[Gauntlet] - Integrate USDT0 on Euler Base (2025-06-26)

Euler DAO
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Overview

USDT0 is Tether’s cross-chain stablecoin. USDT0 uses the LayerZero protocol’s Omnichain Fungible Token (OFT) standard to lock USDT on Ethereum and mint a 1:1 backed USDT0 token on any supported destination chain. Should the community choose to onboard USDT0 to Euler Base, Gauntlet recommends the following:

Onchain Summary:

  • Total Supply: 21.9M
  • DEX Liquidity: $6.07M
  • DEX Daily Volume: $0.92M

Cap Recommendations

Supply Cap Borrow Cap
6M 5.4M

Although the DEX Liquidity is only $6M, Gauntlet recommends a higher-than-usual supply and borrow caps for USDT0 since it can be redeemed to USDT within a few minutes by bridging back to Ethereum. On-chain liquidity shouldn’t be the only category that needs to be considered for this asset.

Interest Rate Curve Recommendations

Borrow demand for USDT0 is expected to be minimal as most of the volume will be routed to USDC on Base. We will recommend the same parameters as are currently set for USDC or USDS Base vault’s interest rate curve:

  • Kink utilization of 90%
  • Kink borrow APY of 5.0%
  • Max APY of 80%

LLTV Recommendations

We recommend setting LLTV at 2 percentage points below the LLTV for USDC.

Collateral Debt LLTV
wstETH USDT0 81%
WETH USDT0 85%
weETH USDT0 78%
USDS USDT0 92%
USDC USDT0 93%
sUSDS USDT0 92%
rETH USDT0 75%
LBTC USDT0 78%
ezETH USDT0 75%
EURC USDT0 88%
cbETH USDT0 78%
cbBTC USDT0 78%
AERO USDT0 63%
USDT0 wstETH 81%
USDT0 WETH 83%
USDT0 weETH 78%
USDT0 USDS 93%
USDT0 USDC 94%
USDT0 rETH 78%
USDT0 LBTC 78%
USDT0 ezETH 78%
USDT0 EURC 88%
USDT0 cbETH 78%
USDT0 cbBTC 78%
USDT0 AERO 78%

Borrow LTVs are recommended as two percentage points less than the recommended LLTVs per collateral/debt pair.

Next Steps

  • We welcome community feedback
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Summary

Objective Labs has reviewed Gauntlet’s recommendations for USDT0 on Euler Base. Although we do not anticipate Tether to rival Circle’s stablecoin adoption in the near term, we believe there is little added risk in onboarding USDT0. We are in full agreement with the risk methodology and recommendations.

Fundamentals

USDT0 is a stablecoin backed 1:1 with USDT with added interoperability using LayerZero’s OFT standard. In practice USDT0 can be bridged using near instantly between 10+ chains without liquidity requirements on the destination chain.

Around 1.72% of USDT’s total supply is locked into USDT0 (~$1.27B TVL). Presently this supply is distributed mostly between Arbitrum (74%) and Unichain (12%) with the rest distributed between Ink, Flare, Corn, Berachain, and Base.

On Base there are currently two versions of USDT:

  • The original USDT (canonically bridged) with $22M total supply and DEX liquidity around $6M.
  • The newer USDT0 with $0.25M total supply, almost all of it on DEXes.

These recommendations pertain to USDT0.

Adoption of USDT on Base has historically been very low. The current numbers of USDT0 on Base indicate $22M in total supply, with DEX liquidity near $6M. For comparison, USDC’s total supply on Base stands at $3.7B, >150x more USDT.

We do not anticipate USDT to be a major competitor to USDC in Base’s DeFi ecosystem. Negative catalysts to adoption include Coinbase’s close business alignment with Circle where Coinbase keeps 50-100% of Circle’s revenue. On the wider stage, USDC has historically been more well-integrated in DeFi while USDT has dominated settlement. Positive atalysts for adoption include USDT’s alignment with the Superchain (which Base is a part of) and the recent efficacy of the Superstacks XP campaign to grow USDT0 on Unichain. On the wider stage Tether is making a decisive move towards DeFi with Plasma and USDT0.

Risk Recommendations

Caps

We are aligned with Gauntlet’s proposed 6M cap. While conservative, we believe it is proportional with the overall size of Euler’s Base market.

LLTVs

The methodology for LLTV is sound, taking into account bridging risk, the early stage of USDT0 on Base, and the potential for volatility around peg on Base.

Oracle

We recommend the use of a market price oracle.

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