eIP 6: Promote LINK to collateral tier

  • Title: Promote LINK to collateral tier
  • Author(s): Seraphim Czecker
  • Submission Date: 24.03.2022

eIP 6: Promote LINK to collateral tier

Simple Summary

Proposal includes a batch of changes to the Chainlink token (LINK) on Euler. These include: promotion of LINK to the collateral tier. Increase of LINK collateral factor to 0.66. Increase of LINK borrow factor to 0.76. Enable cross borrowing of LINK.


This is a proposal to promote Chainlink token (LINK) to the collateral tier on Euler, enabling Euler users to borrow against it. LINK 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 LINK’s borrow factor and enabling of cross tier borrowing. These changes would allow users to borrow LINK in a more capital efficient way. 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 LINK, 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 LINK to collateral status and amending borrow factors is meant to ramp 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 LINK.

2. Provide a brief description of the asset

LINK is the official token of Chainlink: a decentralised blockchain oracle network.

3. How is the asset primarily used?

LINK tokens are used to pay node operators for retrieving data for smart contracts and also for deposits placed by node operators as required by contract creators.

4. Explain why the eIP would benefit Euler’s ecosystem?

LINK 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.

5. Where does the asset trade?

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

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

6. What are the volumes and market capitalisation?

Market capitalisation is $7.5 billion with $760 million traded in the last 24h.

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

The 0.3% LINK/WETH Uniswap V3 pool is extremely liquid as it has a TVL of $21 million and, crucially, has full range liquidity.

8. What security/auditing reports have been done?

Chainlink has been audited by multiple teams of engineers like Quantstamp, Sigmaprime and has stood the test of time.


Contract Method Token Token Name Token Address Updates
governance setAssetConfig LINK Chainlink 0x514910771af9ca656af840dff83e8264ecf986ca borrowIsolated:false, collateralFactor:0.66, borrowFactor:0.76

Risk Assessment

Oracle Grading

According to our inhouse research, meaningful attacks on the 0.3% LINK/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 LINK a strong oracle rating.

For more details, check out the full report.


LINK appears well-distributed amongst different holders.


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


LINK 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

Chainlink has been audited by multiple teams of engineers and has been extensively used by key DeFi protocols for pricing for years.


LINK 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/


I strongly support this proposal. Am very surprised it is not yet cross tier.

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I fully support it. Best regards.

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Well, would like to see more Oracle projects listing, they will be big.

fully support this one. Link shall be collateral

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I support it strongly.

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I support this.
Chainlink is widely known and trusted.

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Is it going to be collateral tier or just cross tier? (i.e. deposit LINK and borrow USDC)

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I’ve amended to:

Enable cross borrowing of LINK.

To avoid the confusion. So basically it’s a collateral asset that will also be cross-borrowable. Thanks for flagging!


We fully support this proposal. :ship:

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