If Euler steps in to compensate, it’s not hard to see what impact that would have on the curator landscape: curators and unworthy borrowers capture the upside, while downside risks are outsourced to Euler. As a result, you create an unhealthy competition to take more and more bad risks, which ultimately only hurts depositors and Euler itself.
Rather, Euler should focus on steps that align depositors with curators more, for example by creating the tools to do risk-tranching and creating healthy precedents around curators taking economic (and not just reputational) risk.