Collateralization under stress
Lombard Finance's assessment for RD-F-068 — scored green on the v1.7.0 rubric. The evidence below is the curator's reasoning for this score.
Evidence summary #
LBTC is 1:1 BTC-backed by construction. Each LBTC token is minted only after the Consortium and Bascule independently verify a BTC deposit with 6 confirmations. Proof of Reserves is verified continuously: RedStone PoR oracle updates every ~20 minutes tracking BTC locked vs LBTC circulating supply; Chainlink PoR also active on Ethereum. Slashing risk is capped at 0.1% per slashing event (Finality Providers use anti-slashing cryptographic policies via CubeSigner). Under stress scenario (BTC -50%): USD collateral value drops proportionally, but BTC backing ratio remains 100%. Cascading liquidations of leveraged LBTC positions in Aave/Morpho are managed by those protocols' own risk parameters, not by Lombard. No fractional reserve exposure identified.
Sources #
- DocsLBTC Design — Lombard Technical DocsLombard architecture docs: 'Minting: Creates new supply after authorization from both the Security Consortium and Bascule'; 'Before any mint, Bascule independently verifies that the BTC deposit exists on the Bitcoin network with 6 confirmations'retrieved 2026-05-05
- Lombard Finance Adopts Chainlink Proof of ReserveChainlink PoR integration: 'Lombard Finance has incorporated Chainlink Proof of Reserve on Ethereum, allowing on-chain real-time verification of the reserves'retrieved 2026-05-05
- RedStone Powers Lombard — Real-Time Bitcoin Reserve VerificationRedStone blog: 'calculates the precise reserve ratio (BTC locked vs. LBTC circulating supply)' updated every ~20 minutesretrieved 2026-05-05
- LBTC Risks — Lombard DocsLombard docs risk page: 'Slashing Risk (LOW): caps maximum exposure at 0.1% per event; uses CubeSigner cryptographic policies to prevent conflicting signatures'retrieved 2026-05-05
Methodology #
Determine whether under curator-defined stress scenario (top-3 collateral assets drop 50%), protocol net collateralization falls below 110%.
See the full factor methodology and distribution across all protocols →