Lybra Finance Unveils CR Guardian: Protecting Users from Liquidation Risks

Lybra Finance, the leading LSDfi protocol, has unveiled its latest feature upgrade, the CR (Collateral Rate) Guardian. This innovative mechanism aims to provide an additional layer of protection to users and minters of eUSD, mitigating liquidation risks in volatile market conditions. The introduction of CR Guardian highlights Lybra Finance’s commitment to enhancing user experience and safeguarding their funds.

The CR Guardian operates by automatically repaying a portion of a user’s debt when their collateral rate (CR) drops below a predetermined threshold. This auto-repayment function ceases as soon as the CR returns to the predefined level, ensuring users have peace of mind during turbulent market fluctuations.

To illustrate how the CR Guardian works, let’s consider an example provided by Lybra Finance. Imagine David, a user, deposits $20,000 worth of ETH/stETH as collateral and mints $10,000 eUSD against his collateral, resulting in a CR of 200%. In this scenario, David can set his CR Guardian trigger at 180%.

Suppose the price of ETH becomes volatile, causing David’s collateral value to drop to $18,000. As a consequence, David’s CR would also decrease to 180%, triggering the CR Guardian’s auto-repayment process.

The auto-repayment process involves Anna, the Keeper, calling the CR Guardian contract. The contract then withdraws $1,000 eUSD from David’s account to repay the equivalent debt, reducing David’s outstanding debt to $9,000 eUSD and restoring his collateral ratio to 200%.

Lybra Finance acknowledges Anna’s assistance by providing a service fee as a reward for her participation. This fee is paid by David as a premium for the protection of his funds and is facilitated through the CR Guardian contract.

The CR Guardian feature holds particular significance for large holders of eUSD who utilize Lybra as a vault. By acting as a safety net, it effectively reduces the risk of liquidations, providing users with added security and confidence in the platform.

The CR Guardian functionality is initially accessible to users who engage with this feature at a contract level. In the near future, Lybra Finance plans to integrate a front-end user interface into its platform, enhancing accessibility for all eUSD minters and borrowers. It’s important to note that the CR Guardian feature remains inactive for users who do not hold eUSD in their wallets.

However, after conducting extensive calculations, Lybra Finance strongly recommends that users keep at least 10% of their eUSD holdings in their wallets. By doing so, they can allocate the remaining 90% to provide eUSD/USDC liquidity on Curve, enabling them to enjoy yield farming rewards.

Lybra Finance has already integrated the recently deployed CR Guardian contract into its Immunefi Bug Bounty Program, ensuring the highest level of security and reliability for users. Additional audit reports will be released in due course to further reinforce the protocol’s robustness.

The introduction of the CR Guardian by Lybra Finance marks a significant step forward in the DeFi space, highlighting the platform’s dedication to user protection and risk management. As the industry evolves and matures, it is initiatives like these that contribute to the overall stability and credibility of decentralized finance.

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