Overview

Inside a vault, each collateral is configured as the address of another vault, not the underlying asset (unless the asset is specially constructed to also function as a collateral vault). This means that the value of a user's collateral is in fact the value of the vault's shares. A vault share is not necessarily equal to a unit of the underlying asset because of the exchange rate.

Because converting quantities of shares to underlying asset amounts is itself a pricing operation, this responsibility is delegated to the price oracle. In some cross-chain designs, the price oracle may also be responsible for determining the exchange rate of a corresponding vault on a separate chain.

The Euler Price Oracle system is a composable on-chain pricing system. It is built around an interface called IPriceOracle, which is an abstraction for querying a diverse range of external pricing oracles and normalising their answers.