Euler Finance – A Modular Lending Comeback in 2025 Protocol Background @eulerfinance is a decentralized non-custodial lending protocol that first gained attention in late 2021 for its modular architecture and customizable isolated markets. After suffering a major $197M exploit in 2023, the team rebuilt the protocol from the ground up. With over 40 security audits and a revamped liquidation system, the new Euler v2 launched in September 2024. Euler v2: Meta-Lending Architecture Euler v2 introduces a meta-lending model built on isolated vaults, each configurable with its own risk parameters, LTV, interest rate models, and asset types. The Ethereum Vault Connector (EVC) allows users to combine liquidity across vaults, creating hybrid strategies. This structure enables both risk isolation and capital efficiency. Rapid Growth in 2025 By June 2025, Euler had reached $2.28B in deposits and $1.1B in active loans, becoming the fifth-largest lending protocol. While many competitors saw stagnant growth, Euler gained market share through its multi-chain expansion, flexible interest rate mechanics, and support for higher-risk assets through compartmentalized vaults. EulerSwap and PT Farming A major growth catalyst was the launch of EulerSwap, a native DEX two years in the making. Co-founder Michael Bentley described it as a transformative leap for the protocol, allowing users to create custom AMMs tied directly to their lending positions. Even in closed beta, EulerSwap registered millions in trading volume through just-in-time liquidity and MEV arbitrage. EulerSwap also enables unique LP mechanics: users can market-make from within Euler vaults and even borrow against their LP positions, creating high capital efficiency. Yield farmers can loop stable pairs like sRUSD/RUSD and achieve triple-digit APYs - 150%+ in some cases. This deep integration between DEX and lending layers sets Euler apart. Importantly, the platform supports @pendle_fi PTs as collateral, aligning Euler with the broader move toward fixed-yield strategies in DeFi. Through Frontier Markets, non-curated vaults with adaptive interest rate curves, projects can spin up custom credit markets without governance delay. This has unlocked new liquidity for exotic stables and real-world assets. Outlook and Conclusions @eulerfinance has earned its title as the “comeback of the year.” Following a major crisis, the team brought the project to a new level - flexible, secure, and ready for new asset classes. Euler is ideal for experienced users seeking custom strategies, fixed yields, or integrated LP/PT workflows. With growing integrations and network expansion, Euler proves that DeFi protocols can recover and scale without compromising on quality or security.