Curve Finance deployed LLAMMA (Lending-Liquidating AMM Algorithm), launched in 2023 as part of its crvUSD stablecoin system. This soft liquidation mechanism distributes collateral across multiple price bands and gradually converts it into crvUSD instead of wiping out positions when price drops below a threshold. Typical losses remain under 0.1% per day, and the process automatically reverses if prices recover. LlamaLend V2, deployed in 2026, expanded accepted collateral types to include LP tokens and yield-bearing assets, driving notable borrowing growth in August 2026. This approach appeals to institutional players due to gradual margin mechanics, helping prevent systemic contagion spirals on-chain.
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