Curve And Resupply Proposal Seeks To Mint 5M crvUSD To Boost reUSD Growth

In Brief

Curve Finance’s DAO is considering a proposal from Resupply to mint 5 million crvUSD into the sreUSD Llamalend market to enhance liquidity, stabilize reUSD, and generate predictable yield for the DAO.

Decentralized exchange (DEX) and automated market maker (AMM) protocol Curve Finance has disclosed that a lending protocol developed on top of Llamalend, known as Resupply, has submitted a new proposal to mint and allocate 5 million crvUSD directly into the sreUSD Llamalend market. The proposal is currently under consideration through a DAO governance vote.

Resupply functions as a decentralized stablecoin system designed to enhance capital efficiency by utilizing the liquidity and stability of Curve’s lending infrastructure. Built atop Llamalend, it enables participants to borrow reUSD using crvUSD supplied within Curve’s lending markets, effectively transforming idle assets into active liquidity. The protocol features two primary stablecoins: reUSD, which serves as the main stable asset, and sreUSD, a yield-generating version that accrues returns based on protocol revenue and the stability of reUSD’s peg.

According to the submitted proposal, the Curve DAO is voting on whether to authorize the minting and distribution of 5 million crvUSD through a specialized factory contract that can mint directly into Curve lending markets, beginning with the sreUSD market.

If approved, the DAO would create and supply the 5 million crvUSD to the sreUSD lending market on Llamalend, establishing a new minting framework based on lending pairs rather than conventional collateralized pairs. These lending markets operate under independent monetary policies that are not directly linked to the crvUSD price, making them strategically valuable for specific targeted applications.

5M crvUSD Allocation To Strengthen Resupply’s Stability And Enhance Liquidity

The proposal is designed to enhance the overall stability and efficiency of the Resupply framework by optimizing the relationship among reUSD, sreUSD, and crvUSD. Due to the high level of leveraged activity within the system, reUSD has often traded slightly below its $1 peg, creating a persistent discount that discourages further leverage since users effectively sell reUSD below par and incur immediate losses.

In order to address this imbalance, Resupply recently launched sreUSD, a yield-bearing variant of reUSD. This token receives a fixed portion of the platform’s revenue, and the system automatically directs additional protocol earnings to sreUSD whenever reUSD falls below $1. Although this mechanism has provided partial relief, it has not been sufficient to fully stabilize the peg on its own.

The new proposal suggests minting and supplying 5 million crvUSD to the sreUSD market on Llamalend to introduce several positive reinforcing effects. The additional crvUSD liquidity would expand borrowing capacity and improve overall market depth, reducing borrowing costs and making it more attractive for participants to borrow against sreUSD. This is expected to stimulate demand for sreUSD and increase overall lending activity. Furthermore, with greater liquidity available, users could transition from reUSD to sreUSD and use it as collateral to borrow crvUSD directly, rather than selling reUSD on the open market. This shift would help alleviate downward pressure on reUSD and promote a more balanced market structure. The enhanced liquidity also enables users to reengage in leverage loops — borrowing crvUSD against sreUSD without selling reUSD first — thereby restoring one of Resupply’s fundamental growth mechanisms and supporting more sustainable expansion.

Collectively, these outcomes aim to improve market efficiency, strengthen the interplay between reUSD and sreUSD, and better align the economic incentives of both the Resupply protocol and Curve Finance.

All assets deposited in Llamalend, including the proposed 5 million crvUSD allocation, generate yield. The associated smart contracts are designed to allow anyone to claim accumulated profits permissionlessly, ensuring both transparency and decentralization. Revenue generated from these activities is directed entirely to the Curve DAO, with Resupply not receiving any portion of the proceeds. This arrangement provides Curve with a consistent and diversified source of income. Unlike traditional crvUSD borrowing models that rely on market fluctuations and PegKeeper adjustments, lending rates on Llamalend are determined by utilization levels, creating a steadier and more predictable income stream. Based on the average supply rate in the sreUSD market, which is approximately 8.1%, the DAO could anticipate an estimated annual return of around $405,000 from the 5 million crvUSD contribution. Beyond the revenue potential, this structure introduces a more resilient and less volatile earnings channel for Curve’s overall ecosystem.