eIP 4: Promote UNI to collateral tier

  • Title: Promote UNI to collateral tier
  • Author(s): Seraphim Czecker
  • Submission Date: 03.03.2022

Simple Summary

Proposal includes a batch of changes to the Uniswap Governance Token (UNI) asset on Euler. These include: promotion of UNI to the collateral tier. Increase of UNI collateral factor to 0.66. Increase of UNI borrow factor to 0.76. Enable cross borrowing.


This is a proposal to promote Uniswap Governance Token (UNI) to the collateral tier on Euler, enabling Euler users to borrow against it. UNI fits the collateral eligibility criteria of a collateral asset. It is backed by a robust oracle on Uniswap v3. It is widely distributed and decentralised. It has relatively high liquidity on numerous decentralised exchanges. Smart contract risk is relatively low. The proposal includes suggested increases to UNI’s borrow factor and enabling of cross tier borrowing. These changes would allow users to borrow more UNI, and bring Euler’s capital efficiency in line with competing protocols. On the upside, adding a new collateral asset to the protocol would increase capital efficiency and provide more utility for users. On the downside, adding a new collateral asset always introduces a degree of systemic risk. In the case of UNI, the benefits outweigh the potential risks.


The goal of the proposal is to boost the capital efficiency and utility of the Euler protocol. The current risk factors on the protocol are purposefully restrictive as a part of Euler’s soft-launch in late Dec 2021. Since then, the protocol has performed well against a backdrop of extreme price volatility and a large number of liquidations across DeFi. Furthermore, there have been no reports of any critical bugs on the protocol in spite of a $1m public bug bounty being live for nearly a month. Promoting UNI to collateral status and amending borrow factors and is one of the first steps in ramping up capital efficiency in a risk-managed fashion on Euler.


  1. What is the link between the eIP author and the asset?

None. The proposer is the head of risk at Euler Finance and has no link to UNI.

  1. Provide a brief description of the asset

UNI is the governance token of the Uniswap Protocol: a leading DeFi AMM.

  1. How is the asset primarily used?

UNI is used primarily for governance purposes, namely:

  • Uniswap governance
  • Community treasury
  • Protocol fee switch
  • eth ENS
  • Uniswap List
  • SOCKS tokens
  1. Explain why the eIP would benefit Euler’s ecosystem?

UNI is an established asset in DeFi and listing it as collateral would allow users to tap into Euler’s capital efficiency without swapping it for the already-listed collateral assets like USDC, DAI and WETH.

  1. Where does the asset trade?

UNI trades on almost every major centralised exchange, including Binance, FTX, and Coinbase. It also has liquid markets on key decentralised exchanges, including Uniswap, Sushiswap, and Curve.

Consequently, it would allow liquidators to easily offload UNI on various CEXes and DEXes in the event of a liquidation spiral.

  1. What are the volumes and market capitalisation?

Market capitalisation is $6.5 billion with $150 million traded in the last 24h.

  1. What is the liquidity like in the Uniswap V3 liquidity pool versus ETH?

The 0.3% UNI/WETH Uniswap V3 pool is extremely liquid as it has a TVL of $25 million and, crucially, has full range liquidity.

  1. What security/auditing reports have been done?

Uniswap protocols have been audited by multiple teams of engineers like Consensys, dapp.org, Paradigm research team etc.


Contract Method Token Token Name Token Address Updates
governance setAssetConfig UNI Uniswap 0x1f9840a85d5af5bf1d1762f925bdaddc4201f984 borrowIsolated:false collateralFactor:0.66 borrowFactor:0.76

Risk Assessment

Oracle Grading

According to our inhouse research, meaningful attacks on the 0.3% UNI/WETH Uniswap V3 oracle appear unfeasible. The substantial TVL spread across the entire price range is able to prevent both artificially elevated and depressed oracle prices.

We therefore give UNI a strong oracle rating.

For more details, check out the full report.


UNI scores well on decentralisation given 60% allocation to the community in the genesis allocation pie. As of now, it appears well-distributed amongst different holders on the blockchain as well.


UNI/WETH annualised 30-day realised volatility fluctuates from 40-200%, which is manageable.


UNI is listed on practically all exchanges (both CeFi and DeFi) with most volumes occurring on Coinbase, Binance, FTX. Given the depth of liquidity pools and order books, it is unlikely that liquidating users in an adverse scenario will be challenging.

Smart Contract Risk

Uniswap protocols have been audited by multiple teams of engineers like Consensys, dapp.org, Paradigm research team etc. and are some of the most reputable DeFi solutions in the space.


UNI ranks high on oracle security, volatility, liquidity, decentralisation and smart contract risk. We therefore recommend implementing the proposed eIP.

Relevant Links

Oracle grading tool: https://oracle.euler.finance/


Uni is coming,when sushi?

Cool uni, I would like to see some interesting bearing token as collateral like stETH

1 Like

I’ve actually had a quick look at WSTETH/WETH 0.05% oracle on Uniswap v3. If you generate a cost of attack report on oracle.euler.finance, you can see that a 2-block attack would require significant spending:

Namely, it would cost 9.7m USD to elevate the TWAP by 21% and 44m USD to depress the TWAP by 21% in a 2-block attack.

Also, our internal tool shows that there’s full-range liquidity, which makes the oracle strong:

Non-zero% at 100% shows that 100% of the price range has some liquidity in it. However, the initialised #, which shows how many price ranges were provided with liquidity, says 52. This means that a max of 52 people have provided liquidity to this pool.

This is a bit risky, as a few people pulling the liquidity out could cause the cost of attack to surge.

We will need to investigate this further to reach a conclusion on WSTETH.

Check out this blog post on how to use the oracle attack tool.


thanks for your feedback. I have a great example to learn how the oracle attack tool work. I know lido is actually is not fully decentralised. but eth2.0 staking is a huge market, I am pretty sure stETH OR some new staking service protocol will prevail in the future.


agree eIP 4: Promote UNI to collateral tier

1 Like

damn you are correct!

1 Like

UNI deserves the collateral tier

1 Like