Integrate Elixir Staked deUSD (sdeUSD) on Euler Yield Market

[Cole0x]

Introduction

Elixir is a high-throughput network powering exchange-based use cases, acting as the primary source of orderbook liquidity on six exchanges and powering deUSD – DeFi’s native yield-bearing dollar.

deUSD serves as the rails for institutional assets to access DeFi. Used exclusively by Securitize, deUSD is the default currency bringing on-chain composability for BlackRock, Hamilton Lane, and others. deUSD is natively yield bearing, earning from a mixture of treasuries and funding yield, and will serve as preferred collateral for orderbook exchanges.

deUSD also is the backing asset for ecosystem-native stablecoins and related products including Sei Network’s native stablecoin (fastUSD) and Reya Network’s stablecoin liquidity vault. Other upcoming deUSD backing additions will include Movement’s moveUSD (100% wrapped sdeUSD), and Plume’s stable asset vault.

Type: Collateral deployment

Motivation

Elixir’s deUSD has garnered support from both retail and institutional investors, with ~$25M+ of onchain liquidity and $200M+ of TVL just months after launching. Institutions and partner projects like Solv Finance have expressed significant interest in adding and utilizing both deUSD and its yield-bearing staked version (sdeUSD) to the lend/borrow markets on Euler - we estimate that more than $30M in deUSD from institutional holders would be deposited within the first week.

Staked deUSD’s native yield ranges weekly from 7% to 20%+ APY (not including additional Elixir potion incentives) – making this an attractive market for Euler users.

Important Links

Website: https://elixir.xyz

Twitter: x.com/elixir

Coinmarketcap, Coingecko and contract address:

https://www.coingecko.com/en/coins/elixir-deusd, Elixir deUSD price today, DEUSD to USD live price, marketcap and chart | CoinMarketCap

deUSD contract address: 0x15700B564Ca08D9439C58cA5053166E8317aa138

sdeUSD contract address: 0x5C5b196aBE0d54485975D1Ec29617D42D9198326

Audits:

Elixir has had multiple audits from Trail of Bits (2023, 2024) and Quantstamp (2024, deUSD & sdeUSD-specific): Audits | Elixir

Next Steps

We invite the community to give their feedback and recommendations for the asset. We also invite curators interested in adding deUSD and its staked variant (sdeUSD) to their vaults to provide risk-analysis frameworks / guidance.

[Gauntlet]

[Gauntlet] - Parameter Recommendations for sdeUSD on Euler Yield (2025-04-28)

Gauntlet has reviewed this proposal to onboard sdeUSD to Euler Yield. sdeUSD is a repricing wrapper for Elixir’s deUSD, a synthetic stablecoin backed by a combination of a delta neutral Ethereum funding trade which uses wstETH collateral to short ETH perps; MakerDAO’s sUSDS; USDT; and RWAs including BlackRock’s BUIDL and Hamilton Lane’s SCOPE through institutional partnership with Securitize.

Presently, the backing consists of about $10M USDT, $150M sUSDS, $5M ETH, and $15M RWAs. sdeUSD accrues a portion of Elixir’s LST and perpetual funding yield as configured through governance, and holders are further incentivized through Elixir’s points campaign known as “potions.” deUSD provides an opportunity for holders of RWAs to access DeFi liquidity and composability with their holdings, with Elixir holding isolated RWA backing for deUSD minted through this collateral.

sdeUSD minted from deUSD requires a 7 day cooldown period before a redemption can be withdrawn. Atomic on-chain liquidity is presently limited to a single Gyroscope E-CLP sdeUSD/deUSD DEX pool with only 12 LP token holders and ~$6.5M TVL, though over 80% of the LP token is locked in the Balancer sdeUSD/deUSD gauge. sdeUSD has exposure to deUSD decorrelation risk in stress scenarios owing to its limited liquidity and redemption mechanism, as well as exposure to the backing risks of deUSD, including Maker governance risk and perpetuals funding risk. The backing risk is partially addressed by Elixir’s Execution Buffer Fund (EBF), which seeks to balance allocation between Maker and basis trades depending on funding rates, reportedly maintaining full backing in USDS if enough of the fund is depleted.

Notably, sdeUSD has an outsize $63.8M TVL in a single Morpho sdeUSD/USDC 91.5% market. This is around 55% of the current token supply. The top 3 borrowers have over 95% of the sdeUSD deposit, with the top borrower having ~62%. High market concentration is likely spurred by Elixir potion incentives and lack of competing venues.

If sdeUSD is listed, we encourage a similar incentives structure to bootstrap activity. We recommend a direct sdeUSD/USD market oracle where possible, though an exchange rate oracle for sdeUSD/deUSD may be prudent while liquidity is limited.

Cap Recommendations

If the community wishes to launch the sdeUSD market on Euler Yield, Gauntlet recommends the following risk parameters:

• Set supply cap to 10,000,000
• Set borrow cap to 0

We recognize the competitive landscape for this asset. This initial recommendation is based on our market risk assessment with an eye toward growth as liquidity improves.

Interest Rate Curve Recommendations

This asset is recommended not to be borrowable initially, so no IR curve needs to be set.

LLTV Recommendations

Borrow LTVs are recommended as three percentage points less than the recommended LLTVs per collateral/debt pair.

Debt	LLTV
wM	87%
USDT	87%
USDS	87%
USDe	87%
USDC	87%
USD0	87%
RLUSD	87%
PYUSD	87%
DAI	87%
USDtb	87%

Next Steps

• We welcome community feedback.

[Objective]

Thank you @Cole0x for submitting this listing proposal and @Gauntlet for providing initial risk recommendations.

After comprehensive review Objective Labs does not recommend sdeUSD’s integration at this date. Our decision is based on three factors: DEX liquidity, borrow demand, and sentiment.

Liquidity

As Gauntlet mentioned in their assessment, secondary market liquidity for sdeUSD is low with a $2.1M swap to USDC incurring 12% slippage.

Furthermore we evaluate decorrelation risk as very high at the moment, noting that 2 such events were observed in the past 30d. The biggest oscillation happened between Apr 22-24 when sdeUSD scored a +15% move from NAV to 1.177 then plunged to 0.978 in a -17% move before recovering to NAV two days later.

Based on these observations, we assess that the risk of liquidations spurring bad debt is high. Thus we believe that the supply cap for sdeUSD cannot be prudently increased above $5M with 87% LLTVs.

Borrow demand

Based on our analysis we believe that sdeUSD is unlikely to attract borrowers in Euler Yield.

55% of sdeUSD’s supply ($65M) is posted as collateral in the sdeUSD/USDC (91.5%) pair on Morpho. 4 individual borrowers make up 99.9% of that activity. Remaining EOA holders of sdeUSD collectively make up ~$10M. Based on this we believe that sdeUSD in Euler Yield would be in direct competition with Morpho. Existing borrowers are unlikely to make the switch as Euler Yield would offer 6.3x in initial leverage while the Morpho pair offers 11.8x leverage with a hardcoded oracle for deUSD. Furthermore we believe that Gauntlet’s LLTVs cannot be materially increased without excessively increasing the risk of bad debt for Euler Yield.

Sentiment

Last, we would like to point out that community sentiment of Elixir is divided.

We found records of users publicly accusing Elixir of carrying out unethical tactics around TGE unannounced, including forced lockups, points dilution, and conversion fees (1, 2). Allegations are also circulating about the founding team’s history, including previous involvement in rugpulls (ZachXBT 1, 2).

As a netural outside observer we cannot corroborate some of these allegations. Yet we recognize that negative community sentiment stifles growth and increases volatility and exit demand, which are factors we take into consideration when doing our risk assessment.

Conclusion

Based on low DEX liquidity with unusually high decorrelation risk, isolated borrow demand, and divided community sentiment, we cannot recommend onboarding sdeUSD into Euler Yield at this time. We are open to revisiting our stance should liquidity and demand improve.