Local and Global Price Stability Modules

To ensure the stability of each stablecoin instance, we introduce a Local Price Stability Module (LPSM) for every L2. The LPSM is a simple USDC wrapper on Ethereum mainnet. When users mint their L2 stablecoin called “rUSDC.L2name” (white labeled with L2 brand), they supply USDC. This USDC liquidity can be used to redeem the stablecoin of the same L2 back to USDC.

Key aspects of the LPSM:

• 1:1 redemptions from rUSDCL2name to USDC

• If one LPSM “gets rekt,” it does not impact the other LPSMs.

The success of one LPSM does not directly benefit other L2s.

To address this, we introduce the Global Price Stability Module (GPSM), which operates as a Relend Network Morpho Vault. This GPSM serves a crucial role in lending USDC liquidity when a LPSM runs out of liquidity. The GPSM ensures that revenues from all L2s are shared with liquidity suppliers, strengthening the overall ecosystem.

Key aspects of the GPSM:

• Suppliers to the Morpho Vault benefit from lending revenues across all L2 deployments.

• If one L2 fails, the risk curator can choose not to lend liquidity to that L2.

• Even if the GPSM takes a temporary hit, it does not impact the long-term stability of the stablecoins, as they remain backed by collateral.

• Short-term volatility may occur, but the design ensures systemic resilience.

Relend Network’s GPSM & LPSM Architecture

Features

1. Security and Risk Isolation: A failure in one L2 does not compromise the entire ecosystem.

2. Composability and Growth: Strong L2 instances help enhance the stability of others.

3. Efficient Liquidity: Users can mint and redeem stablecoins seamlessly, with a reliable 1:1 peg to USDC.

4. Scalable Credit: Native stablecoin minting allows users to access credit at scale without the need to bridge from other chains.

5. Decentralization and Trust Minimization: Relend Network reduces systemic risk while maintaining decentralization across Ethereum’s multi-layered ecosystem.