Euler v2 launched its much-anticipated comeback a little over 4 months ago and has grown remarkably quickly in that time, reaching $250m in TVL. Today we are pleased to announce that Gauntlet is entering the Euler ecosystem to act as a risk-manager for Euler DAO’s flagship lending market: Euler Prime.
By aligning with the Euler ecosystem, Gauntlet will manage risk as Euler grows to $1b in deposits and far beyond in 2025.
What is Euler Prime?
Euler Prime offers lending and borrowing options for both real-world assets and blue chip crypto assets. Much like Euler v1, it is a cross-collateralised monolithic lending market, governed and risk-managed by Euler DAO, now with added support from Gauntlet.
With conservative risk-parameters, Prime is designed to provide market leading risk-adjusted yields with a focus on yield sourced from borrowers using only the highest quality collateral assets to support their loans. In this capacity, it acts as a trusted hub from which other vault creators can accept collateral to help bootstrap their own credit market deployments.
As Prime goes from strength-to-strength, its deposits will be accepted as collateral by more and more credit markets in the Euler ecosystem, bringing more deposits, making them even more useful to help bootstrap new credit markets. In this way, Prime will help drive a strong flywheel growth effect, benefiting not only direct users of Prime itself, but all independently deployed credit markets inside the Euler ecosystem.
What is Gauntlet’s role?
Gauntlet brings significant risk-management experience to Prime, having worked to support other legacy monolithic lending markets for several years prior to aligning with Euler. The firm will work to support onboarding new assets into the Euler ecosystem alongside monitoring and risk-management recommendations for existing assets. Specifically, Gauntlet will manage risk parameters including Borrowing LTV, Liquidation LTV, Supply and Borrow Caps, LTV Ramp Duration, and Interest Rate Curves.
Gauntlet will manage risk for all prime markets: cbBTC, cbETH, eBTC, ezETH, LBTC, mETH, mTBILL, rETH, rsETH, solvBTC, sUSDS, tBTC, USDC, USDS, USDT, weETH, wM, wstETH, wUSDM, WBTC, WETH. Gauntlet will also support Euler as it expands to other EVM chains.
In addition, Euler will leverage Aera, a protocol incubated by Gauntlet to manage EUL protocol owned token liquidity. Aera achieves higher capital efficiency than traditional Protocol Owned Liquidity (POL) by dynamically allocating Uniswap V3 LP positions.
Because Aera’s POL ranges are determined by token volatility and pool liquidity, Aera can rebalance Euler’s POL positions daily to facilitate swaps, encourage external liquidity, and minimize arbitrage losses.
Euler will begin by deploying a fully asymmetric position. As the pool price moves and passively converts EUL to ETH, the Aera strategy will rebalance the LP position such that ETH is spread over an equally wide range.
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