Context
In an effort to further USDA adoption and provide additional options for deployment of protocol-owned-liquidity, this proposal adds a USDA cluster on Euler v2.
Proposal
- Seed 500k USDA into Euler USDA vault cluster on Ethereum Mainnet
Rationale
A new lending protocol on Ethereum
Euler v2 is set to launch shortly, and will be a complete redesign to allow for modular vaults that can be connected together to form isolated lending clusters on any set of arbitrary collateral and deposit assets. Re7 Labs is working in collaboration with Euler to have a set of clusters live at launch and we expect there to be good demand for borrowing and depositing on the new protocol with programs like the Euler XP program.
Euler v2 offers modular lending vaults and a number of benefits for a USDA vault including:
- Ability to set collateral assets that can be used to borrow USDA from the Euler vault.
- Ability to retain governance on a vault in order to add or remove collateral assets as needed.
- Ability to set custom IRM parameters similar to Aave, where kink point, optimal utilization and maxmium rates.
Vault configuration
We propose a USDA vault that targets an interest rate of 6% (in line with the current sDAI rate).
Initial USDA vault parameters:
- Optimal utilization: 90%
- Kink rate: 6%
- Max rate: 100%
- Interest fee: 10%
Initial collateral assets:
- wstETH
- WETH
- tBTC
The vault will retain governance to be able to update IRM parameters and accepted collaterals. The governed vault will be whitelisted by Euler to show on the UI.
Peg implications
The allocated amount is small and shouldn’t impact the peg of USDA. By retaining vault governance, the IRM can be updated to increase interest rates if needed.
Value to Protocol
- Increase utility of USDA on Ethereum by providing a loan facility through a new protocol
- Exposure to new Euler v2 incentives which spreads protocol risk out for Angle deposits.
- Increased revenues vs current available options on Mainnet due to managed IRM.
- Vault configuration and updates will be managed by Re7 Labs in coordination with the Angle team.