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. 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.