Today marks a significant day for Euler Labs, as we proudly introduce The Ethereum Vault Connector, a public good, open-source primitive designed to make lending markets more customizable and interconnected, powering the creation of novel use cases.
DeFi is Dead, Long live DeFi.
DeFi emerged as the answer to traditional finance's shortcomings — limited choices, opacity, and centralised control. For DeFi to continue fulfilling its mission, we believe our efforts must extend beyond just decentralising applications and focus on making it easier to develop new foundational structures. In lending, this means empowering users and developers to go beyond the current status quo and giving them an expanded range of customizable options to create tailored lending markets, products, and protocols.
In this spirit, we're excited to introduce the Ethereum Vault Connector (EVC) - A powerful primitive that enables everyone and anyone to build protocols and new products on top.
The EVC code has been subjected to three smart contract audits by yAudit, Certora, and Hunter Security, along with a comprehensive review by Spearbit. A fourth audit by Trail of Bits is currently underway. While additional audits are already scheduled we welcome feedback and discussions from the community on the current version of the code and the white paper. We also encourage everyone to participate in our ongoing bug bounty.
The Ethereum Vault Connector - What does it do exactly?
The Ethereum Vault Connector (EVC) is a primitive that facilitates seamless communication between ERC-4626 vaults, amongst other smart contracts.
It supercharges vaults with new capabilities and allows them to accept collateral from one another, in a network composed of other vaults.
The EVC empowers developers with absolute freedom to innovate by streamlining the intricacies within core lending and borrowing contracts, lowering barriers to development.
With the EVC, developers no longer need to start from scratch, when building lending protocols, stablecoins, yield aggregators, margin trading apps, or others.
Immutable, unopinionated, without governance , zero fees - it’s intended to be a true public good for DeFi.
Why build on the Ethereum Vault Connector?
1. Unified interoperability layer
The EVC creates network effects by facilitating access to unified liquidity. It enables protocols to accept deposits as collateral from the vaults in the network, offering convenience to users by eliminating the need to transfer their collateral assets from one protocol to another.
Additionally, this integration allows vault creators to easily bootstrap lending products by connecting with vaults and utilising existing deposits within the network as recognized collateral.
2. Underlying asset flexibility
Its unopinionated nature extends to assets, giving you full control over the assets that can be used as collateral or liabilities.
This flexibility enables the creation of lending products backed not only by ERC-20 tokens but also by irregular asset classes, such as RWAs, NFTs, uncollateralized IOUs, or synthetics.
3. Advanced position management
The EVC also excels in the domain of automations as it allows external contracts to act on behalf of your account so the following can be implemented:
- Position Managers
- Conditional Orders
- Intent-Based Systems
- Custom Liquidation Flows
4. Generalised flash loans and batching
Should you choose, you can rely on the EVC to perform multiple operations affecting multiple vaults and external smart contracts within a single batch transaction.
This is more convenient for UI users, more gas efficient, and allows deferring account liquidity and vault constraints checks until the end of the batch.
Infinite use cases, infinite possibilities
EVC allows for a modular design that opens up up a limitless number of use cases for products that can be built on top of it. These include, but are not limited to:
- Traditional, overcollateralized lending products
- Uncollateralized lending products
- Real World Assets (RWA) lending products
- NFT lending products
- P2P lending products
- Oracle-free lending products
- Automations (conditional orders, custom liquidation flows, strategies, position managers, optimizers, guardians etc.)
- Smart contract tooling (i.e. swap hubs using new dexes or new dex aggregators)
Build (and audit) with us
When finally deployed, the EVC will be one of the most audited contracts in DeFi. To date, it has undergone three smart contract audits (yAudit, Certora, Hunter Security) and a detailed code review conducted by Spearbit. A fourth audit with Trail of Bits is currently in progress. We are also proud to have Alberto Cuesta Cañada, co-founder of Yield and ERC-4626 pioneer, contributing to the EVC and assisting us with architecture and security design.
We intend to continue to review the EVC, as further audits are already scheduled. As for bug bounties, the first one is now open. Similar to our audit approach, you can expect more bounties to be announced soon.
Additionally, it's important to add that the EVC is set to be included in the Euler v2's final audit, contributing to the overall scope of the security review.
To learn more about the EVC and its full possibilities we invite you to join our workshops with Encode starting today at 11 AM ET, which will also have a bug bounty up to $100,000.
The Future of Euler v2
The EVC will be the foundation on which Euler v2 will be built, enabling it to be more flexible, with a stronger emphasis on risk management and yield optimization.
Euler v2's modular design will allow users incredible freedom to create and deploy lending markets tailored to their needs. This includes choosing oracles, setting governance structures, selecting asset types, and defining risk management mechanisms and interest rate models.
Whether users are activating a market with our ready-to-use components, customising them to fit their unique requirements, or building completely new ones from scratch, the possibilities to create truly personalised markets will be endless.
Euler v2 holds many more surprises, but this is all we're revealing for now. Worry not, though; the full details of Euler v2 will soon be announced.
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