Summary
Euler Labs has recently received requests from large borrowers looking to loop LST/LRTs against WETH on Euler Prime. This activity is a major contributor to sticky TVL in the ETH-cluster assets on competing lending protocols. This proposal aims make Euler Prime a more attractive venue for these borrowers.
LTVs
Modified values in bold.
| Collateral | Debt | Borrow LTV | LLTV |
|---|---|---|---|
| wstETH | WETH | 91% → 93% | 93% → 95% |
| cbETH | WETH | 91% → 93% | 93% → 95% |
| rETH | WETH | 88% → 93% | 93% → 95% |
| weETH | WETH | 91% | 93% |
| ezETH | WETH | 88% → 91% | 90% → 93% |
| rsETH | WETH | 88% → 91% | 90% → 93% |
| mETH | WETH | 88% → 91% | 90% → 93% |
| ETHx | WETH | 85% → 91% | 87% → 93% |
This adjustment puts ETH derivative assets in two risk tiers. LTVs are increased to make parameters in Euler Prime competitive with Aave’s E-mode on the Core instance.
IRMs
All rates are borrow APY. Modified values in bold.
| Asset | Base rate | Kink | Rate at kink | Rate at 100% (max) |
|---|---|---|---|---|
| WETH | 0% | 85% → 90% | 2.5% → 2.7% | 80% |
This adjustment unlocks another 5% of WETH supply to be borrowed. It supplements the WETH lending rate by 0.2 percentage points, while lining up the borrow rate with equivalent markets on Aave and Morpho.
Caps
Modified values in bold.
| Asset | Supply cap | Borrow cap |
|---|---|---|
| WETH | 25,000 → 50,000 | 21,250 → 45,000 |
| weETH | 6,250 → 20,000 | 1,562.5 → 5,000 |
| rsETH | 6,250 → 20,000 | 1,562.5 → 5,000 |
| ezETH | 6,250 → 20,000 | 1,562.5 → 5,000 |
Incentives
We propose that the implementation of this proposal be paired with a rEUL incentive campaign for the Euler Prime WETH vault. Next to that, we are anticipating a points integration for rsETH.
Visibility
We are reaching out to the issuers of these assets to feature the Euler Prime vaults on their respective DeFi opportunities pages.
Author
Objective Labs is a service provider for Euler Labs tasked with product development, risk management, and incentive optimization. Objective Labs is Euler-aligned.