Euler: focus on the long tail market assets loan agreement | project is introduced

Euler has announced that it will launch its bug testing bounty program in the near future and launch V1 in the third quarter of 2021. Users who participate in the trial may also have the opportunity to receive airdrop.

This is not a new project. Back in June 2020, Euler won first place out of more than 100 projects in the Encode Club's Spark College Hackathon, an 8-week online competition.

Euler is a protocol based on Aave, Compound and other loan agreements. It allows users to create their own loan market for any ERC-20 token and provides Reactive interest rate models to reduce governance intervention.

As of press time, Euler has partnered with security companies Hypfied and ZK Labs to audit and review the V1 version of the smart contract. The audit report has been released onGitHub, four minor problems were found, but no critical errors were found. Next, Euler will launch a bug bounty.

Long-tail assets will also have access to lending markets

According to DeBank, the total amount of mortgage lending on the Ethereum network is currently $17.4 billion, which is still a fraction of the total amount of tokens on the network. And in these lending agreements, there are also a large number of stablecoins and assets such as ETH, BTC (WBTC), which can not be mortgageable.

In traditional markets, the market of products in low demand or poor sales is called the "long tail market".

Even with the current DEFI boom, "long tail assets" outside of popular and mainstream tokens still lack a Defi tool. The creation of Euler is making it possible for neglected tokens to gain access to the lending market.

Euler summed up his three innovations:

-Any asset can be lent as a pledge through Euler (currently only supported for ERC-20 tokens): Driven by the Uniswap Decentralized Time-Weighted Average Price (TWAP) Predictor, any user can create their own lending market. Other protocols require a community vote to decide whether or not to launch a certain generation coin. (Rally note: Time-weighted average prices do not use current prices, but average prices over a period of time, as described below.)

-Risk minimization: Euler will adjust the lending ratio according to the relative risk coefficient of the user's mortgage assets and the lending assets, which will help reduce the settlement rate of the agreement.

-Reactive rate: The interest rate model supported by the control theory can ensure that the Euler money market can adapt to the market environment of real-time fluctuations without the need for governance intervention.

In order to provide more users with a better understanding of the difference between AVE /Compound and Euler interest rate, two interest rate visualizations have been created.

Aave/Compound interest rates:

Euler rates:

What are the advantages of time-weighted average prices?

As mentioned above, Euler's biggest feature is its ability to lend to long-tail assets. The main reason this was possible was that Euler introduced a time-weighted average price, a building block used by Uniswap V2.

Time-Weighted Averaging works by recording the price and length of the Uniswap token pool over a period of time and then calculating the average price over that period.

Here, we can carry out a demonstration of weighted average price calculation:

The price movement of a certain generation currency in a certain period of time

Multiply the time with the price to get a broken line as shown in the figure below. The line chart shows the extent to which the price of the token has accumulated over time.

When calculating the weighted average price for a certain period of time, the average price can be obtained by subtracting the beginning and end of two points of time on the line chart and dividing by this period.

The time-weighted average mechanism means that the Euler market is not affected by the price in the short term, and the operator must keep the token high (or in a position) for a certain period of time in order to influence the market. Of course, this also means that loans made in the same block, such as flash loans, cannot be used in Euler.

Time-weighted average prices are not all good. Since the Uniswap smart contract only stores the current price, calculating the weighted price over time must retrieve the previous contract, which may cost more gas and may also result in the contract record information being too old to get the true price.

Finance information

On December 16, 2020, Euler announced that it had closed an $800,000 seed round of funding. The financing was led by Lemniscap, Launchub Ventures, CWT Digital, Divergence Ventures, Block0 and Cluster, and Coinbase's Luke Youngblood, Richard Burton, Product Hunt CEO Josh Buckley is involved in the investment.

Meanwhile, Euler also hired Piedao's Mick de Graaf as an adviser after closing the financing.

The project team

Michael Bentley:

Michael Bentley is CEO of Euler and has worked as a postdoctoral research assistant at the University of Oxford and University College London.

Jack Leon the Prior:

Jack Leon Prior graduated from the University of Sussex and is an Euler Full Stack Development Engineer.

Doug Hoyte:

Doug Hoyte is a development engineer at Euler Solidity and has over 10 years of experience in development.

Mick de Graaf: & NBSP;

  Mick de Graaf is a consultant to Euler and also serves as Chief Technology Officer at Piedao.

The project's name and official logo seem to be a tribute to the great 18th century mathematician Leonhard Euler's corner. The Euler Angle is used to describe the orientation of a rigid body in three-dimensional Euclidean space. Any rotation matrix about the rotation of a rigid body is composed of three fundamental rotation matrices. In the Euler project, any token could be used as collateral for lending.

At present, Euler V1 has been audited and no serious bugs have been found. Officials say a bug bounty program will be launched in the future, and users who participate in the trial of the protocol may have the chance to get airdrops.

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