Summary
Based on ongoing improvements in DEX liquidity on Swellchain, Objective Labs recommends LTV increases for weETH and rswETH on the Euler Swell market. This proposal aims to foster a mutual growth relationship between Euler and Swellchain and cement Euler’s position as the flagship DeFi protocol on Swellchain.
Liquidity
Swellchain has recently launched two Velodrome Concentrated Stable pools:
- weETH/WETH with ~2567 WETH in total liquidity, and
- rswETH/ETH with ~540 WETH in total liquidity.
Based on communications with the Swellchain team, TVL in these pools is expected to increase over time.
Recommendations
The LTV configuration of the Euler Swell market places LSTs and LRTs in three risk categories: 93% LLTV, 90% LLTV, 85% LLTV. Based on the improvements in available DEX liquidity and a positive future outlook, Objective Labs recommends that weETH and rswETH graduate to the next lower risk category, 93% and 90% respectively.
Liquidation LTVs
Modified values in bold.
| Collateral | Debt | LLTV |
|---|---|---|
| weETH | WETH | 90% → 93% |
| weETH | wstETH | 90% → 93% |
| weETH | ezETH | 90% → 93% |
| weETH | rsETH | 90% → 93% |
| weETH | swETH | 90% → 93% |
| weETH | rswETH | 90% → 93% |
| weETH | pzETH | 90% → 93% |
| rswETH | WETH | 85% → 90% |
| rswETH | wstETH | 85% → 90% |
| rswETH | weETH | 85% → 90% |
| rswETH | ezETH | 85% → 90% |
| rswETH | rsETH | 85% → 90% |
| rswETH | swETH | 85% → 90% |
| rswETH | pzETH | 85% → 90% |
Consistent with the current LTV strategy, borrow LTV is to be set to two percentage points lower than LLTV.