Summary
This proposal recommends formally sunsetting four FiRM markets by setting their market ceilings to zero and pausing new borrows. The markets targeted for deprecation include: scrvUSD-sDOLA, yv-scrvUSD-sDOLA, scrvUSD-DOLA, and yv-scrvUSD-DOLA. These actions are part of ongoing operational cleanup initiatives to streamline FiRM’s collateral roster, reduce unnecessary risk exposure, and improve protocol efficiency.
Motivation
As FiRM matures, periodic reviews of its supported collateral markets are essential to maintaining a healthy, efficient lending protocol. The recent passing of Curve DAO governance proposal #1206, which authorized a credit line of up to 60M crvUSD to bootstrap the Yield Basis protocol, represents a fundamental restructuring that warrants immediate risk reassessment.
Sunsetting these markets serves multiple objectives. It removes operational overhead from the RWG, reduces the monitoring burden for tracking new protocol dependencies, and minimizes governance surface area around parameters that no longer align with our risk tolerance. From a security perspective, deprecating these markets narrows the protocol’s exposure to tail risks during Yield Basis’s initial operational phase and allows the RWG to focus resources on higher-impact opportunities.
Background & Rationale
The crvUSD LP markets require reassessment following Curve DAO’s approval of a 60M crvUSD pre-mint (~55% of current supply) to bootstrap Yield Basis, a newly deployed leveraged yield farming protocol. Since the initial 60M crvUSD authorization, a new Curve governance proposal has been published seeking to increase crvUSD caps for Yield Basis pools to 300M crvUSD—a figure representing over 2x current total crvUSD supply. This signals the intention for continued aggressive expansion of crvUSD backing into Yield Basis. This structural change introduces new dependencies where crvUSD stability relies on Yield Basis performance, which itself depends on Curve pool mechanics and BTC price action. The magnitude of this change triggers our FiRM Collateral Screening Framework requirement for a hard minimum of 6 months operational history before accepting modified collateral structures.
The new backing mechanism moves crvUSD away from its established infrastructure. While Yield Basis has undergone comprehensive security review, the protocol has zero operational history, and the resource allocation required to monitor this experimental phase does not justify the remaining market opportunity. This decision reflects adherence to our collateral screening framework rather than any assessment of Yield Basis’s security or audit quality.
The RWG is entering a formal 6-month observation period to assess Yield Basis operational performance through our weekly Risk Observer Checklist. Reassessment criteria for potential future reintroduction include successful operational history with no critical incidents, demonstrated stability under market stress, and material reduction in monitoring overhead requirements aligned with our collateral screening standards.
On-Chain Actions
For each market listed:
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scrvUSD-sDOLA: pauseBorrows = true, setMarketCeiling = 0 DOLA
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yv-scrvUSD-sDOLA: pauseBorrows = true, setMarketCeiling = 0 DOLA
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scrvUSD-DOLA: pauseBorrows = true, setMarketCeiling = 0 DOLA
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yv-scrvUSD-DOLA: pauseBorrows = true, setMarketCeiling = 0 DOLA