Summary
This proposal requests DAO approval to set the Reserve Fee for the upcoming Securitize DS token markets on Euler at 5% (down from the default 10%).
Reducing the Reserve Fee will improve borrower competitiveness and support the successful adoption and scaling of institutional RWA markets on Euler, while preserving alignment between the curator and the protocol.
Note: In the Euler Vault Kit contracts/UI, this parameter is represented as interestFee. This proposal uses the Reserve Fee for readability.
Background
This proposal is submitted in the context of the onboarding of Securitize markets on Euler, recently announced by Securitize, Euler, and kpk. These markets represent a meaningful step toward expanding institutional-grade Real World Asset (RWA) infrastructure within the Euler ecosystem. kpk is actively supporting the deployment and risk management of the Securitize markets on Euler.
Euler’s default Reserve Fee is set at 10%, split evenly between the curator and the protocol. The contract prohibits setting a lower value by default to ensure that Euler captures a minimum share of generated fees. A manual override can be executed following DAO approval.
Tokenised RWA markets typically operate with lower, tighter base yields than crypto-native markets. Fee efficiency, therefore, has an outsized impact on lender APY (since the Reserve Fee is skimmed from borrower interest) as well as borrower viability and looping demand.
For example, at a 4% base yield, a 10% reserve fee skims ~40 bps from the interest stream, reducing lender APY from 4% to 3.6% (all else equal). In practice, that can materially affect both lender attractiveness and loop viability during early market bootstrapping.
In today’s market, several venues price early RWA looping with low or zero protocol fees to accelerate growth. In that environment, a 10% Reserve Fee at launch risks making Euler markets less attractive to borrowers and limiting utilisation.
| Protocol | Reserve Fee |
|---|---|
| Aave Horizon | 0% |
| Morpho | 0% |
Proposal
kpk proposes that the Euler DAO approve a manual override to set the Reserve Fee for the Securitize markets at 5% total at launch.
This is a growth-oriented configuration intended to increase borrower participation, utilisation, and TVL. Facilitating institutional adoption and strengthening Euler’s positioning as a preferred venue for compliant, structured on-chain RWA lending and borrowing.
The DAO can revisit the Reserve Fee once the markets mature (e.g., after 8-12 weeks of live operation or upon reaching a defined TVL/utilisation threshold) and request an adjustment upward if appropriate.
Given the structural yield profile of RWAs, a more efficient fee configuration is expected to support higher TVL, deeper utilisation, and ultimately more sustainable aggregate fee generation for the protocol.
Note: This change is scoped to the Securitize markets and does not affect Euler’s default configuration for other markets.
Implementation details
kpk requests that Euler update ProtocolConfig so that an Interest Fee of 5% (value 500) is permitted for the Securitize USDC vaults listed below.
Concretely: today, the vault kit appears to enforce a “guaranteed range” for interest fee updates, and values below 10% fall back to ProtocolConfig.isValidInterestFee() checks. The proposal would like ProtocolConfig to explicitly allow 5% for these vaults (via a per-vault override or an expanded allowed range for this vault set).
Scope:
- USDC vault (ecVBILL collateral)
0x2ff596321782fe034102f55af5ad707a4ce0d6a7 - USDC vault (ecSTAC collateral)
0x8b2d7534ffcf6c2a9226f439cdac26c6666e97a9 - USDC vault (ecACRED collateral)
0x75e2DAbcfb2edb0e63445ac9F027e3048508eA2b
Once ProtocolConfig permits interestFee = 500, kpk will execute setInterestFee(500) on each vault itself.
Next steps
kpk encourages the community to provide feedback and suggestions to ensure this plan aligns with the DAO’s and its tokenholders’ best interests. If there is general support, kpk will coordinate the on-chain steps required to apply the DAO-approved override for the Securitize markets.