Curve Finance Lending Surges as Collateral Yields Drive Demand

The protocol’s outstanding debt eclipsed its 2025 year-end balance of $69 million, while the wider DeFi lending sector struggled, ending September at $32.8 billion compared to $37.5 billion at the close of last year. Curve attributed the expansion primarily to LlamaLend v2, which launched on the Ethereum mainnet in July following an earlier rollout on Optimism. Borrowers are increasingly prioritizing markets that allow them to retain income generated by assets like sreUSD and sfrxUSD while simultaneously using them as collateral.

LlamaLend v2 has removed the requirement for crvUSD to serve as either the collateral or borrowed asset, granting issuers greater flexibility to build markets around alternative assets. Looking ahead, the protocol is evaluating a proposal for a market that accepts reUSD/sfrxUSD liquidity provider tokens as collateral, which would allow holders to access credit without withdrawing from underlying pools. Governance oversight for these operations was recently shifted to yRisk, which secured a one-year mandate in September to monitor liquidity and risk parameters for the protocol's lending business.