Summary

This proposal aims to supply 120M sUSDS from the deUSD Treasury into an sUSDS Treasury Vault curated by Gauntlet. The vault is designed to enable Elixir to earn conservative yield on its sUSDS holdings in the deUSD Treasury. This non-custodial vault will provide actively curated risk-adjusted yield and managed liquidity to protect ongoing treasury operations.

Reasoning

Elixir’s deUSD Treasury holds ~165M sUSDS. This proposal enables Elixir to supply 120M sUSDS into a non-custodial, Gauntlet-curated Treasury Vault designed to deliver conservative, risk-adjusted yield while maintaining liquidity for operational needs. Gauntlet’s Prime Vault strategy prioritizes capital preservation and active liquidity management, offering a secure and sustainable way to grow treasury assets and protect ongoing operations.

Proposed Implementation

Gauntlet will curate an Elixir sUSDS Treasury Vault to provide a conservative, risk-adjusted yield to Elixir’s deUSD Treasury holdings of sUSDS.

Gauntlet will work closely with Elixir to source, run due diligence, set parameters and list markets that drive conservative risk-adjusted yield to the Treasury Vault, and support the RWA DeFi ecosystem that Elixir is building.

Gauntlet Vaults on Morpho

Gauntlet offers multiple risk and yield-optimized strategies on Base and Ethereum, allowing clients to select strategies that suit them best.

There are three primary vault categories, each with its own risk profile.

• Gauntlet Prime Vaults offer risk-adjusted yield from very low insolvency risk strategies with bluechip, highly liquid assets as collateral.

• Gauntlet Core Vaults offer smarter yield, low insolvency risk strategies with a blend of blue chip and small-cap assets as collateral.

• Gauntlet Frontier Vaults target maximum yield, accepting higher risks from volatility and liquidity constraints in exchange for greater supplier returns.

For the purposes of this proposal and program, Gauntlet proposes to start with a bespoke vault that uses Prime Vault strategies to mitigate the risk of insolvencies or other adverse effects due to market volatility.

Gauntlet continuously rebalances asset allocations across Morpho Markets to optimize for risk-adjusted returns subject to the following considerations:

• Collateral risk exposure
• Lending market utilization
• Competitive borrow and supply rates
• Liquidity for partial withdrawals

Program Avg APY last 30 days (Inc Morpho Rewards): Gauntlet USDC Core: 6.01% Gauntlet USDC Prime: 5.11% Aave USDC: 2.74%

Elixir sUSDS Treasury Vault

Gauntlet will work with Elixir to curate an Elixir-owned vault that runs strategies similar to those of our Prime Vaults. All Vault changes — collateral markets, parameters, and interest rate schemas — will be recommended by Gauntlet and approved in partnership with Elixir prior to onchain execution. Gauntlet will use its extensive experience to ensure the Vaults offer the best risk-adjusted yield for their targeted risk level and a sustainable path to growing yield as Elixir scales the program across its user base.

Vault Parameters Owner: Elixir Guardian and Curator: Gauntlet Additional Characteristics:

• Timelock Policy: 120+ hours to mitigate smart contract (SC) exploitation risks.
• Oracle Risk Considerations: No reliance on hardcoded or misaligned oracles; must dynamically track collateral/loan relationships; oracle provider must be from a Gauntlet-approved list. Oracles must be audited by a Gauntlet-approved auditor.
• Program Fee: Gauntlet will apply a 7.5% performance fee to the vault on accrued interest, and pass 2.5% (or 1/3 of the total performance fee) back to the Elixir DAO. The fee applies to native yield, and does not apply to any rewards or points generated by the vault.

Market Creation

In addition to the creation of the Elixir sUSDS Treasury Vault, Gauntlet will conduct due diligence on Galaxy’s new Private Credit RWA for addition to Morpho as a collateral asset. Conditional on the asset passing Due Diligence, Gauntlet will set appropriate parameters and launch the market on Morpho. Gauntlet will work with Elixir and Galaxy to source appropriate liquidators and liquidation pathways to protect the Treasury from any liquidations and insolvent positions.

Gauntlet will work with Elixir to source new collateral markets that fit the risk profile and strategy of the vault, providing conservative risk-adjusted yield to the Elixir Treasury and supporting the growing ecosystem of Elixir RWA partners in DeFi.

Questions and Clarity

About Gauntlet

Gauntlet is the leading product-led model provider in crypto, building optimization strategies and platforms for tokens, protocols, and chains. Gauntlet is now applying its years of research and expertise managing risk for DeFi’s largest lending protocols to Gauntlet Morpho Vaults, curating sophisticated risk-adjusted yield to vault suppliers.

Gauntlet has extensive experience collaborating with partners across product, engineering, legal, and growth. We are a US-based company backed by Ribbit Capital, Coinbase Ventures, Polychain, Paradigm, Bain Capital, and Standard Crypto, among others.

For more info on Gauntlet, see the Gauntlet website.

About Morpho

Morpho (~$4.2B TVL) is a lending protocol providing a trustless lending primitive layer (Morpho Markets) combined with an abstracted non-custodial risk and yield vault management layer (Morpho Vaults).

In each vault, the Vault Curator can:

• Allocate user supply between various Morpho Markets
• Manage supply caps for different markets to manage risk and optimize yield
• Set vault fees to earn a proportion of the interest
• In line with their non-custodial nature, all supply and withdrawal transactions can only be completed by the supplier.

Steps to Implement Governance:

1. Forum Discussion Period (~1-2 Weeks, completed)
2. Snapshot Vote (~1 week, ongoing)
3. Vault Creation: Gauntlet creates the Elixir sUSDS Treasury Vault with the parameters outlined above.
4. Vault Seeding: Elixir will seed the Vault with 120M sUSDS from their deUSD Treasury.
5. Vault Curation (ongoing): Gauntlet will actively serve as vault curator to ensure the Vaults offer the best risk-adjusted yield for their targeted risk level.