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Vaults

Introduction

Vaults are the primitive unit of the Euler protocol.

Vaults deployed using the Euler Vault Kit (EVK) are extended ERC-4626 vaults that can be used to:

  • Lend assets to borrowers, earning passive yield.
  • Used as collateral to borrow from other vaults.
  • Lend and use as collateral simultaneously (rehypothecation), maximising capital efficiency.

Vaults deployed using the Euler Earn protocol are ERC-4626 vaults that can be used by passive yield seekers to:

  • Deploy assets into EVK vaults
  • Deploy assets into external yield-generating strategies outside of the Euler ecosystem.

By linking EVK vaults as collateral for one another, creators can compose vaults together to design various forms of markets. These can be isolated collateral-debt pairs to more complex, feature-full, cross-collateralised clusters. Risk curators and asset managers can then layer on Earn vaults on top of EVK vaults to help generate risk-managed yield for passive yield-seekers.

EVK vaults

Vaults deployed using the Euler Vault Kit (EVK) are extended ERC-4626 vaults that act as passive lending pools, accepting ERC-20 deposits. Unlike standard ERC-4626 vaults, they generate yield by lending rather than active investment.

Users can borrow from an EVK vault if they have sufficient collateral in other EVK vaults. The liability vault decides which vaults are acceptable as collateral, and interest accrues by increasing the borrower’s outstanding liability.

Integrated with the Ethereum Vault Connector (EVC), EVK vaults track collateral usage. If a position becomes undercollateralised, the EVC allows the liability vault to withdraw collateral for liquidation.

Governance and risk curators​

The risk of a vault depends on its parameters and relationships with other vaults. Factors such as accepted collateral, borrowing limits, and pricing models all influence its risk profile.

Vaults can be governed or finalised (ungoverned), offering different levels of control and risk:

  • Governed vaults are actively managed by a governor or risk curator, who can adjust risk parameters as market conditions change. These vaults provide a more passive lending experience but require trust in the curator’s risk management.
  • Ungoverned vaults have governance permanently revoked, remaining fixed even as risk conditions evolve. They suit users who prefer self-managed risk without reliance on third parties.

Market forces ultimately determine which vault configurations attract liquidity and remain viable. For users who prefer ungoverned vaults, but want a hands-off approach, Euler has a second product called (coming soon), which enables users to deploy into a .

Creating an EVK vault​

To learn how EVK vaults work in more technical detail and how to deploy your own, visit the Creator tools section. You'll find guides on configuring vault parameters, adding custom hooks, implementing advanced functionality, and governing vault risk.

Earn vaults

Euler Earn vaults are designed for passive yield seekers who want exposure to the Euler ecosystem without managing individual lending and borrowing positions. Built on the ERC-4626 standard, Earn vaults provide a simplified way to access yield from both EVK vaults and external yield-generating strategies.

How Earn vaults work​

Earn vaults operate as yield aggregators, deploying user deposits across multiple strategies selected and managed by risk curators. These curators are responsible for:

  • Rebalancing - Enabling or disabling specific yield strategies to optimize returns
  • Managing liquidity - Determining the supply order and how withdrawals are handled
  • Assessing risk - Monitoring risk profiles and adjusting allocations across different markets
  • Protecting users - Implementing timelocks on critical operations for additional security

Key benefits​

  • Simplicity - Deposit assets and receive yield without managing complex lending positions
  • Diversification - Assets are spread across multiple yield-generating strategies to optimize risk/reward
  • Non-custodial - Risk curators can rebalance allocations but cannot withdraw user funds
  • Risk management - Professional risk curators monitor and adjust strategies to maintain target risk profiles
  • Capital efficiency - Funds are continuously rebalanced to seek optimal yields across the DeFi ecosystem

Earn vaults allow users to benefit from Euler's sophisticated lending infrastructure while delegating the technical complexities of yield optimization to risk curators.