Difference between revisions of "Euler (EUL)"

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== History ==
== History ==
* [https://doseofdefi.substack.com/p/modular-lending-more-than-a-meme From] Dose of [[DeFi]] (30-5-2024):
''"Launched its v1 in 2022 and generated over $200 million in open interest before a hack drained nearly all protocol funds (although they were later returned). Now, it’s preparing to launch its v2 and reenter a maturing modular lending ecosystem as a major player."''


== Audits & Exploits ==
== Audits & Exploits ==
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=== Bugs/Exploits ===
=== Bugs/Exploits ===
* [https://newsletter.blockthreat.io/p/blockthreat-week-11-2023 From] Blockthreat (22-3-2023):
''"The exploit transaction was initially front-run by an MEV bot, but the hard-coded'' [[address]] ''only benefitted the attacker. Things got really wild when the attacker first sent [https://etherscan.io/tx/0xcc8edbe70d22176e90027bb07047b5cc7541b169ef9ef71ae6d6793f344b8bc5 100 ETH to a random on-chain beggar] and later [https://etherscan.io/tx/0x202a67d3a1d52e4dd5e1eebe49da511164b6e4a1ebe717dcf4674dd83a2bd457 sent 100 ETH to the Ronin Bridge exploiter] address which in turn [https://etherscan.io/tx/0xcf0b3487dc443f1ef92b4fe27ff7f89e07588cdc0e2b37d50adb8158c697cea6 replied with an encrypted message] which some suspect was to phish but more likely to just thank or even recruit the bad actor, [https://archive.org/details/The_KGB_The_Computer_and_Me_1990 Cuckoo’s Egg] style. Euler attacker has since returned 3000 ETH back to Euler and continues communicating with Euler to send back what is not theirs to keep."''
* [https://decrypt.co/123656/euler-issues-on-chain-ultimatum-to-hacker-in-bid-to-recover-treasury From] [[Decrypt (DCPT)|Decrypt]] (16-3-2023):
''"If 90% of the funds are not returned within 24 hours, tomorrow we will launch a $1M reward for information that leads to your arrest and the return of all funds," the publicly encoded message from Euler Finance said. The reward was publicly announced by the Euler Foundation today."''
* [https://decrypt.co/123293/defi-lender-euler-finance-hit-flash-loan-attack From] Decrypt (13-3-2023):
''"Suffered an exploit of approximately $196.9 million, the attacker used a series of six different [[Flash Loans|flash loans]] to leverage the attack. The attacker nabbed $8.7 million in [[Maker DAO|DAI]], $18.5 million in [[Wrapped Bitcoin (WBTC)|Wrapped Bitcoin]] (WBTC), a whopping $135.8 million in Staked Ethereum ([[stETH]]), and another $33.8 million in Circle's USD stablecoin [[US Dollar Coin (USDC)|USDC]]."''
== Governance ==
== Governance ==
=== Admin Keys ===
=== Admin Keys ===
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=== How it works ===
=== How it works ===


* [https://doseofdefi.substack.com/p/modular-lending-more-than-a-meme From] Dose of [[DeFi]] (30-5-2024):
''"Euler v2 has two key components. One, the Euler Vault Kit (EVK), which is a framework for creation of ERC4626 compatible vaults with additional borrowing functionality, enabling them to serve as passive lending pools, and two, the Ethereum Vault Connector (EVC), which is an EVM primitive that primarily enables multi-vault collateralisation, i.e., multiple vaults can use collateral made available by one vault. V2 has a planned Q2/Q3 launch."''
* From a commissioned [[Messari]] [https://messari.vercel.app/article/state-of-euler-q4-2022 report] (2-2023):
* From a commissioned [[Messari]] [https://messari.vercel.app/article/state-of-euler-q4-2022 report] (2-2023):


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== Usage ==
== Usage ==


* Per [[DeFi Llama]], the project's total value locked ([[Total Value Locked (TVL)|TVL]]), [https://defillama.com/protocol/euler was] $237.9 million prior to the attack (13-3-2023).
* From a commissioned [[Messari]] [https://messari.vercel.app/article/state-of-euler-q4-2022 report] (2-2023):
* From a commissioned [[Messari]] [https://messari.vercel.app/article/state-of-euler-q4-2022 report] (2-2023):
''"The 2022 bear market had little impact on Euler’s usage metrics. Pool count, average daily active users, unique users, daily number of borrows, and daily number of deposits all increased consistently over the year. The protocol went live on Ethereum Mainnet in December 2021. Although these metrics could be reflective of Euler only being live on Ethereum Mainnet since December 2021, they still show that Euler grew consistently over a tumultuous year.''
''"The 2022 bear market had little impact on Euler’s usage metrics. Pool count, average daily active users, unique users, daily number of borrows, and daily number of deposits all increased consistently over the year. The protocol went live on Ethereum Mainnet in December 2021. Although these metrics could be reflective of Euler only being live on Ethereum Mainnet since December 2021, they still show that Euler grew consistently over a tumultuous year.''



Latest revision as of 03:09, 24 June 2024

From a commissioned Messari report (2-2023):

"Euler Finance (pronounced “Oiler”) is a permissionless lending protocol built on Ethereum, empowering users to lend and borrow ERC-20 tokens."

Basics

"A decentralized lending protocol centered around reactive interest rate models."

History

"Launched its v1 in 2022 and generated over $200 million in open interest before a hack drained nearly all protocol funds (although they were later returned). Now, it’s preparing to launch its v2 and reenter a maturing modular lending ecosystem as a major player."

Audits & Exploits

Bugs/Exploits

  • From Blockthreat (22-3-2023):

"The exploit transaction was initially front-run by an MEV bot, but the hard-coded address only benefitted the attacker. Things got really wild when the attacker first sent 100 ETH to a random on-chain beggar and later sent 100 ETH to the Ronin Bridge exploiter address which in turn replied with an encrypted message which some suspect was to phish but more likely to just thank or even recruit the bad actor, Cuckoo’s Egg style. Euler attacker has since returned 3000 ETH back to Euler and continues communicating with Euler to send back what is not theirs to keep."

"If 90% of the funds are not returned within 24 hours, tomorrow we will launch a $1M reward for information that leads to your arrest and the return of all funds," the publicly encoded message from Euler Finance said. The reward was publicly announced by the Euler Foundation today."

  • From Decrypt (13-3-2023):

"Suffered an exploit of approximately $196.9 million, the attacker used a series of six different flash loans to leverage the attack. The attacker nabbed $8.7 million in DAI, $18.5 million in Wrapped Bitcoin (WBTC), a whopping $135.8 million in Staked Ethereum (stETH), and another $33.8 million in Circle's USD stablecoin USDC."

Governance

Admin Keys

DAO

Treasury

Token

Launch

  • EUL tokens could be claimed in 6-2022, starting Euler DAO governance.

Token allocation

Utility

Token Details

Stablecoin

Coin Distribution

  • Lemniscap turned out to have "$6.3M 682k EUL, up from 292k" with which they "determines the majority of Euler proposals. 8/10 last proposals they were >50% of votes: 1 no vote & 1 was 48%"

Technology

How it works

"Euler v2 has two key components. One, the Euler Vault Kit (EVK), which is a framework for creation of ERC4626 compatible vaults with additional borrowing functionality, enabling them to serve as passive lending pools, and two, the Ethereum Vault Connector (EVC), which is an EVM primitive that primarily enables multi-vault collateralisation, i.e., multiple vaults can use collateral made available by one vault. V2 has a planned Q2/Q3 launch."

"Euler Finance is governed by EulerDAO, which uses EUL (ERC-20 token) to govern the protocol. Euler differentiates itself from other lending protocols in a number of ways, including permissionless token listing with a Uni V3 TWAP oracle, two-sided risk-adjusted borrowing capacities, improved liquidation efficiency through gradual Dutch auctions, and more. Euler introduces a risk framework for classifying assets into three tiers — isolation tier, cross tier, collateral tier — which dictate whether an asset can be used as collateral or as a lending and borrowing asset.

Euler has gauges where tokenholders can vote to allocate EUL rewards to borrowers of various assets. These rewards reduce the borrowing cost on loans, leading the natural interest rate (which ignores the reward from incentives) to trade a positive spread to peers (using Aave as an example).

Liquidations on Euler utilize a unique mechanism. They create a gradual Dutch auction for liquidators to bid for collateral assets instead of simply giving them at a fixed discount to the fastest or highest gas-paying liquidator. The liquidation discount is capped at 20%. This approach results in cheaper liquidations for larger borrowers. In the last nine months of 2022, liquidations over $10,000 were executed at an average discount rate of 2.77%, while liquidations smaller than $10,000 but over $100 were liquidated at a 7.54% average discount. The protocol charges the liquidator a 2% liquidation surcharge, which is included in the discount rate, or amount returned to the borrower who is being liquidated. Euler liquidators are accepting a mere 0.77% return on large liquidations. Given many protocols are charging closer to 5% for all liquidations, the auction-based metric gives a first look at market-based liquidation pricing at different loan sizes."

Fees

Upgrades

Staking

Liquidity Mining

Scaling

Different Implementations

Interoperability

Other Details

Oracle Method

Privacy Method

Compliance

Their Other Projects

Roadmap

  • Can be found [Insert link here].

Revenue

"In the last nine months of 2022, Euler averaged $8,000 per day in protocol revenues (also serving as reserves). The protocol earns fees in the form of reserves from both a share of interest and payments and a share of liquidations. About 14% of reserves generated in 2022 were from liquidations, with the three largest earning days all having over $2 million of liquidations. Euler collects reserves from liquidations denominated in the borrowed asset, thereby creating a stronger buffer against future liquidations of borrows in that asset."

Keep in mind that Euler does use EUL incentives.

Usage

  • Per DeFi Llama, the project's total value locked (TVL), was $237.9 million prior to the attack (13-3-2023).
  • From a commissioned Messari report (2-2023):

"The 2022 bear market had little impact on Euler’s usage metrics. Pool count, average daily active users, unique users, daily number of borrows, and daily number of deposits all increased consistently over the year. The protocol went live on Ethereum Mainnet in December 2021. Although these metrics could be reflective of Euler only being live on Ethereum Mainnet since December 2021, they still show that Euler grew consistently over a tumultuous year.

Using value deposited in Compound, Aave, and Euler as a proxy, Euler launched in December 2021 and entered the year with 0.1% market share. In November 2022, it reached a peak of 6.8% share, closing the year at 4.3%."

"Euler's utilization has remained extremely high throughout its life. Despite the recent crisis, confidence in Euler has hit a new high. Utilization consistently hits between 80 - 100% versus Aave’s ~40% or Compound’s 44%. 80%+ utilization incentivizes more lenders and borrowers, making Euler's revenue versus incentives unbeaten at a deficit of $759k, versus leaders at a deficit of $1.3m despite a comparatively minuscule TVL, meaning a smaller base for fees."

Projects that use or built on it

Competition

Pros and Cons

Pros

Cons

  • Had investment from Alameda Research/FTX, which came out (11-11-2022) during the FTX crash. This could mean fall-out risk.

Team, Funding, Partners

Team

  • Full team can be found [here].

Funding

  • Lemniscap turned out to have "$6.3M 682k EUL, up from 292k" with which they "determines the majority of Euler proposals. 8/10 last proposals they were >50% of votes: 1 no vote & 1 was 48%"
  • FTX turned out to have invested $5.6M in exchange for tokens (8-12-2022).
  • Matter Labs; according to Matter Labs, the founders and leadership of a bunch of DeFi projects, among which this project, joined in on the $50m raise for zkSync (8-11-2021).
  • From EthHub (31-8-2021):

"Euler Raises $8 Million. The Series A round was led by Paradigm with participation from Lemniscap and angels. like Anthony Sassano, Ryan Sean Adams, David Hoffman, Kain Warwick, Hasu, Danilo Carlucci, Supriyo Roy, and Xin Wang."

Partners 

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