Euler

Lending

Euler is a permissionless money market protocol that allows users to lend and borrow almost any crypto asset.

Risk Rating
Average
Protocol Code Quality
Protocol Maturity
Protocol Design
Summary
What we like
Euler is a permissionless lending protocol that allows users to lend and borrow more long-tail assets given isolated risks.
What we like less
The lending platform exposes certain users to more risks given exposure to long-tail assets that are more prone to price manipulation.
What it means for you
Euler is a great way for you to earn additional yield on more exotic assets by lending them to borrowers.
Information
Exploit/Hacks
One
Info
Key Metrics
  • TVL: $76.7K (Rank #201)
  • TVL Ranking by Lending: #37
  • Blockchain: Ethereum
  • Chain TVL
    • Ethereum: $76.74K
Risk Assessment
Average
Protocol Code Quality
  • Code reviewed by several experienced auditors including Omniscia and Halborn
  • Public team promotes accountability
  • One unmitigated protocol hack since launch
Protocol Maturity
  • Core protocol launched in 2021; maturity over one year minimizes technical risk as smart contracts are well battle-tested
  • Top 5% by total value locked reduces risk
  • Requires members of a DAO to vote on-chain for approving contract upgrades
  • Timelock is at least 48hrs, which provides users with sufficient time to exit if any malicious upgrades are approved
  • Low voting power concentration reduces risk
Protocol Design
  • No death spiral concerns
  • Basic controls to prevent oracle price manipulation
  • Secured lending market that uses a combination of isolated and cross-collateral pools depending on the individual asset serves to reduce risk
  • Solid controls in place to prevent risky borrowing
  • Solid mechanisms in place to ensure healthy liquidations
  • Solid methods to accrue protocol reserves
Things to know about Euler

How Euler works

Euler is a permissionless money market protocol that is designed to serve the exotic, long-tail end of the market. On Euler, every token with an ETH liquidity pair on Uniswap V3 can be listed and made available for borrowing and lending. The protocol is able to achieve this through its asset tier system, which aims to mitigate the potential spillover effects of liquidations by classifying assets by their respective risk profiles. There are three asset tiers: isolation-tier, cross-tier, and collateral-tier assets. Isolation-tier assets can't be used as collateral nor can they be borrowed from the same account alongside any other assets. Cross-tier assets can't be used as collateral, but they can be borrowed alongside other assets. Lastly, collateral-tier assets are the only assets that can be used as collateral. By isolating the riskiest assets and restricting their use as collateral. Euler can allow permisionless listings without endagering the entire platform. Permissioned lending protocols like Aave and Compound can't achieve this because a potential liquidation cascade in one market could spill over to other, and ultimately leave the protocol with bad debt. Users who deposit on Euler receive eTokens in return that represent your share of the underlying asset and accrued interest. Borrowers on the platform receive dTokens that represent the user's amount of debt.

How Euler makes money

Euler charges a reserve factor similar to Compound and AAVE that allocates a share of borrowers' fees to the protocol. Each supported asset has a reserve factor based on the asset's individual risk that determines how much goes into the reserve. These fees are controlled by governance and may be paid out to EUL holders, used to compensate lenders if pools become insolvent, or other protocol uses.

How you make money on Euler

You earn lending fees on Euler by depositing your idle crypto assets to be used by borrowers looking for leverage.