Curve Finance has launched a new isolated lending market specifically for Puffer Finance’s liquid restaking token (LRT) pufETH, allowing users to borrow against pufETH with a relatively high maximum loan-to-value (LTV) of 85%. The parameters were calibrated using data from a recent pufETH depeg event, reflecting Curve’s attempt to balance capital efficiency with the asset’s demonstrated market and peg risk. Puffer Finance is an Ethereum-native liquid restaking protocol built on EigenLayer, where users deposit ETH or ETH derivatives (such as stETH/wstETH) and receive pufETH, a repricing, yield-bearing token whose value increases against ETH over time through combined proof-of-stake and restaking rewards. pufETH can be redeemed either instantly for ETH (subject to vault liquidity and a fee) or via a delayed withdrawal process aligned with EigenLayer and Ethereum exit timelines. Because pufETH depends on external systems (EigenLayer, Ethereum consensus) and on vault liquidity, its peg to ETH has previously shown stress; LlamaRisk documents a maximum depeg of roughly –5.5% in August 2024, and identifies liquidity constraints as a key risk during market turbulence. These characteristics make risk-managed integration into lending markets particularly important. Curve’s choice to list pufETH in an isolated market means any potential issues with pufETH (such as a future depeg or liquidity crunch) are ring‑fenced from Curve’s broader collateral set, limiting contagion risk to other assets on the platform. This move fits into a wider DeFi trend of major money markets evaluating pufETH as collateral: governance discussions at protocols like Aave and Euler have considered adding pufETH with conservative LTVs and caps due to its restaking complexity and peg history. By offering relatively high leverage (up to 85% LTV) but in an isolated design and explicitly referencing depeg data in its parameter setting, Curve is positioning itself as an early venue for leveraged strategies on LRTs while signaling that risk controls around restaked collateral remain central.

AI-generated background, compiled from web sources — not editorial content.

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Llama Risk releases asset risk assessment of Puffer Finance pufETH, finding the protocol features robust security measures rated as "solid overall"

Llama Risk releases asset risk assessment of Puffer Finance pufETH, finding the protocol features robust security measures rated as "solid overall"

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