Euler v2 goes live, introduces modular design and enhanced lending capabilities

Mila September 4, 2024

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Key Takeaways

Euler v2 introduces a modular approach to DeFi, enabling a wide range of lending and borrowing options.
The platform’s use of ERC4626 vaults allows for innovative collateral and liquidity solutions.

Euler Finance, a DeFi platform built on the Ethereum blockchain, announced today it has officially launched Euler v2, introducing advanced features like a modular design and enhanced lending capabilities.

Modularity and flexibility have become essential to overcoming liquidity fragmentation and high borrowing costs in DeFi lending.

Modular lending solutions, like Euler v2, aim to make DeFi lending more efficient and user-friendly by allowing permissionless creation of vaults that can connect and utilize other vaults as collateral.

“Euler v2 represents a turning point not just for us but for the entire DeFi ecosystem. With Euler v2’s modular design, we are redefining the possibilities for onchain credit, allowing users to build, borrow, and lend with a new level of flexibility and capital efficiency. This release is a catalyst for the next wave of DeFi growth,” said Michael Bentley, co-founder and CEO of Euler Labs.

Euler said its v2 allows developers to create highly customizable lending and borrowing vaults. This flexibility breaks down limitations and makes it easier to build new financial products.

According to Euler, two key components of the new protocol are the Euler Vault Kit (EVK) and the Ethereum Vault Connector (EVC).

The EVK facilitates the deployment of ERC4626 vaults, allowing developers to create and customize their own lending vaults in a permissionless manner. The kit supports various vault classes, including escrowed collateral vaults, governed/ungoverned vaults, and yield aggregator vaults.

These vaults are adaptable to various governance and risk management styles, supporting everything from crypto-native tokens to real-world assets, Euler noted.

Meanwhile, the EVC enhances vault capabilities, allowing them to be used as collateral for other vaults, thereby creating a more interconnected lending ecosystem.

Euler said this modular architecture supports not only traditional lending and borrowing but also the creation of synthetic assets and collateralized debt positions.

Euler v2 also comes with advanced risk management tools designed to provide a comprehensive and user-friendly experience, while significantly reducing liquidation costs compared to v1.

With the new launch, Euler aims to eliminate the fragmentation seen in the traditional DeFi lending markets.

Sapphire

The company expects that Euler v2 will unlock new opportunities for both seasoned DeFi users and institutional entrants. The goal is to empower users to create, connect, and optimize vaults to suit any strategy or need.

The launch of Euler v2 also marks Euler Finance’s strong comeback following a $200 million exploit last year. The company anticipates that its v2 will go beyond a lending protocol, acting as a meta-lending platform that lays the foundation for on-chain credit in DeFi.