Decentralized lending usually leans on shared liquidity pools with set risk rules. It works, but it’s not exactly flexible, and users can get caught up in waves of systemic risk. Euler flips that script. Instead of one big pool, it splits things up, letting people spin up their own isolated lending and borrowing markets—each one customizable and able to plug into others if needed.
Euler runs on Ethereum and other EVM chains. Anyone can create a lending vault for any ERC-20 token, with its own unique rules, risk controls, and economic setup.
What’s Euler?
Euler is a non-custodial lending protocol that’s all about custom vaults. Forget lumping everything into one huge pool. With Euler, you set up independent markets and decide things like collateral factors, interest models, and which price oracle to trust—right from the start.
This keeps risk in check. If something blows up in one market, it doesn’t drag the rest down with it. Protocol governance happens through the EUL token, so if you hold it, you help steer upgrades, incentives, and treasury moves.
The Euler Vault Kit (EVK)
At the heart of Euler is the Euler Vault Kit. EVK is a smart contract framework—think of it as a toolkit for developers and DAOs to launch lending vaults using the ERC-4626 standard. That standard lays out how deposits, withdrawals, and yield work, so integrating with other DeFi apps is a lot smoother.
With EVK, creators can pick governed or ungoverned vaults, collateral-only setups, or vaults that generate yield. Each vault gets its own price oracle and interest rate model that changes with demand. A separate controller enforces collateral rules, keeping every market inside its own risk limits.
The Ethereum Vault Connector (EVC)
Even though vaults are separate by default, Euler gives you options for cross-vault strategies with the Ethereum Vault Connector. The EVC lets you put up collateral in one vault and borrow from another, so you can do more with your capital—without spreading risk everywhere.
Before you borrow or withdraw, EVC checks all your vaults to make sure everything stays properly collateralized. You can also bundle multiple actions into one transaction, which saves on gas and makes things easier.
Vault Types and Use Cases
Euler offers a few different vault setups for all kinds of users. Escrowed collateral vaults let you lock up collateral strictly for borrowing—no yield. Governed vaults are managed by DAOs or curators who can tweak settings as needed, while ungoverned vaults run on fixed rules with no ongoing oversight.
For people who want diversification and convenience, yield aggregator vaults pool assets and spread them across different strategies, balancing risk and returns through careful allocation.
Euler Earn: Passive Yield, Curated Risk
Euler Earn is Euler’s answer for folks who want passive yield without micromanaging. It’s built on ERC-4626 and pools deposits, then spreads them across Euler vaults or external strategies chosen by risk curators.
Curators set allocation limits to avoid overexposure, and small idle reserves help with smoother withdrawals. Each Earn vault manages its own deposit and redemption queues, so liquidity holds up even when things get busy. The protocol stays non-custodial, so you always own your assets.
Risks and Considerations
Euler isn’t risk-free. Borrowers get liquidated if their collateral drops or interest stacks up too fast. Lenders can face bad debt when markets swing or liquidity dries up.
If you use a governed vault, you’re trusting curators to manage things well. With ungoverned vaults, it’s on you to keep an eye on risk. Isolating markets helps, but you still need to watch your collateral and understand each vault’s setup.
The EUL Token
EUL is Euler’s native ERC-20 token, powering governance and incentives. Holders can propose and vote on protocol updates, treasury moves, and growth plans through the Euler DAO.
EUL also comes into play in Fee Flow auctions, where the protocol’s collected fees get auctioned off for EUL tokens. Those tokens go to the DAO treasury—where they can be burned, distributed, or used for incentives, depending on governance votes. EUL is also handed out as rewards to keep people engaged and to help grow the ecosystem.
Euler on Binance HODLer Airdrops
Back in October 2025, Binance picked EUL as the 51st project for its HODLer Airdrops program. If you locked up BNB in the right earning products during the snapshot, you got EUL tokens. They dropped 2% of the total supply, and the token hit the market with a Seed Tag and a bunch of trading pairs.
Final Thoughts
Euler takes decentralized lending and shakes it up with a flexible, modular setup. It’s all about giving users options—isolating risk, customizing how things work, and letting different pieces fit together. With things like configurable vaults, cross-vault collateralization, and curated yield aggregation, Euler sets up a pretty adaptable base for on-chain credit markets.
Yes, its design lets people manage risk in a more focused way than the old-school pooled systems, but you really have to pay attention—market shifts and vault details matter. For anyone—users or developers—looking for lending tools they can actually tailor, Euler marks a real leap forward in DeFi lending.
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