Euler Finance (EUL) is a permissionless Ethereum lending protocol founded by Michael Bentley (University of Oxford quantitative finance PhD) and the Euler Labs team — notable for allowing anyone to create lending markets for any ERC-20 token without governance approval (unlike Aave or Compound’s curated asset whitelists) via a three-tier risk system (isolated, cross, and collateral tiers) and reactive interest rate models — that suffered a $197 million flash loan attack on March 13, 2023 (the largest DeFi hack of 2023), in which an attacker exploited a vulnerability in Euler’s donation mechanism where a donation to reserves followed by a self-liquidation could extract more collateral than debt repaid, and that achieved a rare distinction: the attacker returned approximately $177 million of the stolen funds within 17 days after negotiations conducted primarily on-chain via Ethereum transaction calldata messages, followed by a complete rebuild as Euler V2 with a modular vault architecture.
| Stat | Value |
|---|---|
| Ticker | EUL |
| Price | $1.22 |
| Market Cap | $29.34M |
| 24h Change | +10.9% |
| 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 market creation — Unlike Aave or Compound, anyone can create an Euler lending market for any ERC-20 token. Markets self-configure via on-chain governance parameters; risk tiers are voted on by the Euler DAO.
- Risk tiers — Euler uses three-tier collateral classification:
Collateral tier: Assets that can back borrowing (e.g., WETH, WBTC, USDC)
Cross tier: Assets that can be borrowed but not used as collateral, except to back same-tier borrows
Isolated tier: Assets that can only be borrowed in an isolated account (risk-isolated from other positions) - Reactive interest rates — Rather than fixed interest rate curves, Euler’s reactive interest rates automatically adjust based on whether utilization is above or below a target, accelerating rate increases when assets are overutilized.
- Protected collateral — Euler allows depositors to mark collateral as “protected” — it cannot be lent by the protocol (so it can’t be borrowed), protecting it from interest rate risk while still counting toward LTV collateral.
- Sub-accounts — Euler allows each wallet to have 256 sub-accounts, enabling isolated position management across different strategies within a single wallet.
- EUL governance — EUL holders vote on risk tier assignments, reserve factor parameters, oracle choices, and protocol upgrades.
- Euler V2 (EVK) — After the 2023 hack rebuild: a modular Euler Vault Kit where each vault is self-contained with customizable collateral rules, allowing isolated risk clusters and custom lending logic per vault.
Tokenomics
| Parameter | Value |
|---|---|
| Ticker | EUL |
| Max Supply | 27,182,818 EUL (e ≈ 2.71828…, “Euler’s number” — the mathematical constant) |
| Ethereum contract | 0xd9Fcd98c322942075A5C3860693e9f4f03AAE07b |
| Distribution | 25.27% liquidity mining; 20.33% employees; 20.33% investors; rest for treasury/DAO/ecosystem |
| Launch | July 2022 (token); protocol deployed earlier |
Use Cases
- Permissionless lending/borrowing — Lend or borrow any ERC-20 token in a Euler market without governance whitelist requirement.
- Isolated risk positions — Use sub-accounts to separate different lending strategies within one wallet.
- EUL governance — Vote on risk tiers, reserve factors, and protocol upgrades.
History
- 2021 — Euler Finance is founded by Michael Bentley and the Euler Labs team. Bentley publishes a detailed whitepaper on reactive interest rates, permissionless lending markets, and the three-tier risk classification system. The team raises $8 million in seed funding from Haun Ventures, Variant, and others.
- 2022-Q1 — Euler receives a first audit from Halborn and additional audits from other security firms. The protocol raises an additional $32 million led by FTX Ventures and Jane Street (notably, both investors later face their own crises).
- 2022-06 — Euler Finance launches on Ethereum mainnet. The permissionless market creation model attracts long-tail assets (GMX, RDNT, LQTY, and others) that create Euler markets when Aave and Compound won’t list them.
- 2022-Q3 to 2023-Q1 — Euler grows to approximately $200–300 million in TVL. The protocol becomes a reference implementation for permissionless lending with sophisticated risk management.
- 2023-03-13 — Euler Finance is exploited for $197 million in a flash loan attack. The attacker exploits a vulnerability in Euler’s
donateToReservesfunction: by donating borrowed assets to the reserve and then self-liquidating, the attacker can withdraw more collateral than their debt repayment. Ten separate transactions drain assets across USDC, DAI, WBTC, and stETH markets. This is the largest DeFi hack of 2023. - 2023-03-13 — Euler Labs pauses the protocol immediately after detecting the exploit. Security firms (PeckShield, Omniscia) publish analyses. The Euler team begins on-chain communication with the attacker via Ethereum transaction calldata messages.
- 2023-03-20 — The attacker sends 100 ETH back to Euler, interpreted as an opening negotiation signal. The Euler team responds via on-chain message.
- 2023-03-25 — The attacker begins returning funds: 3,000 ETH sent first, then larger transfers. By March 27, the attacker has returned $102 million. By April 3, substantially all stolen funds (~$177M out of $197M) are returned. The remaining difference is attributed to funds passing through Tornado Cash mixer before the attack and some lost to front-running MEV bots during the hack.
- 2023-04 — Euler Finance compensates all affected users from recovered funds plus Euler DAO treasury. The full user restitution is a rare positive outcome from a DeFi hack.
- 2023-Q4 to 2024 — Euler Labs rebuilds the protocol as Euler V2 with the Euler Vault Kit (EVK): a modular, isolated vault system where each vault is self-contained. V2 launches with improved security and the modular architecture requested by professional DeFi users.
Common Misconceptions
“The Euler attacker was caught.”
No public identification of the attacker was made. The funds were returned voluntarily. Blockchain analysis suggests the attacker may have been an individual or small group who decided the legal and personal risk of keeping the funds outweighed the value. No criminal charges were publicly announced.
“Euler’s ‘Euler number’ max supply is a coincidence.”
The 27,182,818 EUL max supply is intentional: it equals the mathematical constant e (Euler’s number: 2.71828…) × 10^7. This is a deliberate tribute to mathematician Leonhard Euler, for whom the protocol is named.
Social Media Sentiment
Euler Finance’s $197M hack and subsequent near-total fund recovery makes it one of the most memorable stories in DeFi history. The on-chain negotiation — a hacker and a protocol team communicating through Ethereum transaction calldata in plain text — is widely shared as a fascinating piece of crypto history. The EVK rebuild demonstrates resilience and is praised by DeFi developers as a more composable architecture than V1. EUL token holders were particularly relieved by the full user compensation.
Last updated: 2026-04