Glossary
Core protocol components
| Term | Definition |
|---|---|
| EVC | The Ethereum Vault Connector (EVC) is the account coordination layer used by Euler-compatible vaults. It handles batching, collateral checks, sub-accounts, operator permissions, and controller relationships across vaults. |
| EVK | The Euler Vault Kit (EVK) is the framework for creating Euler credit vaults. EVK vaults are ERC-4626 vaults with lending and borrowing logic, one underlying asset, and configurable parameters such as caps, oracles, interest-rate models, collateral relationships, hooks, and governance. |
| EPO | The Euler Price Oracle (EPO) is a modular onchain pricing system. Oracle adapters and components implement the IPriceOracle interface and can be composed into the pricing routes used by Euler vaults and oracle routers. |
| IRM | Interest Rate Model (IRM) is a contract that provides a vault's borrow-rate input from vault state or another configured rule. Supply APY is derived from borrow APY, utilization, fees, and vault accounting rather than being set independently by the IRM. |
| Hook Target | A contract that can check, restrict, or block selected vault operations before they execute. Hook Targets are configured per vault and should be reviewed for the specific operations they affect. |
Financial metrics
| Term | Definition |
|---|---|
| Health score | Health score represents the buffer between an account's risk-adjusted collateral value and its liabilities. At raw onchain values, the standard EVK no-violation comparison requires risk-adjusted collateral to be greater than liability; equality can enter liquidation calculation. A displayed value of 1 may be rounded, so consult raw values and transaction simulation. |
| TTL | Time to Liquidation. An estimate of how long it would take for an account to reach the liquidation threshold if prices stayed the same while interest continued accruing at current rates. |
| NAV | Net Asset Value (NAV) represents the total value of a user's account, measured as the total value of their deposits minus the total value of their debts. |
| APY | Annual Percentage Yield (APY) is an annualized rate with a stated compounding convention. EVK base supply and borrow rates are displayed as APY; reward campaigns generally provide APR estimates, even when an interface adds them to an APY breakdown. |
| ROE | Return on Equity (ROE) is an annualized estimate of net rate exposure divided by equity, where Euler account and portfolio calculations use Net Asset Value: supplied value minus borrowed value. ROE can change with rates, rewards, intrinsic yield, prices, and position size and is not realized profit. |
| LTV | Loan-to-Value (LTV) compares debt value with collateral value. A configured borrow LTV limits new borrowing for a collateral-vault pair; current position LTV describes the account's present ratio. |
| Utilization | The share of an EVK vault's assets currently borrowed: borrows / (cash + borrows). Many utilization-based IRMs increase borrow rates as utilization rises. |
Risk management
| Term | Definition |
|---|---|
| Liquidation | Standard EVK liquidation transfers selected debt from the violated account to the liquidator and transfers collateral in the other direction at the calculated discount. The resulting liquidator account must pass the applicable controller, collateral, vault, and EVC checks. |
| Liquidation discount (sometimes called liquidation bonus) | The liquidation discount determines how much collateral a standard EVK liquidator can receive when taking over selected debt from a liquidatable account; the configured maximum and account health bound the discount. |
| Isolated Risk | A market structure where risk is scoped by vault and market configuration. Isolation can limit direct risk propagation between configured market sets, but connected collateral, oracle routes, liquidity, governance, and market conditions can still create dependencies. |
Technical terms
| Term | Definition |
|---|---|
| ERC-4626 | A tokenized vault standard that provides a unified interface for yield-bearing vaults. Euler V2 vaults are ERC-4626 compliant, making them compatible with other DeFi protocols. |
| Rehypothecation | The use of deposited assets as collateral while they remain supplied to a vault. Whether a deposit can support borrowing depends on the connected vaults and collateral configuration. |
| Batching (multicall-style execution) | EVC batching groups calls into one execution context and can defer configured account-status checks until the end of the batch; individual calls can still revert and the final account checks must pass. |
| Permit2 | An approval mechanism that can let users authorize token transfers through signatures where supported by the integration and wallet flow. |
Protocol features
| Term | Definition |
|---|---|
| Non-borrowable Vault | A vault where deposited assets can be used as collateral but cannot be borrowed from that vault. |
| Cross-collateralization | The ability to use assets from one vault as collateral to borrow from another vault, enabled by the EVC. |
| Sub-accounts | Virtual accounts within the EVC that allow users to manage multiple positions with different risk parameters. |
| Operator | An address authorized by an EVC account owner to perform ordinary actions on a selected account with broad authority. Operator authorization is account-level rather than a set of granular permissions; owner-only EVC administration remains with the owner. |