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Sharpe FinanceDID YOU KNOWnext in 7s
The largest stablecoin in the world has never been fully audited.
Morpho Blue · Aave V3 · 11 chains · scoring refreshed every 5 min
The largest stablecoin in the world has never been fully audited.
LUSD supply on Aave V3 (Ethereum). Read-only on Sharpe — deposits, withdrawals, and borrows execute on app.aave.com. We surface parameters, rates, and risk so you can compare this reserve against Morpho vaults on the same asset cohort.
Plain-English summary of this vault — what it does, who runs it, where the yield comes from, and what could break it. Generated from the same deterministic inputs shown elsewhere on this page; the numbers are the source, this is just the explanation.
You deposit LUSD (Liquity's stablecoin) and it gets lent to borrowers; you earn 0.55% APY, redeemable at the reserve's $1.29M available liquidity. LUSD is borrow-only here—it cannot be used as collateral to secure a loan—so this reserve is pure yield, not leverage. The supply rate is set by borrow demand (currently 2.08% variable APY) times 33% utilization times 80% (after Aave takes a 20% cut).
Aave governance (Risk Council and BGD Labs) maintains this reserve in active status with no pause or freeze flags, but the depeg signal sits at watch level—indicating elevated scrutiny on LUSD's stability.
Yield flows from borrower demand for LUSD at 2.08% APY. At 33% utilization, borrowing is modest; the rate would climb sharply if more borrowers entered, or fall if utilization dropped further—typical for a smaller reserve.
LUSD carries a composite depeg signal of 57/100 (watch level), the primary material risk. Liquity's design includes redemption mechanics that can pressure the peg under stress; the risk score of 35/100 reflects this and lower liquidity depth versus larger stablecoins.
Good fit for borrowers seeking low-cost LUSD financing who accept stablecoin basis risk; avoid if you require maximum peg certainty or need collateral.
On Aave V3, a supplier can withdraw up to the reserve's available liquidity instantly. Above that, the withdrawal must wait for borrowers to repay or new suppliers to deposit. Markets at 95%+ utilization can keep large redemptions waiting for hours to days at current rates.
Reserve parameters are set by Aave governance (BGD Labs + Aave Chan Initiative + Risk Council). Listings, caps, IRM curves, and LLTVs change through on-chain votes.
This reserve isn't usable as collateral, so LTV / Liquidation LLTV / liquidation bonus don't apply. Borrowers can take it against other collateral; suppliers earn the variable rate driven by borrow demand.
On Aave V3, supply APY = borrow APY × utilization × (1 − reserve factor). There is no curator skim; the only intermediation cost is the reserve factor, which funds the Aave treasury. No emissions slice in v1 of this integration — the headline is fully sustainable.
Aave V3 reserves carry parameter risk (LTV/LLTV adequacy vs collateral volatility), liquidity risk (high utilization slows exit), and depeg risk on the underlying. Governance can pause / freeze / adjust caps in response to incidents. Sharpe's full risk decomposition for Aave reserves rolls in v1.1.
How the composite risk score breaks down. Every number traces to an explicit input — /methodology documents each factor's formula.
Per-collateral decomposition: Sharpe-style realized σ from 30 daily log returns, blended 50/50 with the asset-taxonomy tier fallback. Phase 2 will replace the tier slot with liquidity depth, mechanism classification, and holder concentration. Methodology in /methodology.
The honest version. Every structural failure mode this vault is exposed to, ranked by severity. If you want to know whether to invest, start here.
Sharpe's composite depeg signal reads 48/100 on LUSD (watch band). Aave V3 oracles read Chainlink aggregators — liquidations act on the oracle regardless of spot, so a sharp depeg can either freeze borrowing (if Chainlink updates with delay) or cascade liquidations (if Chainlink tracks fast).
Aave V3 prices and liquidations route through Chainlink's aggregator feed for this asset. A stale, manipulated, or wrong-side update is the protocol's largest single-point-of-failure for this reserve. Chainlink has a strong track record but the failure mode is binary.