Summary
This proposal seeks to increase the supply cap of the Ripple USD (RLUSD) vault in Euler Yield from 10M to 100M. RLUSD is currently expanding into Ethereum DeFi with a new listing on Aave with a 50M supply cap. To stay competitive as an allocation venue for RLUSD, and to bootstrap organic demand for the asset, we propose that the supply cap of the RLUSD vault in Euler Yield be increased to 100M.
We note that the borrow cap is to remain at 9M, attenuating the risk exposure downstream of this increase. There is a deep liquidity pool on Curve for RLUSD/USDC with ~$53M in total liquidity. This pool supports a $20M swap with 0.05% price impact.
Caps
| Vault |
Supply Cap |
Borrow Cap |
| RLUSD |
10M → 100M |
9M |
Author
Objective Labs is a service provider for Euler Labs tasked with product development, risk management, and incentive optimization. Objective Labs is Euler-aligned.
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Gauntlet has reviewed this proposal for an outsize increase of the RLUSD supply cap on Euler Yield to 100M. We believe this to be fairly low risk and recognize it would position Euler’s listing more competitively against Aave’s. RLUSD’s supply on Ethereum has increased from ~130M to ~200M over the past month. The main source of atomic on-chain liquidity is as described by Objective Labs, and presently the 5% price impact swap amount of RLUSD to USDC is ~33M; however, the risk of liquidation is very low and only possible through accrued borrow interest on positions using RLUSD as collateral, given RLUSD on Euler Yield currently uses a fixed 1:1 oracle.
RLUSD obtained regulatory approval from New York Department of Financial Services in December 2024, and its backing assets are subject to strict controls and attestations, so holding risk is very low. We expect on-chain liquidity and exit venues for the asset to increase over time, and most depositors are expected to be risk-averse, likely spurred through incentives.
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