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EulerSwap

Introduction

EulerSwap is a new decentralized exchange that integrates directly with Euler's lending infrastructure and leverages Uniswap v4's hook architecture. By combining the best of modular DeFi powerhouses, EulerSwap unlocks next-generation capital efficiency for market makers, liquidity providers, and traders.

Unlike traditional AMMs that fragment capital across isolated liquidity pools, EulerSwap creates a unified system where the same assets can simultaneously facilitate swaps, earn lending yield, and serve as collateral for borrowing.

Core Architecture

Unified Liquidity System​

When liquidity providers supply assets to Euler vaults, they can then install the swap operator on top of their positions. This architectural design enables capital to remain productive at all times by:

  • Facilitating swaps through traditional AMM mechanisms
  • Earning lending yield from borrowers in the underlying Euler vaults
  • Serving as collateral for borrowing other assets within the Euler ecosystem

This structure eliminates capital fragmentation and maximizes yield opportunities without compromising liquidity provision.

Single-Owner Pool Model​

Unlike traditional shared liquidity pools, each EulerSwap instance is created and managed by a single LP account. This design provides:

  • Full control over the pool's AMM curve parameters
  • Customizable pricing spreads and liquidity profiles
  • Integrated access to leverage and collateral strategies
  • Active management capabilities for sophisticated market makers

Key Features

Just-in-Time (JIT) Liquidity​

EulerSwap's integration with Euler's lending system enables powerful JIT liquidity provision. When an LP lacks sufficient output tokens, the protocol can borrow them on-demand using input tokens as collateral.

Capital Efficiency: In optimal cases, this mechanism can simulate up to 50x the depth of traditional AMMs, particularly effective in stable or pegged asset markets where pricing risk is minimal.

Dynamic Hedging and IL Protection​

Because reserves live inside Euler vaults, LPs can borrow against them natively, enabling:

  • Delta-neutral strategies for uncorrelated pairs like WETH/USDC
  • Impermanent loss mitigation through dynamic position management
  • Automated hedging via smart contract operators
  • Manual strategy adjustment for sophisticated users

Custom AMM Curves​

EulerSwap supports flexible curve configurations defined at pool creation:

  • Symmetric or asymmetric distributions
  • Single-sided or concentrated liquidity ranges

Shared Liquidity Layer​

Assets deposited into Euler vaults can be utilized across multiple EulerSwap pools simultaneously. A single asset (e.g., USDC) can provide liquidity for numerous trading pairs, dramatically improving capital efficiency across the ecosystem.

Uniswap v4 Integration

EulerSwap is built for full compatibility with Uniswap v4's hook architecture, enabling:

  • Seamless integration with Uniswap's routing and solver networks
  • Standard swap interfaces with advanced execution logic running beneath
  • Extended functionality through lending-based logic hooks
  • Transparent user experience hiding complexity behind familiar interfaces

Target Users

Token Issuers​

Bootstrap liquidity without relying on mercenary incentives or short-term yield farming

DAOs and Protocol Teams​

Improve capital efficiency of protocol-owned liquidity through active yield generation

Market Makers​

Access efficient, hedgeable LP positions with customizable parameters and risk management

Sophisticated DeFi Users​

Combine lending, borrowing, and trading strategies in integrated workflows

Use Cases

Stablecoin Liquidity Pools​

Create correlated asset pools (USDT/USDC) earning both swap fees and boosted lending yield. Enable JIT liquidity for greater depth or borrow against positions for hedging.

Long-tail Asset Trading​

Deploy traditional 50/50 pools between emerging tokens and stablecoins, earning swap fees plus potential lending yield from both assets when supported.

Hedged Major Asset Pools​

Set up USDC/WETH pools with dynamic hedging by borrowing ETH against USDC deposits, automatically adjusting exposure to maintain delta-neutral or targeted risk profiles.

Launchpad-style Markets​

Deploy asymmetric liquidity with concentrated ranges for new token launches, enabling fixed-price execution for early buyers while facilitating price discovery.

Security and Auditing

EulerSwap has undergone extensive security review with five leading audit firms engaged from early development stages. Key security measures include:

  • $500,000 capture-the-flag competition for live battle-testing
  • Inherited safety properties from Euler's battle-tested lending infrastructure
  • 40+ independent audits across the underlying Euler protocol and modules

Technical Implementation

Smart Contract Architecture​

  • Factory Contract: Deploys new swap pools with immutable curve parameters
  • Proxy Pattern: Gas-efficient deployment with individual pool parameters and state
  • Main Swap Contract: Handles swaps, enforces curve invariants, supports flash swaps

Developer Resources​

EulerSwap represents the next evolution of DEX infrastructure, combining the liquidity efficiency of modern AMMs with the capital productivity of advanced lending protocols. By breaking down the traditional barriers between trading and lending, it opens new possibilities for yield generation and capital optimization in DeFi.