Welcome to the fourth post in our BOB ecosystem spotlight series. Today, we’ll be taking a closer look at Euler V2—a flexible decentralized lending and borrowing protocol that has recently integrated with BOB.
By using liquid staking tokens (LSTs) like xSolvBTC or yield-bearing assets (YBAs) like HybridBTC.pendle as collateral in Euler V2, BOB users can lend, borrow, and loop BTC-backed assets with ease, allowing them to maximize their BTC yield.
So without further ado, let’s dive right in.
What is Euler?
Euler V2 is a decentralized and adaptable DeFi protocol that allows users to lend or borrow practically any asset. It features a modular system of ERC-4626 vaults that are built with the Euler Vault Kit (EVK), and connected through the Ethereum Vault Connector (EVC). This allows market creators to customize risk parameters, collateral acceptance, and interest rate models in a permissionless way.
With multiple vault classes (governed, ungoverned, yield aggregator, and escrowed collateral), Euler offers unparalleled flexibility. Builders can easily connect vaults together to create cross-collateralized lending products, or isolate certain pairs to suit higher-risk assets.
Meet the team
Euler was founded by Michael Bentley (Co-founder and CEO) and Doug Hoyte (Co-founder and Blockchain Dev). The two met through Encode Club hackathons in 2020, and launched Euler V1 in December 2021. Their original aim was to differentiate Euler from existing protocols like Compound and Aave by introducing innovative ways to quantify and manage lending risks.
Euler V2 has since undergone numerous audits and security challenges, including bug bounties, formal verification, and advanced fuzzing. This has established Euler V2 as one of the most heavily audited lending protocols in DeFi.
Notable accomplishments include achieving all-time-highs in total value locked (TVL) and total borrows, having a total utilization of 44% (higher than the industry average of 40%), and growing TVL on multiple chains, including BOB, Base, Sonic, Berachain, and Swell, with more in the pipeline.
Why they are interesting
Euler’s modular architecture provides both flexibility and depth for builders, who can easily create custom vault configurations to accommodate any risk profile—be it a low-volatility lending product or a high-risk collateral pair.
Euler V2 also introduces advanced risk management features that are often missing in well-known lending protocols. This includes sub-accounts for isolating positions, an operator concept for automated strategies (like stop loss or take profit), and cheaper liquidation flows that minimize penalties for borrowers while protecting lenders.
On top of that, Euler V2 supplies open-source modules like RewardStreams, which lets projects distribute token rewards without requiring extra staking contracts, and FeeFlow, a reverse Dutch auction mechanism that gives Euler DAO greater control over fees and helps accumulate assets for long-term sustainability. These tools collectively ensure a dynamic ecosystem that can adapt to emerging market conditions, real-world assets, and new forms of on-chain credit—all from one place.
By bridging the gap between fully monolithic and isolated lending models, Euler allows for more liquid markets and higher capital efficiency.
What this means for BOB users
Euler adds another layer of opportunity for DeFi users looking to make yield on their BTC. Here’s how:
- Seamless BTC lending and borrowing: Users can deposit BTC-based assets (for example, wBTC, LBTC, SolvBTC) and earn yield. Or, they can borrow more BTC assets to increase exposure.
- Looping strategies: Because Euler allows borrowers to loop (re-deposit) what they borrow, users can increase their returns on their BTC holdings while benefiting from BOB’s security guarantees.
- BOB Rise incentives: Depositing or borrowing BTC-based assets on Euler qualifies users for additional OP incentives through BOB Rise—further boosting potential yields and rewarding community participation.
What’s next
Euler and BOB will continue to work closely together to propel multi-chain BTC-yield to the forefront of DeFi—unlocking new opportunities for users, developers, and institutions alike. Looking ahead, Euler plans to extend its reach to more ecosystems, and is working to improve swapping in DeFi with EulerSwap coming soon.
