-layer-for-the-whole-curve-perimeter/11122)._