Author
Euler Labs
Date
2025-01-02
Summary
Euler Labs proposes to deploy the Euler protocol on behalf of the DAO to multiple new EVM-based networks, starting with Base. Smart contract deployments on new networks will be prioritised first, with user interface support and EUL bridging following later if there is sufficient demand and resources available.
Motivation
Many users are priced out from using the Euler protocol on Ethereum mainnet, where gas prices are relatively costly. Whilst mainnet will likely remain the global settlement layer for decentralised finance for many years to come, new users and developers are increasingly being onboarded on alternative EVM-based networks, either via L2’s or entirely new networks.
As permissionless lending software, it is important that the Euler protocol is deployed to these networks as soon as possible to give builders the opportunity to use the best-in-class lending infrastructure of Euler providers. It is important to ensure Euler does not give away first mover advantage to other lending and borrowing infrastructure solutions. Deploying the Euler smart contracts to new networks will enable vault creators to begin building today, wherever they are, helping to bring Euler to new communities of developers and end users.
Specification
Euler Labs proposes to deploy the Euler protocol on behalf of the DAO to multiple new EVM-based networks, starting with Base. Support for additional networks will be added as quickly as possible. Given that Euler is permissionless to use, and already audited to work on a wide variety of networks, such as OP Stack, there is little need to have a separate DAO governance process for each and every new network. Where more DAO input might be relevant is for more comprehensive support for rewards, user interfaces, or DAO-governed markets. For now, however, there is a need to move quickly to deploy Euler and support anyone who wants to build on the permissionless lending infrastructure it provides.
Smart contract deployment
Core smart contract functionality will be deployed initially, helping support vault creators who want to develop their own lending pools in a permissionless manner. User interface support will then follow once resources are available and periphery integrations - such as swap support - have been fully tested by the Euler Labs team.
EUL bridging
We propose that governance over Euler will continue to take place on Ethereum mainnet. Nevertheless, there are additional reasons to take EUL multichain, including for use as incentives to help grow the Euler community, and for use in Fee Flow (see below), where EUL may be used as the auction currency for auctions of the fees accumulated by Euler protocol deployments. For taking EUL multichain, the Native Token Transfers (NTT) framework has been evaluated by Euler Labs and we recommend it is adopted by the DAO as the official mechanism for bridging. NTT is an open framework that enables the seamless creation and transfer of multichain tokens, while maintaining ownership and contract upgradability across blockchains. Using this framework will allow EUL to be bridgeable between mainnet and networks where the Wormhole protocol is available.
Fee Flow
On mainnet, Fee Flow is currently configured to auction away protocol fees in return for EUL. Until EUL is available on new networks, we propose that fees are auctioned for WETH on new networks. Accrued WETH can be accumulated by the DAO and later utilised however the DAO sees fit. It could be converted to EUL, USDC, wstETH, used to increase liquidity for EUL, distributed to stakers, used to pay grants, or many other things. Once EUL has been successfully bridged across networks the DAO may opt to replace WETH for EUL as the primary auction currency.
Next Steps
Governance & community
Given Euler’s recent move to an optimistic governance framework, no formal on or off-chain voting is required for this proposal to pass. However, we encourage the Euler DAO and community members to provide feedback, share suggestions, and voice their opinions on this initiative. Community input will, as always, be crucial to ensuring that Euler remains relevant, competitive, and risk-managed.
Implementation
Unless any concerns are raised or the DAO would like more time for consideration of this proposal, the proposal will be actioned by the Euler Foundation in minimum 2 days’ time.
Disclosures, disclaimers and copyright
The author of this proposal, Euler Labs, is contracted to provide software development services by Euler DAO. Copyright is waived via CC0.