Optimizing on-chain management of Euler vaults

Euler DAO Protocol
1

Risk Steward: Optimizing on-chain management of Euler vaults

Author: Euler Labs
Date: 2025-04-03

Summary

In collaboration with Objective Labs, Euler Labs has developed the CapRiskSteward smart contract that will act as a fast lane for incremental non-critical changes to Euler DAO vaults. Inspired by similar provisions on Aave, CapRiskSteward allows authorized parties to execute incremental updates to vault caps and change interest rate models without going through the standard 48-hour timelock. CapRiskSteward will be installed as a complement to the current governance mechanisms but will not replace them. Adjustments exceeding the scope and limits of CapRiskSteward will still need to be enacted through the timelock controller.

Specification

CapRiskSteward is deployed with hardcoded limits to the adjustment rate of caps. Risk stewards can adjust caps by a factor of 1.5 every 72 hours. Risk stewards can update the interest rate model to any instance deployed by the canonical EulerKinkIRMFactory. The factory itself limits the maximum APY to 1000%.

CapRiskSteward will be installed on all Euler DAO markets: Euler Prime, Euler Yield, Euler Base, Euler Swell. The admin role will be given to Euler DAO. The admin can choose the authorized users that can call setCaps and setInterestModel through CapRiskSteward.

The proposed configuration is as follows:

  1. CapRiskSteward

    • DEFAULT_ADMIN role: Euler DAO
    • WILDCARD role: multisig comprised of Gauntlet, Objective Labs and Euler Labs signers not giving unilateral power to any provider

  2. GovernorAccessControlEmergency

    • setCaps.selector role: CapRiskSteward
    • setInterestRateModel.selector role: CapRiskSteward

Note that the CapRiskSteward contract is being currently audited by MixBytes. The audit will conclude before the smart contract is deployed.

Voting

Given Euler’s recent move to an optimistic governance framework, no formal on or off-chain voting is currently required for this proposal to pass. However, we encourage the Euler DAO and community members to provide feedback, share suggestions, and voice their opinions on this initiative. Community input will, as always, be crucial to ensuring that Euler remains relevant, competitive, and risk-managed.

Implementation

Unless any concerns are raised or the DAO would like more time for consideration, this proposal will be actioned by the Euler Foundation in 2 days’ time.

Copyright

The author of this proposal, Euler Labs, is contracted to provide software development services by Euler DAO. Copyright and related rights waived via CC0.

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