Euler Light Report

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Collateralized lending and borrowing with tiered assets

 

  • EUL is the native token of the Euler Protocol, an on-chain non-custodial permissionless lending and borrowing protocol native to Ethereum.
  • Users can borrow various tokens against the collateral supplied. Collaterals are classified into different tiers. 
  • The EUL token is used for protocol governance and also collateral onboarding. In particular, EUL holders can vote to onboard collaterals into different tiers. 
  • The total supply of EUL is 27,182,818 (27 million), a tribute to Euler’s number.
  • The total supply of EUL is fixed for the first four years, after which EUL token holders may enact a governance proposal to inflate the supply by a maximum 2.718% per year. Once implemented, the newly minted EUL will enter circulation via the Treasury. 
  • A detailed breakdown of EUL’s tokenomics can be found here
  • Euler has emerged in 2022 as one of the few protocols where stETH can be used as collateral for ETH borrowing - which has allowed some to take advantage of a stETH-ETH looping strategy.
  • Euler is noted for its three-tiered collateral structure, which includes: 
    • Isolation tier: assets within this tier can be lent and borrowed, but cannot themselves be used as collateral to borrow other assets, nor can they only be borrowed in isolation, i.e. if you have already borrowed ABC against USDC, you cannot borrow anything else against that same USDC. 
    • Cross tier: assets within this tier are available for lending and borrowing, but cannot be used as collateral to borrow other assets. However, they can be borrowed alongside other assets, i.e. one can borrow DEF alongside ABC against USDC provided ABC and DEF are both cross-tier assets. 
    • Collateral tier: assets within this tier are available for lending and borrowing, cross-borrowing, and can be used as collateral. 
  • The Euler Protocol was founded by Michael Bentley.

 

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