[Gauntlet] - Market Risk Parameter Recommendations (2025-04-30)

Euler DAO
1

As part of Gauntlet’s ongoing risk monitoring, we regularly review and recommend enhancements to Euler market parameters to better align the protocol with broader ecosystem developments while keeping user utility in mind.

Euler Prime

Interest Rate Curve Recommendations

These recommendations are based on present market demand for the assets as well as to better standardize the curves.

Asset Kink Borrow APY Max Borrow APY Kink Utilization
cbBTC 1% → 0.6% 100% 85%
LBTC 4.6% → 2.5% 848.77% → 100% 25%

Euler Yield

LTV Recommendations

USD0++ has a cumbersome atomic redemption process to USD0 which requires any liquidator to return USUAL tokens. A recent analysis showed DEX liquidity for the asset is sparse, and this is presently unchanged. Both USD0++ and PT-USD0++ Euler vaults use Pyth oracles for USD0++/USD market rate pricing, which lowers expected correlation of reported price with USD0’s. USD0++ supply cap utilization recently surpassed 80%, and though we do not currently recommend bumping the supply cap given low atomic liquidity, we would like to reassess LTVs to be more conducive to increasing usage.

Collateral Debt LLTV Borrow LTV
USD0++ USD0 90% → 88% 88% → 86%
USD0++ DAI, PYUSD, RLUSD, USDC, USDS, USDT USDe, USDtb, sDAI, sUSDS, wM 90% → 86% 88% → 84%
PT-USD0+±26JUN2025 USD0 90% → 86% 88% → 84%

Euler Base

Interest Rate Curve Recommendations

Stablecoin markets on Base are underutilized. We recommend lowering the kink borrow APY to match Euler Prime IRMs, which are more competitive in the current market.

BTC IRMs are chosen to match the Euler Prime recommendations given similar market demand and to better standardize the curves.

The wstETH update is recommended to align with the recent CRS proposal given similar market demand.

Asset Kink Borrow APY Max Borrow APY Kink Utilization
EURC 6.5% → 5.0% 80% 90%
USDC 6.5% → 5.0% 80% 90%
USDS 6.5% → 5.0% 80% 90%
cbBTC 1% → 0.6% 100% 85%
LBTC 4.6% → 2.5% 848.77% → 100% 25%
wstETH 2.5% → 0.5% 80% 85%

Next Steps

  • We welcome community feedback
1 Like
2

Objective Labs agrees with Gauntlet’s recommendations for interest rate models on Euler Prime and Euler Yield.

We agree with Gauntlet’s analysis of USD0++ decorrelation risk. The proposed LLTV reductions for Usual would but ~$800k of collateral at liquidation. Instead of disrupting current users, we propose that only borrow LTVs be reduced while LLTVs remain at current levels.

Collateral Debt LLTV Borrow LTV
USD0++ USD0 90% 88% → 86%
USD0++ DAI, PYUSD, RLUSD, USDC, USDS, USDT USDe, USDtb, sDAI, sUSDS, wM 90% 88% → 84%
PT-USD0+±26JUN2025 USD0 90% 88% → 84%