Summary
This proposal authorizes the relaunched Junior Tranche (jrDOLA) system to provide bad debt coverage for FiRM lending markets. All eligible markets are added simultaneously to the FiRMSlashingModule, subject to the mandatory activation delay for security. The proposal is designed to execute in parallel with the jrDOLA Relaunch Proposal, ensuring the insurance mechanism becomes operational immediately upon both proposals passing. Consistent with the post-incident rollout strategy, coverage is limited to currently active markets and excludes paused, and deprecated markets.
Background
The jrDOLA Relaunch Proposal configures the core parameters and reward budget for the Junior Tranche system. That proposal intentionally excludes FiRM market additions to maintain a clean separation of concerns:
• Relaunch Proposal: sets operational parameters, deploys infrastructure, allocates DBR budget
• This Proposal: connects jrDOLA to the FiRM markets requiring bad debt protection
Coverage Strategy
Rationale for comprehensive coverage across eligible markets:
1. Simplicity: depositors don’t need to evaluate which markets are or aren’t covered. Coverage is uniform across eligible FiRM markets, making the value proposition clear.
2. Fair treatment: all FiRM markets benefit from DOLA liquidity, so all eligible markets should contribute to and benefit from bad debt insurance.
3. Administrative efficiency: avoid the ongoing governance overhead of individual market evaluations. The activation delay and guardian cancellation provide sufficient safeguards.
Each market added through this and any future proposal enters a 7-day timelock before jrDOLA begins covering its bad debt. While at this initiation stage it serves little immediate purpose, in general this delay:
• Gives the guardian multisig time to cancel problematic additions if discovered
• Prevents zero-day exploits where an attacker adds a market and immediately creates bad debt
• Provides a buffer for depositors to exit if they disagree with market additions
If and when a FiRM position in a covered market becomes insolvent:
1. Detection: anyone observes a position where debt > collateral value (via oracles)
2. Eligibility check: market is active in FiRMSlashingModule (activation delay passed); position collateral value < maxCollateralValue; position debt > minDebt
3. Execution: permissionless call to slash(market, borrower)
4. Repayment: jrDOLA vault repays bad debt to the FiRM market
5. Loss socialization: all jrDOLA depositors absorb the loss pro-rata (share value decreases equally)
Markets to be Added
The following currently active FiRM markets, as of June 24th 2026, are proposed for jrDOLA coverage.
| Market | Active Debt (DOLA) |
|---|---|
| sUSDe-DOLA | 34,817,172 |
| yv-sUSDe-DOLA | 5,435,566 |
| sUSDS-DOLA | 4,907,275 |
| wstETH | 621,939 |
| yv-sUSDS-DOLA | 371,962 |
| INV | 216,131 |
| wBTC | 209,338 |
| CVX | 135,086 |
| cvxCRV | 128,796 |
| st-yCRV | 113,367 |
| cbBTC | 92,899 |
| wETH | 16,359 |
| sUSDe | 0 |
| CRV | 0 |
On-Chain Actions
One allowMarket call per covered market on the FiRMSlashingModule (0x316a01f878AA6d5A4C7ea2080D64D364F9538aa2), each subject to the 7-day activation delay. Mirrors the executed coverage proposal’s action format, retargeted to the relaunch slashing module and refreshed market set.