Euler Finance built the lending protocol that Aave and Compound refused to build: permissionless, where anyone can create a lending market for any ERC-20 token without governance approval. Aave and Compound only support whitelisted assets — the DAO approves each new collateral type. This is prudent risk management but excludes thousands of legitimate tokens from DeFi lending. Euler’s permissionless design lets any token be listed — anyone can create an isolated lending pool for any asset. To manage the risk of listing arbitrary tokens, Euler introduced sophisticated risk tiering: “isolated” assets can only be borrowed against themselves (not other tokens), “cross” assets can borrow from multiple pools but within limits, and “collateral” assets can be used freely as collateral. This system allows long-tail token lending while containing systemic risk. Euler also pioneered Dutch auction liquidations — rather than fixed discounts to liquidators, auctions start at large discounts and decrease until someone liquidates, minimizing value extracted from borrowers while still ensuring prompt liquidation. The protocol suffered a catastrophic $197M flash loan attack in March 2023 — then achieved something nearly unprecedented: recovered most of the funds through on-chain negotiation with the hacker.
| Stat | Value |
|---|---|
| Ticker | EUL |
| Price | $1.23 |
| Market Cap | $29.62M |
| 24h Change | +14.4% |
| Circulating Supply | 24.13M EUL |
| Max Supply | 27.18M EUL |
| All-Time High | $15.81 |
| Contract (Ethereum) | 0xd9fc...e07b |
| Contract (Arbitrum One) | 0x462c...4b64 |
| Contract (Base) | 0xa153...81b0 |
| Contract (Binance Smart Chain) | 0x2117...ffad |
| Contract (Unichain) | 0xe9c4...aa09 |
| Contract (Plasma) | 0xca63...baa6 |
| Contract (Sonic) | 0x2117...ffad |
| Contract (Berachain) | 0xeb9b...dac6 |
| Contract (Swellchain) | 0x80cc...e7a3 |
| Contract (Tac) | 0x38c0...e7dc |
| Contract (Bob Network) | 0xde17...0b8d |
| Contract (Avalanche) | 0x9cee...ac68 |
How It Works
Permissionless listing:
Any ERC-20 token can be listed on Euler permissionlessly — creating isolated lending markets accessible to all. Risk tiers determine collateral and borrowing eligibility.
Risk tiers:
- Isolation tier: Can only borrow the same token; no cross-collateral use
- Cross tier: Can borrow multiple assets; subject to cross-collateral limits
- Collateral tier: Full collateral and borrowing capability
Dutch auction liquidations:
When a position is underwater, a Dutch auction begins at a large liquidation discount. The discount decreases over time until a liquidator intervenes. This minimizes the value extracted from the borrower while ensuring timely liquidation — compared to fixed-discount systems where liquidators always extract maximum value.
EUL governance:
EUL token holders vote on risk parameters, asset tier classifications, fee rates, and protocol upgrades. The supply is memorably set at e^(10) × 1000 ≈ 27,182,818 — a math nerd’s nod to Euler’s constant (e).
Tokenomics
| Metric | Value |
|---|---|
| Supply | 27,182,818 EUL (≈ e × 10^7, Euler’s number reference) |
| Governance | Protocol parameter voting |
| Liquidity mining | EUL distributed to active borrowers/lenders |
| Protocol fees | Generated from borrower interest |
Use Cases
- Long-tail token lending — Access lending/borrowing for tokens not supported by Aave or Compound
- Governance — EUL holders vote on risk parameters and new collateral tier assignments
- Capital efficiency — Multi-collateral lending with fine-grained risk controls
- Protected collateral — Euler’s “protected” collateral mode prevents collateral from being lent out (unlike Aave, where deposited collateral can be lent)
History
- Apr 2022 — Euler Finance launches on Ethereum mainnet; permissionless lending goes live
- 2022 — Grows to $250M+ TVL; receives backing from Haun Ventures and others; EUL token has LM rewards
- Mar 2023 — Flash loan attack drains $197M from Euler using a vulnerability in the donation/health check mechanism
- Apr 2023 — In an extraordinary outcome, the hacker returns most funds after on-chain negotiations; Euler distributes recovered funds to affected users
- 2024 — Euler V2 launches with improved architecture, isolated vaults, and Ethereum Vaults Connector for composability
- Ongoing — Euler V2 positions as next-generation permissionless lending infrastructure
Common Misconceptions
“Euler was destroyed by the 2023 hack.” The team negotiated the recovery of ~$177M of the $197M stolen — one of the few large DeFi hacks where substantial funds were returned. Euler V2 relaunched with improved security.
“Permissionless listing means uncontrolled risk.” Euler’s tiered risk system contains exposure — a bad token listed in isolated tier cannot infect other lending pools. Risk is compartmentalized by design.