What is Euler (EUL)?

Deep Dive

1. Purpose & Value Proposition

Euler addresses inefficiencies in DeFi lending by enabling permissionless creation of isolated markets, allowing niche or volatile assets to be borrowed/lent without systemic risk. Unlike traditional platforms, users set risk parameters (e.g., collateral ratios, interest rates) for custom strategies, making it ideal for institutions and advanced DeFi participants.

2. Technology & Architecture

The protocol’s modular design revolves around two core components:
- Euler Vault Kit (EVK): A toolkit for building isolated lending markets with customizable risk parameters.
- Ethereum Vault Connector (EVC): Facilitates cross-vault interactions, letting users borrow against one vault’s collateral in another.
This architecture supports ERC-4626 standards, enabling seamless integration with yield-bearing tokens and composable strategies.

3. Tokenomics & Governance

EUL is the governance token, used to vote on protocol upgrades, fee structures, and risk parameters. Its Fee Flow mechanism auctions protocol revenue (in stablecoins) to EUL holders, burning a portion of bids to reduce supply. Staking EUL also boosts user yields, aligning incentives between stakeholders and protocol growth.

Conclusion

Euler reimagines DeFi lending by merging flexibility with institutional-grade risk management. Its modular toolkit empowers builders while isolating risks, and EUL’s governance model ties protocol success to token utility. How might Euler’s design adapt as demand for long-tail asset lending grows?