For anyone not familiar, what is Euler?
Euler is a new lending protocol on Ethereum with revolutionary features like permissionless listing, market-based liquidations and many more.
What does the EUL token do?
EUL token is a governance token allowing the community to vote on: collateral and borrow LTVs, interest rate models, allocation of grants, management of treasury funds.
Can you tell us about your permissionless listing system?
Euler lets its users determine which assets are listed. To enable this functionality, Euler uses Uniswap v3 as a core dependency . Any asset that has a WETH pair on Uniswap v3 can be added as a lending market on Euler by anyone straight away.
This does not mean that anything can be used as collateral, as EulerDAO strives to be as risk-managed as possible. But it does allow for practically any asset to be borrowed or shorted.
With so much drama in defi lately, can you tell us very clearly the risks we take when putting money on Euler?
While Euler aims to manage risks better than any lending protocol, it still has risks. Namely:
- Withdrawal risk: if lenders withdraw most funds and utilisation reaches 100%, some lenders will have to wait for borrowers to repay their debts.
- Bad debt risk: risk that lent capital is not returned by borrowers. This occurs when it’s not economic for liquidators to liquidate users because of extreme market slippage or malicious tokens used as collateral. The way to prevent that is to only list extremely liquid assets as collateral, which Euler embraces. Also, reserves accrue within each lending pool.
- Interest rate risk: if someone is extremely overlevered, an utilisation reaches 100%, users may be liquidated due to accruing interest rates.
You have some pretty amazing backers including Coinbase, FTX, Uniswap, and Jane Street. Can you tell us what these players bring to the table and how they contribute to your success?
All of them bring something amazing to the table. Haun have incredible clout in the industry as well as reputation. Variant are masters of marketing and spreading the message. FTX are extremely helpful when it comes to market-feedback given their trading backgrounds.
The defi space is getting increasingly crowded what is your plan to capture market share from the likes of Aave?
The best way to take on Aave and Compound is by unrolling new products that the market needs. This is why Euler is the only place where you can short stETH onchain, which is especially useful during market volatility.
What comes next for Euler?
The R&D team behind the initial deployment of Euler have some more exciting ideas about how the ecosystem can be extended to allow market participants to create their own collateral markets in a risk-managed way. These ideas and others about another project involving oracles will be put to the community in the relatively near future.
Hi! My name is Lark Davis!
I’m a cryptocurrency investor with years of experience and I’ve been making consistent profits in the crypto space.
I’m passionate about helping others do the same, so I run multiple educational channels on crypto investing.
