Summary
This proposal seeks approval to integrate PT-cUSDO-19JUN2025 as collateral on the Euler Yield market. We believe this will allow Euler DAO to strategically expand its competitive stablecoin yield offering, capturing increasing demand for OpenEden.
Fundamentals
cUSDO is the compounding (accumulating) version of the USDO token, a yield-bearing stablecoin issued by OpenEden Digital in a bankrupt-remote setup. USDO is backed by short-term U.S. Treasury Bills and reverse repurchase agreements. USDO is overcollateralized with its reserves transparent and continuously attested to via a Chainlink Proof of Reserves feed. USDO has a total supply of 89.2M tokens, 69.4M of which are in the compounding wrapper, cUSDO. 60% of cUSDO supply is locked in Pendle.
Liquidity
The Pendle pool has 36.8M in liquidity. cUSDO has $42.1M in total liquidity on a single Curve pool against USDC. Both liquidity venues combined can accommodate a 15M PT-cUSDO to cUSDO swap with 1.78% price impact.
Yield
OpenEden has an active Bills Points campaign with the biggest 10x multiplier given for Pendle YT and LP, contributing to a market leading yield for PT-cUSDO at 13.2%. For comparison, PT-eUSDe yields 8.7% and sUSDS yields 4.5% (benchmark rate). The high PT yield is an indicator that market participants value OpenEden’s points program highly. Its addition in the Euler Yield market would create lucrative looping opportunties, resulting in a positive feedback loop for both OpenEden and Euler.
Risk Recommendations
Based on the fundamental and economic indicators of PT-cUSDO we would like to recommend the following risk parameters for its integration on Euler Yield:
Caps
| Supply Cap | Borrow Cap |
|---|---|
| 4M (~$4M at expiry) | 0 (borrowing disabled) |
Liquidation LTV
| Debt | LLTV |
|---|---|
| wM | 84% |
| USDT | 84% |
| USDS | 84% |
| USDe | 84% |
| USDC | 84% |
| USD0 | 84% |
| RLUSD | 84% |
| PYUSD | 84% |
| FDUSD | 84% |
| DAI | 84% |
In line with the rest of the market, Objective Labs recommends that the borrow LTV should be set to two percentage points less than liquidation LTV.
Interest Rate Model
The IRM can remain unset since PT-cUSDO will be non-borrowable.
Oracle
We propose that a Pendle PT market oracle be used, crossed by cUSDO’s ERC4626 conversion rate, crossed by a fixed (1:1) oracle to USD.
Author
Objective Labs is a service provider for Euler Labs tasked with product development, risk management, and incentive optimization. Objective Labs is Euler-aligned.