Objective recommends raising Ethena PT caps more aggressively. With Aave set to add >1$B in Ethena exposure this week, and implied yield on the PTs increasing above 15%, the growth potential for Euler Yield is high, while total risk is low due to the correlated nature of the market.
| Market | Vault | Supply Cap |
|---|---|---|
| Euler Yield | PT-USDe-25SEP20205 | 50M → 80M |
| Euler Yield | PT-tUSDe-25SEP20205 | 40M → 60M |
| Euler Yield | PT-pUSDe-16OCT2025 | 20M → 30M |
For assets correlated to Ethena, I propose raising the caps by 2x to be truly competitive. This will remain secure and attractive given the nature of the assets, especially for PT-usde.
I therefore propose a cap of 100M, then 200M when filled.
I have supplied and maintained substantial stable coin position with Euler. Many of the positions were with AAVE previously. The reason being AAVE(ACI) keeps increasing it’s USDe exposure at the expense of other lenders recklessly.
One possible solution for Euler is to limits the borrowable assets for these PT token to usde/eusde only. For this to happen, may need more incentives for usde/eusde deposits.
If Euler keep increasing the caps for these PT tokens and let the loopers to borrow USDC/USDT to cycle, I believe some stable lenders likes me might have to reduce the exposure on Euler as well.
Gauntlet is aligned with the proposal to increase the supply caps of PT-USDe-25SEP2025, PT-tUSDe-25SEP2025, and PT-pUSDe-16OCT2025 on Euler Yield.
We note that the caps for the PTs are nearing the limit of DEX liquidity on Pendle and that there have been sizeable increases over the last week. Gauntlet recommends caution in further increases to monitor user demand before recommending additional cap adjustments.
Gauntlet is aligned with Objective Labs’ recommendation on an increase in Base Rate and Kink Rate in Euler Yield, with a caveat on USDC and USDT Max Rates on Euler Yield.
| Market | Asset | Base Rate | Kink (%) | Rate @ Kink | Rate @ 100% (Max) |
|---|---|---|---|---|---|
| Euler Yield | USDC, USDT | 0% → 5% | 90% | 8.0% → 10% | 15% (No Change) |
| Euler Yield | eUSDe, rUSD | 0% → 5% | 90% | 7.5% → 10% | 40% |
| Euler Yield | USDe,PYUSD, RLUSD, wM, USDtb | 0% → 5% | 90% | 8.0% → 10% | 15% → 20% |
Euler should increase the slope of USDC USDT RLUSD, otherwise it will be difficult to attract more people to deposit. Without sufficient deposits, significantly increasing the supply limit of pt is very risky. you can’t be so aggressive anymore.It is recommended to increase the interest rate of USDT USDC RLUSD100% utilization to 25%
Due to the recent increase in interest rates for WETH and LST tokens, the staking rate on TETH has been lower than its borrowing rate. Gauntlet expects the interest rate trend to persist. We recommend reducing supply caps on TETH on Euler Prime to reduce risk accordingly.
| Market | Vault | Borrow Cap | Supply Cap |
|---|---|---|---|
| Prime | TETH | 2250 → 1600 | 13500 → 9400 |
180M, 100M and 60M please.
| Market | Vault | Supply Cap |
|---|---|---|
| Euler Yield | PT-USDe-25SEP20205 | 80M → 100M |
| Euler Yield | PT-pUSDe-16OCT2025 | 30M → 40M |
| Euler Yield | USDT | 50M → 100M |
Objective Labs recommends increasing the caps as PTs have quickly reached their supply limits and USDT utilization remains consistently high, nearing its cap. This adjustment facilitates continued market growth and encourages PT-stable trading over stable-stable incentive farming.
Presently 26% of Ethena PT collateral borrw USDe/eUSDe, which is considered highly correlated low-risk looping. The rest of positions are against USDC, RLUSD, and USDT. Stress simulations confirm that all open loans can be liquidated with reasonable effectiveness, resulting in no bad debt for Euler Yield under USDe depeg conditions.
dune query: https://dune.com/queries/5650792
Current liquidity depth allows for a $100M swap for PT-USDe at than 0.5% slippage.
Over 50% of PT-pUSDE collateral in Euler Yield borrows USDe/eUSDe, which is resilient against USDe depegs as both pUSDe and USDe are immediately redeemable to USDe without capacity constraints. In the scenario where all additional supply after the cap raise borrows non-Ethena stablecoins, Pendle liquidity can still service liquidations at 2.12% price impact.
Gauntlet is aligned with the Objective Labs recommendations for PT-USDe-25SEP2025, PT-pUSDe-16OCT2025, and USDT on Euler Yield. There has been strong user demand for Pendle PTs, and liquidity can handle the cap increases with minimal slippage.
Objective Labs supports Gauntlet’s proposal to lower tETH supply and borrow caps on Euler Prime, since tETH’s staking rate is currently lower than its borrowing rate, making leveraged activity unattractive and resulting in low demand. This cap reduction is a sensible preventive action to manage risk.
| Market | Vault | Borrow Cap | Supply Cap |
|---|---|---|---|
| Yield | USDT | 47M → 75M | No Change |
USDT borrow demand on Euler Yield is persistently high, with the cap repeatedly nearing full utilization. Onchain USDT liquidity depth is substantial and well-distributed, supporting orderly liquidations. Given these conditions, Gauntlet recommends increasing the Yield USDT borrow cap to 75M to meet user demand.
Objective is aligned with Gauntlet’s recommendation for USDT.
Gauntlet proposes reducing supply and borrow caps for Euler Base markets that have supply and borrow cap utilization below ≤10% over the past 30 days by 50%.
The outlined markets have demonstrated low user demand over the past 30 days, with peak utilization on both the borrowing and lending sides below 10%. To reduce risk exposure, we recommend lowering the supply and borrow caps for these markets by 50%. We note that cap reductions will not affect currently open positions.
| Vault | Borrow Caps | Supply Caps | Borrow Cap Utilization 30 Day High | Supply Cap Utilization 30 Day High |
|---|---|---|---|---|
| AERO | 800,000 | 1,000,000 | 1% | 3% |
| ezETH | 500 | 1,900 | 4% | 5% |
| rETH | 800 | 1,900 | 0% | 2% |
| sUSDS | 9,000,000 | 10,000,000 | 0% | 0% |
| cbBTC | 213 | 250 | 2% | 7% |
| wstETH | 800 | 1,900 | 1% | 6% |
| cbETH | 800 | 900 | 0% | 8% |
| LBTC | 30 | 100 | 0% | 7% |
| USDS | 18,000,000 | 20,000,000 | 0% | 1% |
| Vault | Borrow Cap | Supply Cap |
|---|---|---|
| AERO | 800K → 400K | 1M → 0.5M |
| ezETH | 500 → 300 | 1,900 → 1,000 |
| rETH | 800 → 400 | 1,900 → 1,000 |
| sUSDS | 9M → 4.5M | 10M → 5M |
| cbBTC | 213 → 110 | 250 → 125 |
| wstETH | 800 → 400 | 1,900 → 950 |
| cbETH | 800 → 400 | 900 → 450 |
| LBTC | 30 → 15 | 100 → 50 |
| USDS | 18M → 9M | 20M → 10M |
Gauntlet proposes reducing supply and borrow caps for Euler Unichain markets that have supply and borrow cap utilization below ≤10% over the past 30 days by 50%.
The outlined markets have demonstrated low user demand over the past 30 days, with peak utilization on both the borrowing and lending sides below 10%. To reduce risk exposure, we recommend lowering the supply and borrow caps for these markets by 50%. We note that cap reductions will not affect currently open positions.
| Market | Vault | Borrow Caps | Supply Caps | Borrow Cap Utilization 30 Day High | Supply Cap Utilization 30 Day High |
|---|---|---|---|---|---|
| Unichain | UNI | 400,000 | 500,000 | 0.30% | 0.34% |
| Unichain | wstETH | 563 | 2,250 | 5.87% | 9.97% |
| Vault | Borrow Cap | Supply Cap |
|---|---|---|
| UNI | 400K → 200K | 500K → 250K |
| wstETH | 563 → 290 | 22,50 → 1,130 |
Objective is aligned with Gauntlet’s recommendation to decrease the supply and borrow caps of the listed assets on Euler Base.
Objective is aligned with Gauntlet’s recommendation to decrease the supply and borrow caps of the UNI and wstETH on Euler Unichain.
The USDC/USDT utilization in Euler Yield maintain at high level for past few days. Please consider steepen the curve after kink to protect lender since you keep increase the PT-USDe token cap
| Market | Vault | Supply Cap |
|---|---|---|
| Euler Yield | PT-USDe-25SEP2025 | 100M → 120M |
| Euler Yield | PT-tUSDe-16OCT2025 | 60M → 80M |
| Euler Yield | PT-pUSDe-16OCT2025 | 40M → 50M |
All three PTs have reached ~100% supply cap. Pendle liquidity for the three pairs has increased moderately in the past week and remains adequate given the current market dynamics.
