Author
Euler Labs
Date
2025-05-06
Summary
EulerSwap will soon launch on Euler. In preparation for launch, we propose to give the Foundation the ability to migrate DAO protocol-owned liquidity from Uniswap and Euler into vaults that will benefit the growth of EulerSwap.
Motivation
EulerSwap is a new type of decentralised exchange (DEX) that allows an automated market maker (AMM) to be installed on top of Euler’s lending and borrowing vaults. Using EulerSwap to hold the reserves of the AMM has several main advantages over alternative AMM designs, allowing liquidity providers to earn additional lending yield on their deposited AMM reserves, borrow against their liquidity, and supply just-in-time liquidity to increase the depth of reserves be re-using idle liquidity in Euler. EulerSwap is therefore an important new module in the Euler ecosystem that promises to onboard more users and more liquidity to Euler. It is therefore crucial the project is able to help bootstrap the new protocol as much as possible to help it compete.
Specification
The proposal seeks approval from the community to give the Foundation the flexibility to migrate existing USDC, WETH, and EUL currently used as protocol-owned liquidity in Uniswap and Euler into new vaults inside Euler connected EulerSwap. Updated liquidity positions will be highlighted on the DAO forum. Feedback or suggested new strategies for turbo charging the growth of EulerSwap are welcome.
One of the main risks associated with migrating liquidity to EulerSwap is that EulerSwap is a new protocol and its ability to compete will only become clear after launch. DAO assets might therefore be used less productively until EulerSwap has proven itself and/or become more established. There is also additional smart contract risk, although the protocol will have undergone 5 audits by the time it is launched later this month.
Voting
Given Euler’s recent move to an optimistic governance framework, no formal on or off-chain voting is currently 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 Prime market will be actioned by the Euler Foundation in 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.