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Fee Flow

Introduction

Fees collected from Euler vaults are periodically auctioned through Fee Flow auctions. These auctions use EUL as the bidding currency, ensuring that protocol-generated fees are consistently converted into EUL. The accumulated EUL currently returns to the Euler DAO treasury, but the DAO could choose to burn it, distribute it as incentives for EUL stakers or protocol users, or allocate it in any other way it deems appropriate through governance proposals.

How Fee Flow Auctions Work

  • Collection: Protocol fees (e.g., in USDC, DAI, or other assets) accumulate in the protocol.
  • Auction: At regular intervals, these fees are auctioned off to the public. Anyone can participate by bidding EUL tokens.
  • Conversion: The highest bidders pay EUL to acquire the protocol fees. This process converts non-EUL protocol revenue into EUL.
  • Treasury: The EUL collected from auctions is sent to the Euler DAO treasury. The DAO can then decide, via governance, how to use these funds (e.g., burn, distribute, or allocate for growth).

Example: If the protocol collects $10,000 in USDC fees, these are auctioned off. Bidders compete by offering EUL tokens. The winning bidders receive the USDC, and the EUL they pay is sent to the DAO treasury.

Transparency and Security

All Fee Flow auctions and EUL transfers are conducted on-chain, ensuring full transparency and auditability for the community.

Further Reading

For further reading, check out the Fee Flow Concepts page

Additionally, please visit the dedicated Fee Flow GitHub repository.