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.
