EUL Euler

Euler Use Cases

Euler is a decentralized lending platform that offers a variety of use cases for users looking to leverage their crypto assets. Here are some key applications:

• Leverage by Chaining Vaults: Users can create vaults for major LSTs (Liquidity Staking Tokens) and use these LSTs as collateral to borrow other assets. For example, LRT (Liquidity Reward Tokens) depositors can borrow LSTs, and then use both LRTs and LSTs to borrow WETH (Wrapped Ether), enabling them to swap, re-deposit, and leverage their yield.

• Permissionless Listing: Euler allows anyone to list almost any token for borrowing or lending, as long as it has a trading pair with WETH on Uniswap v3. This feature caters to the demand for lending and borrowing long-tail crypto assets, providing users with more flexibility and opportunities.

• Asset Tiers: Euler uses risk-based asset tiers to manage lending risks. Isolation-tier assets can be borrowed in isolation but cannot be used as collateral to borrow other assets. This approach helps protect the protocol and its users from potential bad debts.

• Defer Liquidity Checks: Euler introduces a feature that allows users to defer liquidity checks, preventing transactions from failing due to insufficient collateral. This feature helps users manage their positions more efficiently and reduces the risk of transaction failures.

• dTokens for Debt Tokenization: Euler issues dTokens to tokenize debts, similar to Aave’s debt tokens. These tokens can be used to create derivative products that include debt obligations, offering users more flexibility in managing their debt positions.

• Governance and Market Stability: Euler’s features, such as the ability to protect assets needed for governance votes and prevent intense selling pressure, help maintain a fairer democratic governance process and market stability.

Key Features and Benefits of Euler

• Permissionless Listing: Euler allows token holders to dictate which assets are listed on the protocol, enabling a wide range of ERC20 crypto assets to be borrowed and lent.
• Reactive Interest Rates: The platform dynamically adjusts interest rates based on the underlying market conditions of each asset, improving capital efficiency.
• Risk-Adjusted Borrow Factors: Euler considers both the risk profile of the borrowed assets and the collateral provided, making it more capital efficient than traditional lending protocols.
• Protected Collateral: Users can deposit assets without immediately making them available for lending, preventing manipulation in governance decisions and intense selling pressure.
• Deferred Liquidity Checks: The protocol uses a two-sided approach to adjust the market value of a borrower’s liabilities, reducing the risk of collateral violations and improving transaction success rates.

Potential Drawbacks

• Complexity: Euler’s innovative features and modular design may be challenging for new users to understand and navigate.
• Market Risks: The permissionless nature of the platform introduces risks associated with volatile and less liquid assets.
• Dependence on Uniswap: Euler relies on Uniswap for decentralized price oracles, which could pose risks if Uniswap experiences issues.
• Limited Adoption: As a newer protocol, Euler may have fewer users and less liquidity compared to more established lending platforms.

Unique Innovations

• Asset Tiers: Euler categorizes assets into isolation, cross, and collateral tiers to manage risk and protect users.
• Modular Architecture: The protocol’s design allows for the creation of new lending products and the integration of various asset classes, such as RWAs, NFTs, and synthetics.
• Fee Management: Euler uses a reverse Dutch auction mechanism to manage fees, providing greater control and flexibility for the DAO and users.

Founders of Euler

• Michael Bentley: Co-founder and CEO of Euler. Prior to founding Euler, Michael was a postdoctoral research scientist at the University of Oxford, where he studied evolutionary game theory and dynamical systems.
• Other Co-founders: The information available does not specify additional co-founders by name. However, Euler Labs is known for its innovative non-custodial lending protocol built on Ethereum.

Investors in Euler

Euler has received funding from several prominent investors in the crypto industry. These include:

• Venture Capital Firms:

  • Haun Ventures, founded by former Andreessen Horowitz general partner Kathryn Haun.
  • Coinbase Ventures, the venture arm of the crypto exchange provider Coinbase.
  • FTX, a major crypto exchange provider.
  • Jump Crypto, a venture capital firm focused on crypto investments.
  • Jane Street, a global quantitative trading firm.
  • Variant, a venture capital firm investing in crypto and blockchain projects.
  • Uniswap Labs Ventures, associated with the decentralized exchange Uniswap.
  • Lemniscap, a venture capital firm specializing in crypto investments.
  • Morningstar Ventures, a venture capital firm focused on crypto and blockchain projects.
  • Divergence Ventures, a venture capital firm investing in crypto and blockchain projects.
  • CMT Digital, a venture capital firm focused on crypto and blockchain investments.
  • Paradigm, a venture capital firm investing in crypto and blockchain projects.

• Angel Investors:

  • Kain Warwick, an angel investor in the crypto space.

These investors have contributed to Euler's total funding of $40.8 million across multiple rounds.

Halal Status of Euler

No, the halal status of Euler is not universally agreed upon. The reason is that Islamic scholars have varying opinions on whether cryptocurrencies, including Euler, comply with Shariah principles. Key concerns include the speculative nature of cryptocurrencies, the potential for illegal activities, and the lack of physical backing, which may contradict Islamic finance principles.

Key Considerations

• Speculative Nature: Cryptocurrencies like Euler are known for their volatility, which can be seen as akin to gambling, a practice forbidden in Islam.
• Anonymity and Illegal Activities: The anonymity of crypto transactions raises concerns about ethical issues and compliance with Islamic law.
• Lack of Physical Backing: Cryptocurrencies do not have a tangible asset underlying their value, which may contradict Islamic finance principles that emphasize the importance of physical commodities or assets in financial transactions.
• Regulatory Oversight: The unregulated nature of cryptocurrencies poses challenges in ensuring fairness and integrity, which are crucial in Islamic finance.

Conclusion

Given these considerations, while some Islamic scholars may argue that Euler could be halal under certain conditions, there is no consensus, and many view it as haram due to the reasons mentioned above.