Idle

The following is an extract of the proposal posted on the Idle governance forum.

Summary

A proposal to add the Euler DAI staking Senior tranches as a new yield source to the Senior Best Yield strategy.

Proposal

Today we want to continue the discussion on the last missing stablecoin piece to join the Best Yield aggregation layer:

• The Euler staking PYTs for the DAI market, with specs available on GitHub here

Similar to previous integrations, Euler staking ones would benefit doubly the Idle ecosystem

By integrating Clearpool USDC (Senior) tranches as a new yield source for the USDC BY strategy, we can create a two-side benefit for the Idle protocol:

1. The USDC BY strategy can add a new yield source, besides the usual Aave and Compound, able to offer an average APY in the 5% to 10% range. Currently, Aave and Compound offer APYs lower than 1%. This significant increase in yield can benefit current BY LPs and attract new users to the protocol.
2. The USDC BY funds flowing to the Senior side of Clearpool PYTs can create a stable source of funding for the Senior tranches and consequently incentive new Junior liquidity deployments thanks to the boosted APYs available (with an expected average APY in the range of 10% to 20%).

Currently, the Euler DAO is discussing to extend the duration of the EUL incentives distribution indefinitely to its staking markets with the following specs:

Token	EUL distribution
eWETH	9,000 per epoch
eUSDC	5,000 per epoch
eUSDT	1,000 per epoch

The Euler DAI staking PYTs will benefit from the Peg Stability Model (PSM) of Maker DAO to swap 1:1 DAI to USDC and enjoy indirectly the staking rewards distributed by Euler DAO.

Euler details

Euler hit the mainnet in December 2021. Euler’s Perpetual Yield Tranches are live since June 2022.

Euler is a non-custodial permissionless lending protocol on Ethereum that helps users to earn interest on their crypto assets or hedge against volatile markets without the need for a trusted third party.

Euler protocol features a number of innovations not seen before in DeFi, including permissionless lending markets, reactive interest rates, protected collateral, MEV-resistant liquidations, multi-collateral stability pools, and much more.

From the security perspective, Euler has been committed to develop various safe mode measures and introduced the Oracle Risk Grading System. This mechanism empowers Euler DAO to enable lending and borrowing on any ERC-20 token thanks to Uniswap v3 TWAP (Time Weighted Average Price). The risk system estimates the oracle manipulation cost, allowing tokens to unlock specific functionalities (e.g. collateral) only above a certain security score.