[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.

Accelerate CRS to meet elastic demand efficiently in Euler DAO markets
[Jun 2025] Non-critical Parameter Updates by Risk Stewards
[Jul 2025] Non-critical Parameter Updates by Risk Stewards
[Aug 2025] Non-critical Parameter Updates by Risk Stewards
[Sept 2025] Non-critical Parameter Updates by Risk Stewards
[Oct 2025] Non-critical Parameter Updates by Risk Stewards
[Dec 2025] Non-critical Parameter Updates by Risk Stewards
[May 2025] Non-critical Parameter Updates by Risk Stewards
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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
Enhance Euler Yield's Pendle PT offering with an Ethena Looping Cluster
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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.

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

Transaction 1, Transaction 2

1 Like
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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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1 Like
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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

1 Like
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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.

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

1 Like
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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.

1 Like
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Gauntlet is aligned with the proposed cap increases.

USDC poses minimal risk. PT-sUSDe-29MAY2025 allows for 20M swap to sUSDe on Pendle with < 1% price impact, and sUSDe can be swapped to stablecoin through DEXes for the same amount at < 1% impact, and so is low risk.PT-USD0+±26JUN2025 allows for 8M swap to USD0++ on Pendle with ~1.5% price impact, but swapping USD0++ to stablecoin relies on one USD0++/USD0 Curve pool, and swapping 6M USD0++ presently results in ~5% price impact. PT-USD0+±26JUN2025’s LLTVs as collateral are presently all 0.84 except for USD0, which is 0.9.

We believe the proposed increase presents relatively low risk, but would caution against future increases until liquidity improves.

[Gauntlet] - PT-USD0++-27Nov2025 - Euler Yield Recommendations
[Gauntlet] - Market Risk Parameter Recommendations (2025-04-30)
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Objective Labs: Parameter Updates on Ethereum (2025-04-23)

Market Vault Supply Cap Borrow Cap
Euler Prime rsETH 18k → 24k 4.5k → 6k
Euler Prime tETH 8k → 12k 2k → 3k
Euler Yield PT-cUSDO-19JUN2025 4M → 6M 0
Euler Yield eUSDe 40M 20M → 30M

Rationale

  • Euler Prime rsETH is at 82% supply cap utilization, having grown by 12% in the last 7d.
  • Euler Prime tETH is at 83% supply cap utilization, having grown by 55% in the last 7d.
  • Euler Yield PT-cUSDO-19JUN2025 is at 100% supply cap utilization, filled hours after the vault going live.
  • Euler Yield eUSDe is at 89% borrow cap utilization. Borrows grew by 101% in the last 7d. eUSDe and PT-eUSDe together accounted for 21M of net inflows into Euler Yield. While we appreciate Gauntlet’s caution about USDe liquidity, we believe the opportunity for growth outweighs the tail risk of Ethena peg volatility. The increase is sound because eUSDe’s only collateral exposure is PT-eUSDe.

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

1 Like
Increase PT-cUSDO-19JUN2025 supply cap in Euler Yield
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Gauntlet has reviewed Objective Labs’ proposal, and we are aligned with the updates.

  • rsETH has a supply of over 370K in Aave Core. We support increasing the current caps to remain competitive while noting that on-chain liquidity is notably lacking, as 10K DEX swap to WETH results in over 50% price impact, and instant withdrawal capacity is negligible. The main supplier use case however is to loop against WETH borrows, which is what the top 10 collateral positions are all doing, so this is currently low risk given the use of exchange rate pricing.
  • tETH has over 8% of its mainnet supply presently in Euler Prime. DEX liquidity for swapping 2K tETH to wstETH is currently about a 15% price impact, and there is ~3K instant redemption capacity to wstETH with a 2% fee. We see however that, like rsETH, the top 10 collateral positions are all looping against WETH, and the largest such position is ~1K tETH collateral. With the exchange rate pricing, risk is relatively low, though we would apply caution to future increases.
  • cUSDO’s primary atomic liquidity source, the main Curve pool, has slightly dropped in TVL from ~$39M to ~$35M since last week. Even so, 10M PT/cUSDO and 10M cUSDO/USDC swaps still each incur < 1% price impact. Liquidation risk is minimal owing to component fixed rate pricing, and holding risk is low given OpenEden’s reserves transparency, so this change is relatively low risk.
  • The original borrow cap for eUSDe was suggested given an IRM kink of 50%. Given the subsequent update to an 80% kink, we support this update.

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Increase PT-cUSDO-19JUN2025 supply cap in Euler Yield
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This proposal has been executed on Apr-23-2025 08:15:11 AM UTC.

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This proposal has been executed on Apr-24-2025 09:08:47 AM UTC.

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Objective Labs: Parameter Updates on Ethereum (2025-04-29)

Market Vault Base rate Kink Rate at kink Rate at 100% (max)
Euler Prime wstETH 0% 85% 2.5% → 0.5% 80%
Market Vault Supply Cap Borrow Cap
Euler Yield eUSDe 40M → 50M 30M → 40M
Euler Yield PT-eUSDE-29MAY2025 40M → 50M 0
Euler Yield mEDGE 4.5M → 3M 0
Euler Yield mMEV 6M → 4M 0

Rationale

  • Establish Euler Prime wstETH as an option to borrow against LST/LRTs. This replicates a trend on Aave where a significant portion of borrowers have moved to wstETH.
  • Euler Yield eUSDe is at 79% supply cap utilization and at 72% borrow cap utilization, having grown by 26% and 32% respectively in the last 7d.
  • Euler Yield PT-eUSDe is at 86% supply cap utilization, having grown by 33% in the last 7d.
  • Euler Yield mEDGE and mMEV warrant derisking due to insufficient instant redemption liquidity and concerns about total leverage in their respective portfolios.
[Gauntlet] - Market Risk Parameter Recommendations (2025-04-30)
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Gauntlet has reviewed Objective Labs’ 4/29 proposal for parameter changes.

  • We agree that the wstETH IRM can have the kink rate lowered to 0.5% to better align with current market demand and cause minimal disruption for current users.
  • USDe liquidity has marginally improved since our previous recommendation for eUSDe and PT-eUSDe caps. We recommend a more moderate increase of the supply cap to 45M for eUSDe and PT-eUSDe, and of the borrow cap to 36M for eUSDe, and to revisit as needed if cap usage rises further.
  • After discussion with Objective Labs, we are aligned with lowering of caps for mMEV and mEDGE. The backing portfolios for these assets have increased their exposure to intrinsically leveraged assets and to lending positions that could materially affect the NAV if liquidated. Meanwhile instant redemption capacity has continued to remain a low proportion of TVL, and oracle pricing may not be in lockstep with the true NAV.
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This proposal (with Gauntlet’s amendments) has been executed on Apr-30-2025 07:50:47 PM UTC.