Davos Protocol Review 2026: Borrowing DUSD Against LSTs and LRTs

Davos Protocol is a DeFi platform in the CDP category. It lets users lock liquid staking tokens (LSTs) and liquid restaking tokens (LRTs) as collateral and borrow DUSD, an omnichain stablecoin the protocol issues.

The protocol was listed on DefiLlama in March 2023 and is deployed on BNB Chain, Ethereum, Polygon, Linea, Optimism, Arbitrum, Mode and Polygon zkEVM. DefiLlama shows two audits, and a governance token named DAVOS appears in third-party project listings.

The protocol is small. Its TVL is about $23,661, which limits liquidity and the buffer behind DUSD. The idea of borrowing against yield-bearing collateral is sound, but the scale and the limited published detail call for caution.

Davos is a collateralised debt position (CDP) protocol. A user deposits an accepted asset, here a liquid staking token (LST) or liquid restaking token (LRT), into a smart contract and can then mint the DUSD stablecoin against it. The amount that can be borrowed is capped by a loan-to-value ratio, which Davos says is tuned to each collateral's risk profile.

Because the collateral is an LST or LRT, it keeps earning staking or restaking rewards while locked. The borrower gets liquidity without selling the position. If the collateral's value falls too far relative to the debt, the position can be liquidated to protect the system. Repaying the DUSD debt releases the collateral.

DUSD is described as omnichain, meaning it is designed to move across the networks where Davos is deployed. Early coverage from 2023 describes the protocol as a way to generate yield from liquid staking, with the aim of stable returns in unsettled markets.

Davos does not publish fees in the material reviewed here. Typical CDP costs include a borrow or stability rate on minted DUSD, possible mint or redemption charges, and a liquidation penalty. Users should confirm the exact figures in the app and documentation before borrowing.

Network gas fees also apply on each chain, and moving DUSD across chains may add bridge costs.

DefiLlama lists two audits for Davos Protocol, but the auditors and findings are not detailed. An audit reduces but does not remove smart-contract risk. Users hold collateral in contracts, so a bug or exploit could affect deposits. Liquidation and stablecoin-peg risk also apply, and the LST/LRT collateral adds risks from the underlying staking and restaking systems.

The protocol's TVL is very small, which means less liquidity to defend the DUSD peg and fewer participants to absorb stress. The team's identity and any regulatory status are not published in the material reviewed. Users should verify the official site and contract addresses before interacting, and only commit funds they can afford to lose.

Davos Protocol is for DeFi users who already hold LSTs or LRTs, understand liquidation mechanics, and want DUSD liquidity while keeping their staked exposure. It is a poor fit for beginners or anyone who needs deep stablecoin liquidity.