[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.

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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.
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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.

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

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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.
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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.

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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.

1 Like
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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.

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

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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.