Improve oracle setup for wstETH, sUSDS, USDS on Euler Prime

[Objective]

Summary

This proposal seeks to make changes to the oracles used on the wstETH, sUSDS, USDS vaults on Euler Prime. We believe these changes will strengthen the market against volatility-driven price desynchronization.

This proposal is part of a wider reevaluation of Euler DAO-governed markets.

Changes

Vault	Current Setup		Proposed Setup
	Oracle A	Oracle B	Oracle A	Oracle B
wstETH	Lido wstETH/stETH	Chainlink stETH/USD	Lido Fundamental wstETH/ETH	Chainlink ETH/USD
sUSDS	ERC4626 sUSDS/USDS	Chronicle USDS/USD	ERC4626 sUSDS/USDS	Chainlink USDS/USD
USDS	Chronicle USDS/USD	N/A	Chainlink USDS/USD	N/A

Rationale

The change to wstETH effectively assumes 1 stETH = 1 ETH. Given the market position of Lido we believe this is a safe pricing assumption. The change makes wstETH’s pricing configuration uniform with the WETH, weETH, rsETH, ezETH, ETHx, mETH, cbETH, and rETH vaults which all use the Chainlink ETH/USD price feed. This would make leveraged staking of wstETH (a highly sought after trade) safe from volatility, allowing for higher LTVs without liquidations.

The change to sUSDS and USDS transitions the USDS/USD price feed from Chronicle to Chainlink. At the time of deployment only Chronicle was available, however now that a price feed by Chainlink exists, we believe it is the better choice for two reasons. First, Chainlink’s trigger threshold (0.3%) is lower than Chronicle’s (0.5%). Furthermore, Chronicle’s optimistic price update mechanism could lead to undesirable update latency in a depegging scenario.

Author

Objective Labs is a service provider for Euler Labs tasked with product development, risk management, and incentive optimization. Objective Labs is Euler-aligned.

[Gauntlet]

Gauntlet is aligned with Objective Labs on this proposal to update oracles for the chosen vaults.

For wstETH, shortly after the original post there were two liquidations for wstETH/WETH positions (here and here) for approximately $200k and $90k respectively. These were triggered due to market fluctuations in the prices of stETH and ETH, as can be seen in the following stETH price chart around 9:28 AM EST. These liquidations could have been avoided if the wstETH vault used an ETH/USD price feed instead.

The choice to switch from Chronicle USDS/USD to Chainlink USDS/USD oracles in the USDS and sUSDS vaults is also agreeable given the historical reliability of Chainlink uptime along with the factors detailed by Objective Labs.