Introduction to Vaults

Vaults are the core primitive of the Euler protocol. They serve as modular, composable smart contracts that enable permissionless lending, borrowing, and yield aggregation. Each vault is an isolated pool of assets with its own risk parameters, governance, and configuration, allowing for a wide range of financial products — from simple lending pools to complex, governed credit markets and meta-vaults.

Vaults can be either governed or ungoverned. Governed vaults are managed by risk curators or DAOs, who can adjust parameters and respond to market conditions. Ungoverned vaults, on the other hand, are immutable after deployment and place all risk management in the hands of users, with no external party able to intervene or change parameters. This duality allows for both curated, actively managed markets and fully permissionless, user-sovereign vaults.

Vaults are designed for flexibility and security. They can be linked together to form markets or clusters, empowering developers, DAOs, and risk curators to build custom lending products, manage risk at a granular level, and innovate on top of a robust, open foundation.

In Euler, vaults are not just containers for assets — they are the building blocks for the entire ecosystem, enabling new forms of DeFi composability and risk management.