Euler

• Euler is a lending protocol on Ethereum that lets builders deploy custom lending vaults for almost any ERC-20 token.

• Its Euler Vault Kit and Ethereum Vault Connector let a single collateral position back borrowing across multiple vaults.

• EUL is used for governance and for directing incentives across the ecosystem.

• Governance token with supply allocated across the DAO, contributors and distribution programmes.

• No fixed link between token supply and protocol interest revenue.

Pros:

• Permissionless vault creation covers assets that pooled protocols will not list.

• The protocol was rebuilt and relaunched after a major 2023 exploit, with the stolen funds returned.

• Cross-vault collateral improves capital efficiency for active borrowers.

Cons:

• The 2023 exploit, though resolved, remains part of the protocol's history and risk assessment.

• Permissionless listing means vault quality varies widely.

• Smaller deposit base than the largest lending protocols.

• Exposure to modular lending infrastructure rather than a single monolithic pool.

• The recovery and relaunch after the exploit is evidence of both the risk and the response.

• Consider the competitive position against larger incumbents in the same segment.

• Cross-vault collateral, letting one deposit support borrowing positions in several markets at once.

• Long-tail assets are excluded from lending markets because listing them endangers shared pools.

• Isolated, builder-deployed vaults make listing a local decision rather than a protocol-wide one.

• Founded by Michael Bentley, previously an evolutionary biologist, alongside Doug Hoyte.

• Developed by Euler Labs with governance through the Euler DAO.

• No public sale. EUL was distributed via private rounds and a community distribution.

• Smart contract risk, demonstrated by the 2023 exploit in an earlier version of the protocol.

• Vault-level risk varies; a poorly parameterised vault can accrue bad debt.

• Oracle dependency for collateral pricing.

• Competitive pressure from larger lending protocols.

Euler's documentation argues that the binding constraint on lending markets is not capital but listing policy. Conventional pooled protocols must vote each asset in, and because all depositors share the pool's risk, that vote is conservative by necessity. Euler's vault architecture pushes the decision to whoever deploys the vault, with the Ethereum Vault Connector providing the accounting that lets one collateral position serve several vaults without them needing to trust each other. The papers are explicit that this shifts risk assessment onto the depositor and the vault operator rather than removing it.