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Euler Protocol Explained
Learn about the Euler Protocol
Euler works similar to other lending protocols in the space such as Compound and Maker with advancements in the listing process and risk management. Euler's permissionless listing process makes it one of the broadest crypto lending protocols. The Euler protocol takes into account both sides of each crypto asset, evaluating its value and risk as collateral and similarly as debt; enabling unique self-loans and access to a variety of exotic pairs.
In order to balance security, risk and access; the Euler protocol identifies each asset as one of the following tiers. These tiers determine how the asset can be utilized for example riskier assets may be lent but not borrowed against, etc.
Collateral Tier The gold standard! You will find some of the most liquid crypto assets here like ETH, WBTC, USDC and DAI. These assets can be lent, borrowed against, and can be combined with different asset pairs similar to assets on other lending protocols. Cross-Tier These assets can be lent to the protocol but cannot be borrowed against (they yield no collateral factor) you can borrow multiple asset types from this tier. This can Isolation Tier These assets similar to Cross-Tier do not have collateral factor and cannot be borrowed against; however you can borrow these assets as the only debt in a position. Eulers specialized asset tier lending platform requires Euler built into their protocol the ability to access more accounts to get the most of the differing tiers; Euler supports up to 256 accounts per address and each owner address can have any number of DSAs, thats unlimited accounts for ya!
Every asset on Euler will be labeled to show its Tier
To better manage the differing limitations and combinations presented by the tier asset system, Euler allows each address to create sub accounts.
When accessing the Euler page you will find your Euler position starts with a default 'Main Account' and you can create more accounts within your Euler account. You can utilize multiple accounts to better manage your Euler positions such as creating different accounts to use with different tiers etc.
Euler adjusts risks for each asset and collateral combinations; to solve for this Euler separates out the collateral factor and the borrowing factor. For example USDT is a cross tier asset it has no collateral factor so it cannot be borrowed against but has a 0.5 borrowing factor meaning you can borrow USDT at 50 cents on the dollar against the collateral value of the account. This more detailed approach to risk allows Euler to offer higher collateral factors than other lending protocols.
The Euler protocol offers many more features and unique properties that power its protocol; above represent the most salient features from a DApp user prospective. Find more links for Euler below: