Enable Euler Prime USDC and USDT as Collateral in Frontier Markets

Euler DAO Markets
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Summary

Objective Labs recommends enabling Euler Prime USDC and USDT as collateral in all Frontier USDC and USDT markets and adding USDT to all Frontier markets. This will unify liquidity across Euler and improve rate efficiency for EulerSwap.

Rationale

Since the launch of EulerSwap, increased trading activity directly drives Euler Prime utilization higher. When utilization approaches or exceeds kink, borrowers are exposed to temporary rate spikes, leading to unfavorable borrowing conditions and a poor user experience.

EulerSwap daily volumes spiked >$100M in early July. USDC/USDT utilization rates show clear volatility during volume spikes

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High rates attract new deposits, but these deposits are currently limited to Prime markets and cannot support borrowing in Frontier markets.

By enabling Euler Prime USDC/USDT as collateral in Frontier:

  • Liquidity becomes system-wide.
  • Supply becomes more elastic to sudden demand spikes.
  • EulerSwap gains deeper, more efficient liquidity access.

This improves rate stability, balances platform-wide utilization, and enhances the borrowing experience across Euler. These collateral relationships also increase elasticity for EulerSwap pools in periods of high volume.

Action Items

  • Add USDT to all current and future Frontier USD-type markets.
  • Enable Euler Prime USDC as collateral in all current and future Frontier USDC vaults with 94/95% LTV.
  • Enable Euler Prime USDT as collateral in all current and future Frontier USDT vaults with 94/95% LTV.
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In addition to this recommendation for USD-type Frontier markets, we also recommend following the same strategy for ETH-type Frontier markets and BTC-type Frontier markets. We believe USD-type markets have the highest immediate value for EulerSwap, however the fundamental mechanism remains sound for the other major types.