# \[Gauntlet\] - Market Risk Parameter Recommendations (2025-03-19) **URL:** \ **Category:** Euler DAO\ **Tags:** risk\ **Created:** [March 19, 2025, 8:52pm UTC](https://forum.euler.finance/t/gauntlet-market-risk-parameter-recommendations-2025-03-19/1326 "2025-03-19T20:52:12Z")\ **Posts on this page:** 2\ **Page:** 1
**Author:** ![Gauntlet](https://yyz1.discourse-cdn.com/flex007/user_avatar/forum.euler.finance/gauntlet/32/611_2.png) [@Gauntlet](https://forum.euler.finance/u/Gauntlet)\ **Post date:** [March 19, 2025, 8:52pm UTC](https://forum.euler.finance/t/gauntlet-market-risk-parameter-recommendations-2025-03-19/1326/1 "2025-03-19T20:52:12Z")
# Euler Prime ## Cap Recommendations | Asset | Current Supply Cap | New Supply Cap | Current Borrow Cap | New Borrow Cap | | --- | --- | --- | --- | --- | | WBTC | 500 | **600** | 425 | **510** | WBTC supply cap is trending upwards and has seen up to 77% supply cap usage in the past month. The entire recommended supply cap could be swapped on DEX for less than 5% price impact. Borrow exposure is varied among WETH, USDC, and BTC derivatives. ## Interest Rate Curve Recommendations | Asset | Current Kink Borrow APY | New Kink Borrow APY | Current Max Borrow APY | New Max Borrow APY | Current Kink | New Kink | | --- | --- | --- | --- | --- | --- | --- | | cbBTC | 2.79% | **1%** | 122.55% | **100%** | 85% | 85% | | WBTC | 2.79% | **1%** | 122.55% | **100%** | 85% | 85% | | wstETH | 4.6% | **2.5%** | 145.96% | **80%** | 40% | **85%** | | USDS | 9.42% | **7.5%** | 101.38% | **80%** | 90% | 90% | | USDC | 6% | **7.5%** | 70% | **80%** | 90% | 90% | | USDT | 6% | **7.5%** | 70% | **80%** | 90% | 90% | These recommendations are to align curves with current market demand and reduce fragmentation within the ecosystem. ## LTV Recommendations None at this time. # Euler Yield ## Cap Recommendations | Asset | Parameter | Current Value | New Value | | --- | --- | --- | --- | | mMEV | Supply Cap | 3,000,000 | **6,000,000** | mMEV has seen extremely fast adoption since its recent listing on Yield and currently sits at 100% supply cap usage. Its TVL has risen from under $2M to over $10M in about 3 weeks. Given the growth rate, we are aligned on this [proposal](https://forum.euler.finance/t/increase-mmev-supply-cap-on-euler-yield/1315) for the same increase by Objective Labs. However, we note that instant redemption capacity has actually decreased in 3 weeks, from ~$900k to ~$760k. We will continue to monitor this as redemptions remain the primary avenue for liquidation. Borrow exposure is primarily to USDC. ## Interest Rate Curve Recommendations | Asset | Current Kink Borrow APY | New Kink Borrow APY | Current Max Borrow APY | New Max Borrow APY | Current Kink | New Kink | | --- | --- | --- | --- | --- | --- | --- | | USDC | 16.18% | **7.5%** | 101.38% | **80%** | 90% | 90% | | USDT | 16.18% | **7.5%** | 101.38% | **80%** | 90% | 90% | | wM | 16.18% | **7.5%** | 101.38% | **80%** | 90% | 90% | | PYUSD | 16.18% | **7.5%** | 101.38% | **80%** | 90% | 90% | | DAI | 16.18% | **7.5%** | 101.38% | **80%** | 90% | 90% | | FDUSD | 16.18% | **7.5%** | 101.38% | **80%** | 90% | 90% | | USDS | 16.18% | **7.5%** | 101.38% | **80%** | 90% | 90% | | USD0 | 16.18% | **7.5%** | 101.38% | **80%** | 90% | 90% | | RLUSD | 16.18% | **7.5%** | 101.38% | **80%** | 90% | 90% | | USDe | 12.75% | **7.5%** | 848.77% | **80%** | 30% | **90%** | These recommendations are to align curves with current market demand and reduce fragmentation within the ecosystem. We are generally aligned with this [proposal](https://forum.euler.finance/t/adjust-irms-on-euler-yield-in-line-with-market-conditions/1307) with similar changes by Objective Labs, though believe the kink APY can be reduced further and remain competitive due to the zero reserve factor for these assets. ## LTV Recommendations None at this time. # Euler Base ## Cap Recommendations None at this time. ## Interest Rate Curve Recommendations | Asset | Current Kink Borrow APY | New Kink Borrow APY | Current Max Borrow APY | New Max Borrow APY | Current Kink | New Kink | | --- | --- | --- | --- | --- | --- | --- | | cbBTC | 2.79% | **1%** | 122.55% | **100%** | 85% | 85% | | wstETH | 4.6% | **2.5%** | 145.96% | **80%** | 40% | **85%** | | EURC | 9.42% | **7.5%** | 101.38% | **80%** | 90% | 90% | | USDC | 6% | **7.5%** | 70% | **80%** | 90% | 90% | | USDS | 6% | **7.5%** | 70% | **80%** | 90% | 90% | These recommendations are to align curves with current market demand and reduce fragmentation within the ecosystem. ## LTV Recommendations None at this time. # Next Steps - We welcome community feedback ---
**Author:** ![Objective](https://yyz1.discourse-cdn.com/flex007/user_avatar/forum.euler.finance/objective/32/830_2.png) [@Objective](https://forum.euler.finance/u/Objective)\ **Post date:** [March 21, 2025, 7:54am UTC](https://forum.euler.finance/t/gauntlet-market-risk-parameter-recommendations-2025-03-19/1326/2 "2025-03-21T07:54:52Z")
Thank you @Gauntlet team for issuing these recommendations. # Euler Prime We would like to propose setting the kink rate at 6% for USDS, USDC and USDT. Unlike Euler Yield, there are no yield-bearing USD assets in Euler Prime that are expected to absorb borrowing demand at higher rates. USDC on Aave it has settled to 4.6% with kink rate at 6.5% APR (~6.7% APY). Comparable blue-chip pairs on Morpho have settled to 5-6% with kink rate at 4-5%. The Euler Prime USDC vault has settled to 4.5% with 68% utilization. Therefore we believe raising the rates for USD assets on Euler Prime is unwarranted and may limit effective borrow capacity as utilization drops to price in the rate hike. Striking the balance between lenders and borrowers is especially important to grow sticky liquidity in Prime. # Euler Yield This is a small 0.5% reduction in the kink rate relative to our [stanalone proposal.](https://forum.euler.finance/t/adjust-irms-on-euler-yield-in-line-with-market-conditions/1307) We support this amendment. # Euler Base We agree with the proposed parameters. The inferred methodology is to align the IRMs with Euler Prime, which we believe is warranted.