Author: Euler Labs
Date: 2025-08-25
Summary
Euler is launching a dedicated market, Euler DeFi, to support lending activity for leading DeFi governance and utility tokens. In this design, DeFi tokens are supply‑only assets: users can deposit them as collateral, but they cannot be borrowed. Borrowing is instead limited to the most liquid base assets in the ecosystem, ensuring risk containment while creating opportunities for stablecoin and ETH‑denominated leverage. This approach allows users to unlock liquidity from their DeFi tokens without introducing excessive directional risk to less liquid governance tokens.
Specification
New Assets
-
Supply‑only Assets (non‑borrowable): UNI, AAVE, ENA, SKY, CRV, LDO, PENDLE, W, WLFI
-
Borrowable Assets: USDC, USDT, WETH
Risk Management
Euler DeFi will be governed by the Euler DAO with risk management provided in partnership with Gauntlet and Objective Labs. Both groups are invited to make initial recommendations on supply caps, collateral factors, and liquidation thresholds suited to DeFi tokens, with stricter parameters to reflect their governance‑driven liquidity profiles.
Copyright
Copyright and related rights waived via CC0.
[Objective] Creation of Euler DeFi Market
Summary
Objective Labs recommends launching a new Euler DeFi Markets segment where major DeFi tokens (UNI, AAVE, ENA, SKY, CRV, LDO, PENDLE) are onboarded.
These assets will be collateral-only, with borrowing restricted to USDC, USDT, and WETH.
No cross DeFi-to-DeFi lending will be enabled to limit correlation risks.
Fundamentals
The proposed tokens represent the most liquid and widely adopted governance or utility assets in DeFi (Uniswap, Aave, Ethena, Sky, Curve, Lido, Pendle).
Most of these tokens have market capitalizations above $1B, reflecting strong adoption, deep secondary markets, and resilient trading infrastructure.
By restricting borrowing to USDC, USDT, and WETH, risk from highly correlated DeFi-to-DeFi loans is avoided, while still enabling leverage and liquidity access.
Liquidity
These tokens have established liquid markets, with billions in combined market cap and deep liquidity pools on both DEXs and CEXs.
- UNI, AAVE, CRV, LDO: multibillion market caps, long history of trading depth.
- ENA, SKY, PENDLE: newer but fast-growing tokens with hundreds of millions in liquidity and rising integration across DeFi.
Risk Parameters
Cap
| Asset |
Supply Cap |
Borrow Cap |
| USDC |
20M |
18M |
| USDT |
10M |
9M |
| WETH |
1,000 |
900 |
| UNI |
500k |
– |
| AAVE |
15k |
– |
| ENA |
7.5M |
– |
| SKY |
30M |
– |
| CRV |
2.5M |
– |
| LDO |
1.5M |
– |
| PENDLE |
350k |
– |
IRM
| Market |
Asset |
Base Rate |
Kink (%) |
Rate @ Kink |
Rate @ 100% (Max) |
| Euler DeFi |
USDC |
0% |
90% |
6.5% |
80% |
| Euler DeFi |
USDT |
0% |
90% |
6.5% |
80% |
| Euler DeFi |
WETH |
0% |
90% |
2.7% |
80% |
LTVs
| Collateral |
Debt |
LLTV |
| Defi Tokens |
USDC |
65% |
| Defi Tokens |
USDT |
65% |
| Defi Tokens |
WETH |
60% |
| USDC |
USDT |
95% |
| USDC |
WETH |
86% |
| USDT |
USDC |
95% |
| USDT |
WETH |
86% |
| WETH |
USDC |
86% |
| WETH |
USDT |
86% |
We recommend setting borrow LTVs to 5% below LLTVs.
Oracle
| Asset |
Price Feed |
| USDC |
Chainlink USDC/USD |
| USDT |
Chainlink USDT/USD |
| WETH |
Chainlink ETH/USD |
| UNI |
Chainlink UNI/USD |
| AAVE |
Chainlink AAVE/USD |
| ENA |
Pyth |
| SKY |
Chainlink SKY/USD |
| CRV |
Chainlink CRV/USD |
| LDO |
Chainlink LDO/ETH * ETH/USD |
| PENDLE |
Pyth |
Author: Euler Labs
Date: 2025-08-27
Update
- Added W and WLFI to the New Assets section.
