Research Summary
The report discusses the crvUSD MetaMorpho vault managed by Llama Risk, which comprises Convex-wrapped TriCrypto LP/crvUSD lending market pairs. It explains the AdaptiveCurve interest rate model (IRM) used in these markets and how it benefits borrowers. The report also provides an overview of the vault’s current conditions, including supply and utilization of each vault market.
Key Takeaways
Introduction of crvUSD MetaMorpho Vault
- Launch of crvUSD MetaMorpho Vault: Llama Risk has introduced the crvUSD MetaMorpho vault, which consists of Convex-wrapped TriCrypto LP/crvUSD lending market pairs. This allows Curve and Convex users to leverage their TriCrypto LPs and benefit from Curve ecosystem yield opportunities.
AdaptiveCurve Interest Rate Model
- AdaptiveCurve IRM: The crvUSD vault uses an AdaptiveCurve IRM, designed to incentivize a market equilibrium at a target 90% utilization. The IRM is fully automated and responds programmatically to market behaviors without requiring manual intervention.
Current Vault Conditions
- Vault Supply and Utilization: The report provides an overview of the supply and utilization of each vault market. The crvUSD/tBTC/wstETH TriCrypto market is the only one with open borrow interest, utilizing 76.57% of the total Vault Supply.
Interest Rate Adjustments
- Interest Rate Changes: The AdaptiveCurve IRM adjusts the overall IRM curve over time in response to changes in market behavior. If the utilization exceeds 90%, the mechanism shifts the entire curve upward, and if it is below 90%, it shifts the curve downward.
Co-Incentive Program
- Co-Incentive Program: There is a temporary co-incentive program between Morpho and Curve to reward crvUSD lenders in the vault. However, the vault’s viability depends on a sustainable equilibrium for both borrowers and lenders.
Actionable Insights
- Understanding the AdaptiveCurve IRM: Users and potential investors should familiarize themselves with the AdaptiveCurve IRM used in the crvUSD vault. This understanding will help them make informed decisions about their investments.
- Monitoring Vault Conditions: Regular monitoring of the supply and utilization of each vault market can provide insights into market trends and potential investment opportunities.
- Exploring Co-Incentive Programs: Users should explore the co-incentive program between Morpho and Curve, as it offers rewards for crvUSD lenders in the vault.
