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Vault Types

Introduction

In the dynamic world of Euler's lending ecosystem, vault types serve as classifications that help users navigate the complex landscape of lending opportunities. Vault classifications and metadata are maintained by the Euler Labs team in the euler-labels repository and served through public known-vault endpoints.

Known Vault Types

Governed Vaults

Governed vaults are actively managed by risk managers or curators who have undergone a KYB (Know Your Business) process. These entities are responsible for setting and adjusting risk parameters, managing collateral types and their risk levels, monitoring market conditions, and managing the risk of their vaults. The initial review of these vaults is a manual process, where the vault configuration is evaluated and sanity-checked at listing time. Once listed, these vaults are fully subject to the risk manager's governance decisions — Euler Labs does not monitor or vouch for subsequent configuration changes, and the curator remains solely responsible for the vault's risk management. Users of these vaults rely entirely on the governor's risk management decisions.

Escrow Vaults

Escrow vaults are like deposit boxes in the DeFi world. They're designed to hold deposits that can be used as collateral for loans from other vaults. Since they don't allow borrowing, they don't earn interest for depositors. Their parameters are fixed and unchangeable, making them predictable and stable. These vaults can be reused multiple times as collateral for different vaults.

Ungoverned Vaults

Ungoverned vaults are designed for active users who want full control over their risk exposure. With fixed parameters and no governor to make decisions, users must actively monitor and manage their positions themselves. Each vault may only accept collateral from other vaults in its market, creating a controlled risk environment that users must navigate independently.

Earn Vaults

Earn vaults represent a specialized category of governed vaults designed to pool and manage passive lender assets. These vaults function as flexible investment vehicles, allowing the vault governor to allocate assets across various ERC4626 vaults, including both Euler-native vaults and external vaults such as sDAI. This structure enables dynamic portfolio management, where asset allocation can be adjusted in response to changing market conditions and opportunities.

Unknown Vaults

Unknown vaults are the wild west of the Euler ecosystem. While they're deployed using the main EVK vault factory, they haven't been reviewed and don't fall under any of the known types. These vaults are for advanced users who are comfortable with minimal guarantees about functionality.

Understanding Vault Types

The classification of vaults into different types isn't just about putting labels on things - it's about creating a framework for understanding risk in a complex system. This is particularly important because:

  1. Vaults can be highly customized with many risk parameters
  2. Vaults can recognize deposits in other vaults as collateral
  3. Risk exposure can come from both direct interaction and indirect exposure through collateral vaults

Risk Management Considerations

When choosing between governed and ungoverned vaults, you're essentially choosing between two different approaches to risk management:

Governed Vaults: These are like having a professional risk manager on your side. You need to trust the vault governor to:

  • Adjust vault parameters appropriately as market conditions change
  • Limit the vault's exposure to other risky vaults
  • Make timely decisions in response to changing economic conditions

Ungoverned Vaults: These are like self-directed investing. You need to:

  • Proactively manage your own risks
  • Understand that vault parameters cannot change in response to market conditions
  • Be aware that you bear full responsibility for monitoring and managing your exposure

Who Runs the Markets

All markets on Euler are run by external, third-party curators and risk managers. Euler Labs does not operate, govern, or manage any market — each curator is solely responsible for the configuration and ongoing risk management of the vaults it governs. Use the known-vault endpoints to see which entity is behind a given vault.