What is Euler Finance (EUL)?
Euler (EUL) is a decentralized credit protocol that lets users lend and borrow crypto assets. It operates on Ethereum, BNB Smart Chain, and Arbitrum One. Unlike many lending platforms, Euler does not pool all funds together; instead, each market runs as its own isolated vault.
Why Euler v2 uses isolated vaults
In a single-pool design, a failure in one asset can spread across the entire system. Euler avoids this by allowing anyone to create a separate vault for a specific token using the Euler Vault Kit. Each vault has its own interest rates and collateral rules. A connector layer then links these vaults, so collateral can be used across different markets without merging their risks.
On top of the vaults, Euler Earn collects strategies and professional curators manage risk for passive participants. This means users can deposit into curated vaults and follow expert strategies rather than configuring every parameter themselves.
What EUL does in the protocol
EUL is the governance token. Holders vote on protocol changes and treasury actions. Beyond voting, EUL can be staked to earn a share of protocol fees. Stakers also absorb some bad debt if the protocol faces losses, aligning token holders with the system's overall health.
Euler's history includes a major exploit in 2023, after which the attacker returned nearly all stolen funds. The team then rebuilt the protocol as Euler v2 with extensive audits and a focus on isolation and risk control. This background shapes how the current system works.
