Summary
LlamaRisk supports the proposed parameter changes to WBTC and EURS from @ChaosLabs. The illiquidity of EURS on Polygon prevents this position from being resolved, resulting in persistent bad debt. The rationale for increasing WBTC’s liquidation bonus would provide a strong incentive for liquidators, compensating them for the cost of bridging liquidity from more liquid chains.
Increasing EURS’s reserve factor to 99% would further deprecate the asset’s use on Aave, as any potential profitability for lenders would be reduced to zero, thereby disincentivizing further deposits into this market. Combined, these parameter changes would:
- Accelerate debt resolution: A temporarily higher bonus encourages larger, more frequent liquidations using bridged liquidity.
- Finalize market deprecation: High reserve factors curtail EURS utilization and isolate the asset, ensuring the market remains unattractive.
The largest debt position currently has 510K EUR outstanding (~$606K), with a health factor of 0.91.
Liquidity
Source: EURS Polygon Pools, Geckoterminal, February 10th, 2026
As shown above, EURS liquidity is limited, with only a single pool with meaningful liquidity. Onchain supply is concentrated on Aave, with ~72% of the available 1.75M supply having been deposited. Within the available pools, there is less than $10K in EURS.
Peg Comparison
Source: EURS/USD, Geckoterminal, February 10th 2026
Source: EUR/USD Exchange Rate, Chainlink, February 10th, 2026
A relative comparison of historical EURS-to-EUR prices shows that EURS has traded at a premium, with small trades causing significant price movements, as shown above.
Bridge Simulation
Source: EURS bridge from Ethereum, Jumper Exchange. February 10th, 2026
A simulated bridge transaction of a larger value than the observed average liquidation size ($262.71) indicates that the increased Liquidation Bonus provides sufficient coverage for bridging costs and a profit incentive for liquidators on Polygon.
Disclaimer
This review was independently prepared by LlamaRisk, a DeFi risk service provider funded in part by the Aave DAO. LlamaRisk is not directly affiliated with the protocol(s) reviewed in this assessment and did not receive any compensation from the protocol(s) or their affiliated entities for this work.
The information provided should not be construed as legal, financial, tax, or professional advice.