[May 2025] Non-critical Parameter Updates by Risk Stewards

Euler DAO Markets
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This is the monthly continuation of CapRiskSteward updates. Original thread: [April 2025] Non-critical Parameter Updates by Risk Stewards

Summary

Euler Labs and Objective Labs recently developed the CapRiskSteward smart contract as a fast lane for non-critical parameter updates. Following its implementation for the Euler DAO markets, we propose that service providers follow a notification process for in-scope changes. By establishing this process we seek to give the Euler community full transparency into the work done by service providers to optimize and grow Euler DAO markets.

3 Likes
[Sept 2025] Non-critical Parameter Updates by Risk Stewards
[Aug 2025] Non-critical Parameter Updates by Risk Stewards
[Oct 2025] Non-critical Parameter Updates by Risk Stewards
[Dec 2025] Non-critical Parameter Updates by Risk Stewards
[Jan 2026] Non-critical Parameter Updates by Risk Stewards
[Jun 2025] Non-critical Parameter Updates by Risk Stewards
Accelerate CRS to meet elastic demand efficiently in Euler DAO markets
[Jul 2025] Non-critical Parameter Updates by Risk Stewards
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Objective Labs: Parameter Updates on Ethereum (2025-05-02)

Market Vault Supply Cap Borrow Cap
Euler Yield PT-cUSDO-19JUN2025 16M → 24M 0
Euler Yield mEDGE 3M → 2M 0
Euler Yield mMEV 4M → 2.7M 0

Rationale

  • PT-cUSDO-19JUN2025 has hit 100% supply cap shortly after the previous increase.
  • Euler Yield mEDGE and mMEV warrant further derisking due to insufficient instant redemption liquidity and concerns about total leverage in their respective portfolios.
2 Likes
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Gauntlet has reviewed the Euler Yield proposal from Objective Labs covering caps for PT‑cUSDO‑19JUN2025, mMEV and mEDGE, comments below:

PT‑cUSDO‑19JUN2025
We support raising the supply cap from 16M to 24M cUSDO. Supply usage has remained near 100%, signaling persistent user demand. Liquidity conditions remain healthy relative to the proposed cap.

mMEV / mEDGE
We are aligned with reducing the supply caps to 2.7M (mMEV) and 2M (mEDGE). The rationale is identical to our 29 April recommendation: each index has compounded leverage‑on‑leverage exposure while instant‑redemption depth remains thin, so smaller caps better match risk with available liquidity.

2 Likes
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This proposal has been executed on May-04-2025 03:02:47 PM UTC.

2 Likes
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Objective Labs: Parameter Updates on Ethereum (2025-05-06)

Market Vault Supply Cap Borrow Cap
Euler Yield PT-cUSDO-19JUN2025 24M → 36M 0

Rationale

  • PT-cUSDO-19JUN2025 has hit 91% supply cap. Borrow demand has increased as expressed in USDO’s 100-150bps premium over USDC.
1 Like
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Gauntlet has reviewed Objective Labs’ proposal and supports increasing the PT‑cUSDO‑19JUN2025 supply cap from 24 M to 36 M cUSDO. Supply usage has stayed above 90 %, confirming persistent user demand, while on‑chain liquidity remains robust. The principal token carries low holding‑period risk, so a higher cap offers a clear growth opportunity without materially increasing Euler’s risk profile.

1 Like
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Objective Labs: Parameter Updates on Ethereum (2025-05-08)

Market Vault Supply Cap Borrow Cap
Euler Prime WETH 70k → 100k 63k → 90k
Euler Prime USDC 50M → 75M 45M → 67.5M
Euler Prime rsETH 24k → 36k 6k → 9k
Euler Prime weETH 13k → 18k 3.12k → 4.5k

Rationale

  • Euler Prime WETH has hit 81% supply cap utilization and 70% borrow cap utilization.
  • Euler Prime USDC has hit 85% supply cap utilization and 79% borrow cap utilization.
  • Euler Prime rsETH has hit 68% supply cap utilization.
  • Euler Prime weETH has hit 71% supply cap utilization.

Proactive cap increases allow Euler Prime to continue scaling and accommodate rising demand from large LPs.

2 Likes
8

Gauntlet has reviewed the Objective Labs proposal to raise supply and borrow caps for WETH, USDC, rsETH, and weETH on Euler Prime and supports all four increases.

USDC (50 M → 75 M supply / 45 M → 67.5 M borrow)
USDC remains a low-risk asset & liquidity remains robust on Mainnet.

WETH (70 k → 100 k supply / 63 k → 90 k borrow)
WETH usage is climbing, and the supplier base is well diversified, keeping counterparty risk low. A 100k WETH on‑chain swap to stables would move the price by > 20 percent when aggregating a swap across DEXs. The proposed cap strikes a prudent balance between growth and liquidation‑slippage risk.

rsETH (24 k → 36 k supply / 6 k → 9 k borrow) & weETH (13 k → 18 k supply / 3.12 k → 4.5 k borrow)
The top collateral positions for both LRTs are dominated by looping WETH, keeping concentration risk low.

1 Like
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This proposal has been executed on May-09-2025 08:25:59 AM UTC.

1 Like
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Objective Labs: Parameter Updates on Ethereum (2025-05-12)

Market Vault Supply Cap Borrow Cap
Euler Yield USDC 100M → 150M 90M → 135M
Euler Yield PT-cUSDO-19JUN2025 36M → 54M 0
Euler Yield eUSDe 45M → 60M 38.2M → 51M
Euler Yield mMEV 2.7M → 2M 0
Market Vault Base rate Kink Rate at kink Rate at 100% (max)
Euler Prime USDC, USDT, USDS, USDtb 0% 90% 5% → 5.5% 80% → 40%
Euler Prime wM 0% 90% 9.42% → 5.5% 101.38% → 40%
Euler Prime WETH 0% 90% 2.4% → 2.6% 80% → 40%
Euler Yield USDC, USDT, PYUSD, RLUSD, wM, USDS, DAI, USD0, USDe, eUSDe, USDtb 0% 90% 6.5% → 7% 80% → 40%
Euler Yield eUSDe 0% 85% 6.5% → 7% 80% → 40%

Rationale

  • Euler Yield USDC has hit 79% supply cap and 78% borrow cap with 17% supply growth and 11% borrow growth in the last 7d.
  • Euler Yield PT-cUSDO-19JUN2025 has hit 100% supply cap with 63% supply growth in the last 7d.
  • Euler Yield eUSDe has hit 80% supply cap and 78% borrow cap with 15% supply growth and 20% borrow growth in the last 7d.
  • USD-cluster vaults in Euler Prime have seen consistently high utilization over the past week largely driven by an inflow of ETH-long borrowers. To balance the new borrow demand we recommend a 50 bps increase in USD borrow rates at kink.
  • Euler Prime WETH currently offers the lowest borrow rates at size for LRTs. To balance the sustainability of incentives on the supply side we recommend a small 20 bps increase to the rate at kink.
  • Borrowable stablecoins in Euler Yield have had consistent high utilization in the past 3 weeks. In the past few days rates have gone up across the board, prompting us to recommend a 50bps increase to balance demand. Weighted by open interest, outstanding borrowers will be largely unaffected (PT-cUSDO, Ethena PTs), while we expect this change to reduce the size of reward-farming TVL (USDT/USDC, USDC in Prime/USDC in yield), which we believe is a good thing as it frees up capacity for stickier borrowers.
  • We also recommend reducing the max rate of the major borrowable vaults to reduce the effect of transient utilization spikes on borrowers.
2 Likes
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Gauntlet has reviewed the proposal from Objective Labs, comments below:

  • USDC cap increase is low risk.
  • PT-cUSDO remains relatively low risk. Top 10 collateral positions are against USDC debt with sufficiently high average health and the major DEX pool’s liquidity has increased to 40M since the previous cap increase.
  • eUSDe cap increase is relatively low risk. USDe atomic liquidity has markedly increased on-chain, with ~50M swap to stablecoin incurring at most ~20% slippage, versus <= ~40M the previous month.
  • mMEV cap decrease is aligned with recent analysis to reduce exposure.
  • Recent borrowing usage of stablecoins has caused sharp temporary utilization spikes, leading to highly volatile rates past the IRM kink. We agree that the utility of lowering the max borrow APY and lowering rate volatility likely outweighs the opportunity cost to suppliers. 40% max borrow APY is currently a reasonable upper bound.
  • At present, utilizations of Euler Prime stablecoin borrow APYs slightly tracks behind Aave. We agree that increasing the kink borrow APY by 0.5% will more closely match recent demand.
  • Given the demand premium in Euler Yield for borrowing stablecoins as well as the recent general increase in market stablecoin demand, a 0.5% kink borrow APY raise in this market is expected to attract more supply while retaining sticky borrowers. We think this is reasonable to try to bolster growth given current conditions, though we will monitor for depressed utilization that may result, as current rates are already competitive.
  • WETH Prime utilization has been oscillating close to the kink with the borrow APY slightly trailing Aave’s. Therefore we are aligned with the kink borrow APY increase by 0.2%.
  • The proposed eUSDe kink change is already aligned with our latest recommendation.
1 Like
[Jun 2025] Non-critical Parameter Updates by Risk Stewards
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Objective Labs: Parameter Updates on Ethereum (2025-05-16)

Market Vault Supply Cap Borrow Cap
Euler Yield PT-eUSDE-29MAY2025 45M → 60M 0
Euler Yield PT-cUSDO-19JUN2025 54M → 70M 0
Market Vault Base rate Kink Rate at kink Rate at 100% (max)
Euler Yield USDC, USDT, PYUSD, RLUSD, wM, USDS, DAI, USD0, USDe, USDtb 0% 90% 7% → 7.5% 40%
Euler Yield rUSD 0% 90% 6% → 7% 80% → 40%

Rationale

  • Euler Yield PT-eUSDE-29MAY2025 has hit 87% supply cap with 13% supply growth in the last 7d.
  • Euler Yield PT-cUSDO-19JUN2025 has hit 83% supply cap with 24% supply growth in the last 7d.
  • Comparative borrow rates on Morpho have increased to 7-9%, prompting a 50 bps increase for Euler Yield’s borrowable stablecoins to keep competitive. Morpho’s srUSD/rUSD pair has hit 7.5% borrow APY, prompting a proactive 100 bps increase.
2 Likes
Frontier Markets: Risk-isolated looping vaults
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This proposal has been executed on May-14-2025 02:07:11 PM UTC.

1 Like
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Objective Labs: Parameter Updates on Unichain (2025-05-26)

Market Vault Supply Cap Borrow Cap
Euler Unichain WETH 6k → 9k 5.4k → 8.1k
Euler Unichain weETH 3k → 4.5k 750 → 1.13k
Market Vault Base rate Kink Rate at kink Rate at 100% (max)
Euler Unichain USDC, USDT0 0% 90% 5% → 6% 80%

Rationale

  • Euler Unichain WETH has hit 87% supply cap and 64% borrow cap.
  • Euler Unichain weETH has hit 100% supply cap.
  • Euler Unichain USDC and USDT see primarily correlated borrows to farm rewards and have therefore been sitting near kink since launch. The interest rate increase intends to free stablecoin supply for an upcoming influx of uncorrelated borrows with WBTC0.
1 Like
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  • Supply & Borrow Cap Increases
    Gauntlet supports the proposed increases to the WETH and weETH supply and borrow caps. Uniswap liquidity can absorb the top-10 collateral positions in both assets with under 5% slippage, indicating sufficient depth to support safe liquidations at these new limits.

  • Monitor weETH Liquidity Depth
    Gauntlet is aligned given weETH’s rapidly growing usage and incentives given to this token pair on Uniswap, we will continue to monitor its Uniswap pool depth. This will allow us to proactively assess liquidity conditions and adjust recommendations if fragmentation or depth deterioration occurs.

  • IRM updates to USDC and USDT
    Gauntlet supports on increasing Rate at Kink as both the competitors Venus and Compound have a 6% or higher kink rate than Euler.

1 Like
16

Objective Labs: Parameter Updates on Unichain (2025-05-30)

Market Vault Supply Cap Borrow Cap
Euler Unichain weETH 4.5k → 6.75k 1.13k → 1.69k
Euler Unichain USDC 30M → 45M 27M → 40.5M
Euler Unichain USD₮0 30M → 45M 27M → 40.5M
Market Vault Base rate Kink Rate at kink Rate at 100% (max)
Euler Unichain USDC, USD₮0 0% 90% 6% 80% → 40%

Rationale

  • Euler Unichain weETH has hit 100% supply cap. Demand has increased after Optimism’s SuperStacks XP campaign that incentivizes this vault.
  • Euler Unichain USDâ‚®0 has hit 100% supply cap. Demand has increased after Optimism’s campaign.
  • Euler Unichain USDC is expected to grow in tandem with USDâ‚®0 as leverage traders borrow USDC.
  • Rationale for IRM updates discussed in Gauntlet’s monthly risk recommendations.
1 Like
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Objective Labs: Parameter Updates on Base (2025-05-30)

Market Vault Base rate Kink Rate at kink Rate at 100% (max)
Euler Base USDC 0% 90% 5% → 4.5% 80% → 40%

Rationale

1 Like
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Objective Labs: Parameter Updates on Ethereum (2025-05-30)

Market Vault Supply Cap Borrow Cap
Euler Prime tETH 12K → 18K No Change
Euler Yield RLUSD 100M 9M → 13.5M
  • Rationale for tETH discussed in Gauntlet’s monthly risk recommendations.
  • Euler Yield RLUSD has reached $40M in deposits and 100% borrow utilization after RLUSD incentives began a few days ago. Increasing the borrow cap increases the sustainability of the RLUSD vault after incentives end.
1 Like
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This proposal has been executed on Jun-02-2025 07:25:59 AM +UTC.

1 Like
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This proposal has been executed on Jun-02-2025 08:02:47 AM UTC.

1 Like