Euler Labs

Euler Labs, founded in 2020 by Dr. Michael Bentley, Jack Leon Prior, and Doug Hoyte, is a UK-based financial technology company focused on developing decentralized finance (DeFi) protocols on the Ethereum blockchain and other networks. Dr. Bentley, the CEO, transitioned from a postdoctoral research position in Mathematical Biology at the University of Oxford, applying his expertise in mathematical modeling to the financial dynamics of DeFi. The company's journey began after winning Encode Club's 'Spark' University Hackathon, which led to an initial $800k seed round in December 2020. Subsequent funding includes a Series B round in June 2022, bringing total funding to over $40 million from investors like Haun Ventures, Paradigm, Coinbase Ventures, and FTX.

The firm's primary business is the research and development of non-custodial lending protocols, which allow users to lend and borrow a wide array of crypto assets without a central intermediary. The business model generates revenue through fees on lending and borrowing activities within its ecosystem. Its initial flagship product, the Euler protocol, differentiated itself by enabling the permissionless listing of any ERC20 token, creating money markets for a broader range of assets than competing platforms like Aave and Compound. This was achieved by utilizing Uniswap v3 as a price oracle and implementing features like reactive interest rates based on control theory to manage market volatility.

In March 2023, the Euler v1 protocol suffered a significant setback due to a $197 million flash loan attack, exploiting a vulnerability in a smart contract. The event led to a temporary, sharp decline in the value of its native EUL governance token. In a notable turn of events, the Euler Labs team successfully negotiated the return of all recoverable funds from the attacker over the following weeks.

Following the exploit, Euler Labs focused on developing and launching Euler v2 in September 2024. This redesigned protocol operates as a modular "meta-lending" platform, providing infrastructure for developers to build their own customized lending and borrowing vaults. Key components include the Euler Vault Kit (EVK) for creating bespoke, ERC-4626 standard vaults, and the Ethereum Vault Connector (EVC), which allows these vaults to interact and accept collateral from each other. This modular design supports diverse use cases, from leveraged yield farming to managing tokenized real-world assets (RWAs), and offers users greater control over risk parameters through governed (dynamic) and ungoverned (immutable) vault options. Having undergone numerous security audits, Euler v2 aims to provide a more resilient and flexible foundation for on-chain credit markets.

Keywords: decentralized finance, DeFi lending protocol, crypto asset borrowing, Ethereum, Euler protocol, Michael Bentley, non-custodial lending, permissionless money markets, flash loan attack recovery, Euler v2, modular lending, meta-lending, Euler Vault Kit (EVK), Ethereum Vault Connector (EVC), ERC-4626 vaults, on-chain credit markets, crypto risk management, reactive interest rates, digital asset lending, blockchain finance, EUL token, Haun Ventures, Paradigm, Coinbase Ventures