This proposal seeks to increase the supply cap of the PT-cUSDO-19JUN2025 vault in Euler Yield from 6M to 20M. Several large LPs have inquired about this opportunity, mentioning that borrowing against PT-cUSDO is not available elsewhere. We believe that this cap increase is highly strategic to establish Euler as a central lending venue in OpenEden’s ecosystem.
The asset’s risk profile hasn’t changed appreciably since the initial risk assessment 2 weeks ago. There is a deep liquidity pool on Curve for cUSDO/USDC with ~$35M in total liquidity. This pool supports a $20M swap with negligible price impact, thus motivating our recommendation for a $20M supply cap on the PT.
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Gauntlet has reviewed Objective Labs’ proposal for an outsize increase in the supply cap for PT-cUSDO-19JUN2025, following the recent CRS proposal which increased the cap to 6M and was almost instantly filled, showcasing strong LP demand for looping on Euler.
Per our analysis for that proposal, TVL in the main Curve pool actually declined by ~$4M in the span of under a week. Though a swap of 20M cUSDO to USDC in that pool still currently results in < 1% price impact, the effect quickly steepens thereafter as a swap of 25M cUSDO results in ~16.5% price impact. We also see that the top 5 holders of cUSDO are Pendle, the cUSDO/USDC Curve pool, Napier, Spectra, and a Napier PT-cUSDO Curve pool. Activity through the yield tokenization protocols is largely incentivized by OpenEden’s current Bill rewards program, and we expect users to have largely similar profiles across most of this supply.
Given the heightened risk that further drops in the main pool liquidity would bring, combined with the higher risk of users simultaneously reacting to any potential question of OpenEden’s solvency (which to reiterate is low risk), we recommend a dialed back increase in the supply cap to 16M. We believe this will continue to position Euler competitively in this offering while minimizing additional tail risk.
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