Euler is a decentralized lending protocol that enables users to earn interest on their cryptocurrency assets while managing market volatility, without the need for a trusted intermediary. This innovative platform is also known for its capital efficiency and offers various unique features such as permissionless lending markets, reactive interest rates, protected collateral, MEV-resistant liquidations, multi-collateral stability pools, and more, which are not commonly found in decentralized finance (DeFi).
Listing without permission can be risky on decentralized lending protocols, especially if there is a sudden drop in collateral asse t prices. This can lead to multiple pools having bad debts. Euler solves this problem by using risk-based asset tiers:
● Isolation-tier assets are available for borrowing and lending, but can't be used as collateral or borrowed with other assets in the same pool.
● Assets in the cross-tier can be lent and borrowed, but cannot be used as collateral. They can be borrowed alongside other assets.
● Collateral-tier assets can be used as collateral, borrowed, and lent.
EUL holders can vote to move assets from isolation to cross or collateral tiers, but this also increases risk. So, it's important to balance these concerns for the safety of users.
Euler lenders earn interest by depositing assets into a liquidity pool and receiving eTokens. These eTokens can be redeemed for a share of the pool's assets, as long as there are unborrowed tokens available, like Compound's cTokens. Borrowers take liquidity out and return it with interest, increasing the pool's assets over time. This means that the eTokens earned by lenders can be redeemed for a larger amount of underlying assets, allowing them to earn interest on their supplied assets.
Euler tokenizes debts on its protocol with dTokens, similar to Aave's debt tokens. These ERC20-compliant interfaces allow for the creation of derivative products including debt obligations. To prevent users from burning their dTokens, Euler uses regular transfer/approve ERC20 methods but with reversed permissioning logic. Borrowers pay interest on their loans in the underlying asset, with a portion of the interest held in reserves for bad debts.
How Many EULER Tokens Are in Circulation?
EUL is the Euler network's native governance token. It has a circulating supply of 15,789,529 EUL and a maximum supply of 27,182,818 EUL coins.
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