Title: [RFC] Euler V2 “Capture The Flag” Competition
Author(s): Euler Labs
Submission Date: 15 July 2024
Abstract
This proposal requests approval to create an ETH + USDC + wstETH vault with 575 ETH and 2m USDC using funds from the Euler DAO treasury in order to run a “Capture The Flag” security competition prior to the public launch of Euler V2.
Post-competition, these funds will either seed the first Euler vaults or reward successful security researchers, depending on the outcome.
Motivation
Enhanced Security and Reliability — The cornerstone of this proposal is a rigorous “capture the flag” security competition, organised in partnership with a respected security provider. This competition will serve multiple critical purposes:
Final Stress Test: By deploying a substantial sum from the Euler DAO treasury, we create an environment that closely mimics real-world conditions. This will attract top-tier security researchers and ethical hackers, ensuring a thorough examination of Euler V2’s codebase.
Vulnerability Discovery: The competition format encourages a diverse range of approaches to probing the system. This increases the likelihood of uncovering subtle or complex vulnerabilities that might not be apparent in traditional audit processes.
Pre-Launch Assurance: Conducting this intensive security assessment immediately prior to the public launch of Euler V2 provides a final layer of confidence in the protocol’s robustness. Any issues identified can be addressed before the full deployment, significantly reducing the risk of post-launch vulnerabilities.
Dual-Purpose Fund Utilisation — The funds allocated for this proposal serve a dual purpose, maximising the value derived from this investment:
Initial Use: During the competition, these funds act as the “flag” in the Capture The Flag competition, providing a tangible and significant incentive for participants to thoroughly test the system.
Post-Competition Allocation: In the event that a security researcher successfully exploits the system, these funds serve as a substantial bug bounty. This ensures that even in a scenario where vulnerabilities are found, the investment directly contributes to improving the protocol’s security. If no vulnerabilities are found, these funds will be seamlessly transitioned into one of the first Euler vaults. This not only demonstrates confidence in the system but also provides immediate liquidity and utility for Euler V2 upon public launch.
Comprehensive Euler V2 Ecosystem Configuration — A significant portion of the requested funds will be allocated to the meticulous setup and configuration of the Euler V2 ecosystem. This includes:
Ethereum Vault Connector (“EVC”): The EVC is a foundational layer designed to facilitate the core functionality required for a lending market.
Euler Vault Kit (“EVK”): The EVK is a system designed to streamline the process of creating and managing credit vaults within Euler V2. Careful development and testing of the EVK will enhance user experience and encourage adoption among both individual users and institutional partners.
Price Oracle Implementation: Accurate and tamper-resistant price feeds are crucial for the stability and fairness of any DeFi protocol. We will implement and test a range of price oracles to ensure resilience and accuracy across various market conditions.
By allocating the requested funds across these critical areas, we ensure that Euler V2 launches as a secure, well-tested, and user-friendly protocol. This comprehensive approach not only minimises risks but also positions Euler V2 for rapid adoption and long-term success in the competitive DeFi landscape.
Specification
Transfer 575 ETH and 2m USDC to the multisig wallet managed by the Euler Foundation, which will be deployed into a range of initial vaults on Euler V2.
Risks and Considerations
- The Euler community is well aware that smart contract risk exists with any allocation of this nature. This risk is mitigated by extensive audits that have taken place.
- The robust market and liquidation frameworks established for the protocol aim to effectively manage and minimise any financial risks.
Next Steps
If this proposal passes, Euler Labs will coordinate with the Euler Foundation in order to deploy funds in alignment with the specifications outlined in this proposal.