[April 2025] Non-critical Parameter Updates by Risk Stewards

Euler DAO Governance
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Summary

Euler Labs and Objective Labs recently developed the CapRiskSteward smart contract as a fast lane for non-critical parameter updates. Following its implementation for the Euler DAO markets, we propose that service providers follow a notification process for in-scope changes. By establishing this process we seek to give the Euler community full transparency into the work done by service providers to optimize and grow Euler DAO markets.

Guidelines

The service provider making the CapRiskSteward proposal posts a notification in this forum thread that contains the parameter changeset together with a brief rationale.

Each notification post contains the set of parameter updates for a single network only. This is done for the purposes of disambiguation and easier status tracking as updates have separate lifecycles across chains.

Following the forum notification, there is a 24-hour acknowledgment window to allow all service providers to review incoming proposals and make further recommendations.

Convention

Each notification post contains the date of the proposal. Parameters are formatted in tables for readability.

  • Each parameter change (cap or IRM) is placed on a row that shows the previous and updated state of all related parameters. For example, if only changing the rate at kink of an IRM, the other IRM parameters should still be displayed in the row. This is done so that people reading the notification can view the entirety of the new configuration at a glance.
  • Parameters are formatted as [current value] → [new value] if modified or as [current value] if not.
  • Cap amounts are in decimal units of the underlying.
  • Cap amounts are formatted in suffix notation (k/M/B) with up to 3 significant digits e.g. 1.25k, 10M, 1.05B, following the limitations of the representative type in the smart contracts.
  • Linear Kink IRMs are represented through 4 parameters: base rate, kink, rate at kink, rate at 100% (max).
  • IRM rates are formatted as % borrow APY.

States

Once a proposal is in a final state (enacted or discarded), the proposer updates the community by posting a one-line reply to the original post with timestamp and transaction hash as applicable.

Format

[Proposer]: Parameter Updates on [Chain] ([YYYY-MM-DD])

Market Vault Supply Cap Borrow Cap
Placeholder USDC 50M → 60M 0
Market Vault Base rate Kink Rate at kink Rate at 100% (max)
Placeholder WETH 0% 85% → 90% 2.5% → 2.7% 80%

Rationale

[Brief rationale for these changes]

Author

Objective Labs is a service provider for Euler Labs tasked with product development, risk management, and incentive optimization. Objective Labs is Euler-aligned.

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Objective Labs: Parameter Updates on Ethereum (2025-04-10)

Market Vault Supply Cap Borrow Cap
Euler Prime rsETH 13k → 18k 3.12k → 4.5k
Euler Yield PT-sUSDE-29MAY2025 4M → 6M 0
Euler Yield mEDGE 3M → 4.5M 0
Market Vault Base rate Kink Rate at kink Rate at 100% (max)
Euler Yield eUSDe 0% 50% → 90% 10% → 6.5% 100% → 80%

Rationale

  • Euler Prime rsETH has hit 100% of its cap thanks to increased LST looping interest.
  • PT-sUSDE-29MAY2025 has hit 92% of its supply cap.
  • mEDGE has hit 100% of its supply cap.

Raising the caps for these assets allows Euler DAO markets to grow by accommodating more borrow demand.

The eUSDe IRM is uncompetitive for the PT-eUSDe / eUSDe borrow loop. Given that eUSDe is a 1:1 wrapper of USDe, we propose that eUSDe receive the same IRM in line with the rest of non-borrowable stablecoins in Euler Yield, including USDe. This allows Euler to stay a competitive lending and looping venue for Ethereal users (now at $900M TVL).

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Gauntlet broadly supports the proposal for streamlining non-critical parameter updates through CapRiskSteward and acknowledges the importance of operational speed and market efficiency.

Given Gauntlet’s role in Euler’s risk management, we recommend incorporating a brief acknowledgment window (~24 hours) prior to executing CapRiskSteward transactions. This would provide sufficient time to surface any immediate risk-specific feedback without materially affecting the intended speed of execution.

We are aligned with all recommendations except for a minor adjustment to the eUSDe IRM parameters on Yield:

Set the IRM kink at 80% with a kink borrow APY at 7%, considering:

  • Observed collateralization ratios and profiles, as well as borrower looping behavior for PT-eUSDe/eUSDe since our initial recommendation.
  • The observed downward trend in Pendle implied APY, which informs a more accurate and market-responsive IRM setting.

This adjustment preserves borrower accessibility while aligning with prudent risk management.

1 Like
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Objective Labs: Parameter Updates on Swellchain (2025-04-13)

Market Vault Supply Cap Borrow Cap
Euler Swell WETH 5k → 7k 4.25k → 6.3k
Market Vault Base rate Kink Rate at kink Rate at 100% (max)
Euler Swell WETH 0% 85% → 90% 2.79% → 2.4% 122.55% → 50%

Rationale

Swellchain has seen increased activity in weETH/WETH looping as DEX liquidity for the pair has improved. The IRM changes to WETH are expected to stimulate more WETH borrowing. WETH’s caps are 67% utilized which we believe warrants a proactive cap increase of around 2000 WETH.

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This proposal has been executed on Apr-13-2025 11:02:35 PM.

Transaction 1, Transaction 2

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Objective Labs: Parameter Updates on Ethereum (2025-04-14)

Market Vault Supply Cap Borrow Cap
Euler Prime WETH 50k → 70k 45k → 63k
Euler Prime LBTC 500 → 700 125 → 175
Euler Yield USDC 50M → 70M 45M → 63M
Euler Yield USD0++ 8M → 12M 2.4M → 3.6M

Rationale

  • Euler Prime WETH is at 76% supply cap utilization, having grown by 28% in the last 7 days.
  • Euler Prime LBTC is at 82% supply cap utilization with steady growth over the past month.
  • Euler Yield USDC is at 88% supply cap utilization, having grown by 25% in the last 7d.
  • Euler Yield USD0++ is at 88% supply cap utilization, having grown by 109% in the last 7d.

Raising the caps for these assets allows Euler DAO markets to grow by accommodating more borrow demand.

1 Like
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Gauntlet is aligned with Objective Labs in the proposed changes for WETH on Euler Prime, and both USDC and USD0++ on Euler Yield, as we believe added risk given market conditions and liquidity profiles is minimal.

We are aligned with an increase in the LBTC caps on Euler Prime to support user utility, however we suggest a smaller initial increase to 600 for supply cap and 150 for borrow cap. As we can see, presently, most usage of LBTC as collateral in Euler Prime is either highly overcollateralized or against a highly correlated asset, so liquidation risk is low. However, DEX liquidity for the asset is limited, as swapping 200 LBTC to stablecoin presently results in ~40% price impact. Therefore, we believe it prudent to hold off on a larger increase of the caps and revisit them at a future date as warranted.

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This proposal (with Gauntlet’s amendments for LBTC) has been executed on Apr-15-2025 09:56:11 PM UTC.

Transaction 1, Transaction 2

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Objective Labs: Parameter Updates on Ethereum (2025-04-18)

Market Vault Supply Cap Borrow Cap
Euler Yield PT-sUSDE-29MAY2025 6M → 9M 0

Rationale

  • Euler Yield PT-sUSDE-29MAY2025 is at 100% supply cap utilization. The previous cap increase was filled in a matter of hours.

Raising the caps for these assets allows Euler DAO markets to grow by accommodating more borrow demand.

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This proposal has been executed on Apr-18-2025 11:34:59 AM UTC.

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Objective Labs: Parameter Updates on Ethereum (2025-04-22)

Market Vault Supply Cap Borrow Cap
Euler Yield USDC 70M → 100M 63M → 90M
Euler Yield PT-USD0++-26JUN2025 4M → 6M 0
Euler Yield PT-sUSDE-29MAY2025 9M → 13.5M 0

Rationale

  • Euler Yield USDC is at 86% supply cap utilization, having grown by 25% in the last 7d.
  • Euler Yield PT-USD0++-26JUN2025 is at 100% supply cap utilization, having grown by 96% in the last 7d.
  • Euler Yield PT-sUSDE-29MAY2025 is at 100% supply cap utilization, having grown by 49% in the last 7d.

Raising the caps for these assets allows Euler DAO markets to grow by accommodating more borrow demand.