Curve Finance has launched Llamalend v2 on the Optimism network, marking a significant upgrade to its decentralized lending infrastructure. The new version removes the previous restriction that limited borrowing markets exclusively to crvUSD pairs, now allowing any combination of assets to serve as collateral or the borrowed asset, subject to Curve DAO approval. The deployment is backed by a 250,000 OP token grant (approximately $50,000) from the Optimism Foundation to stimulate early liquidity, with rewards commencing on June 16.
A key innovation is the ability to use Curve LP tokens as collateral, enabling liquidity providers to earn trading fees while borrowing against their positions. The system retains the range-based liquidation model from the original Llamalend, which gradually converts collateral rather than triggering single-price liquidations, reducing market stress. Additionally, Pendle PT tokens are envisioned as future collateral, supporting fixed-yield strategies.
The initial rollout features three isolated markets—ETH/wstETH, wstETH/USDC, and WBTC/USDC—all starting with zero borrowing limits. Borrowing will be enabled only after a DAO vote (approximately seven days). LlamaRisk will curate markets, evaluating collateral and parameters before governance approval, moving away from the open design of v1 that required users to independently assess risks. The Ethereum mainnet deployment is planned for the second half of 2026, following observation of contract behavior on Optimism.
