Euler Earn: The new product to simplify access to Euler Finance yields

The Complexity of Yield in DeFi

A little over seven years after the first liquidity was deposited into smart contracts, DeFi has profoundly evolved. Protocols have multiplied, their architectures have become more complex, and yield opportunities have never been so numerous.

In recent years, the trend has been toward the integration of increasingly sophisticated products, often inspired by traditional finance, and the arrival of institutional players. While the future of DeFi is undeniably promising, one fact remains: the user experience is still largely unsuitable for the general public.

For a user simply seeking passive yield, decentralized finance seems less accessible. Between the multiplication of blockchains, lending protocols with increasingly advanced logics, and derivative assets such as liquid staking or restaking, the ecosystem demands technical skills and vigilance that most users do not possess.

It is precisely this problem that Euler seeks to address with the launch of EulerEarn. This new “set-and-forget” vault infrastructure aims to democratize access to on-chain yield by offering strategies managed by professional curators, within transparent, secure, and easy-to-use products.

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What is EulerEarn?

EulerEarn is the new product from Euler Finance, introduced this August. It is designed to simplify access to yield in DeFi and is built directly on top of Euler’s other products. The idea is to allow users to deposit an asset (ETH, USDC, etc.) into a single vault, which will then be automatically allocated across a set of automated professionally curated strategies.

EulerEarn vaults are managed by one or more curators (DAOs, specialized funds, partner protocols, or independent experts) whose main role is to define the allocation strategy, manage rebalancing, and optimize returns for users.

In summary, users of EulerEarn access a passive product, easy to understand and use, while benefiting from advanced yield strategies that were until now reserved for more experienced users. The objective is to simplify the investor experience while offering professional yield management.

Moreover, EulerEarn charges no protocol-level fees. Curators may apply a performance fee (up to 50% of positive yield), but this is distributed in the form of additional vault shares, which maintains alignment between all parties.

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How EulerEarn Works

EulerEarn is based on an architecture forked from MetaMorpho, a non-custodial vault built on the ERC-4626 smart contract standard. The function of EulerEarn vaults is to aggregate user deposits and automatically allocate them to a set of strategies on Euler.

The Earn Vaults

An Earn Vault is an ERC-4626 smart contract functioning as a container that aggregates liquidity deposited by users. Each vault is dedicated to a single asset (for example ETH, USDC, or wBTC) and applies a simple logic: deposit, yield generation, and withdrawal.

When a user deposits an asset into the vault:

• the protocol issues a token representing their share (vault shares);
• the value of this token increases over time, reflecting the yield generated by the underlying strategies;
• an allocator (curator) is responsible for managing the funds and associated strategies;
• performance fees are deducted directly from the yield earned;
• withdrawals are possible as long as liquidity is available.

The user therefore interacts with a simple product, but behind the scenes, the vault functions as an aggregation layer that directs deposits toward a variety of strategies defined by a curator. In other words, it is a simplification layer for using Euler.

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Roles and Responsibilities

EulerEarn’s Vaults are designed to be non-custodial, immutable, and permissionless. Once deployed, their contracts cannot be updated, which limits risks linked to intrusive governance or arbitrary interventions. Management is based on a system of clearly defined roles, each with precise responsibilities and safeguards.

• Owner: administrator of the vault (often a multisig), able to define each role and general parameters.
• Curator: responsible for selecting eligible strategies in the vault, setting deposit caps per strategy, defining deposit and withdrawal parameters, etc.
• Allocator: technical executor managing real-time fund distribution between strategies, within the limits set by the curator.
• Guardian: guarantor of vault security, able to act as a circuit breaker to cancel any sensitive action before execution.

The curator may be a DAO, a partner protocol, a professional fund, or an independent expert. They provide the main added value to EulerEarn by putting their expertise at the service of users. Furthermore, the separation between curator (strategic decision-making) and allocator (technical execution) allows for more granular and transparent governance.

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Fund Allocation

The funds contained in an Earn Vault are allocated directly within Euler. To understand the process, it is important to recall a few basics of the protocol’s modular architecture:

• At the base of Euler are the ”Vaults”, ERC-4626 smart contracts dedicated to a single ERC-20 asset.
• Next are the ”Markets”, structures composed of at least two vaults (one for collateral and one for debt), allowing assets to be borrowed or lent.
• Finally, the ”Strategies” interface provides access to leverage loops on certain markets, for example to benefit from point farming or arbitrage opportunities on interest rates.

Note: it is important not to confuse Euler’s “Strategies” tab with the mechanism related to EulerEarn that we are discussing here. In practice, when we refer to curator strategies, this actually means the way they use the vaults to optimize yields for their users.

As explained above, curators are responsible for defining eligible strategies for the vaults from the full range of possibilities available on Euler. It should be noted that each Earn Vault can allocate deposits to up to 30 different strategies. Allocators then distribute funds in the best possible way to optimize user yields while limiting risks.

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Fees, Yield, and Withdrawals

The yield generated by the strategies is directly reflected in the totalAssets value during interactions with the vault. Performance fees, when applicable, are accrued and converted into additional shares at the time they are accounted for.

If the vault incurs losses for users, they are first absorbed by yield not yet distributed. Then, if necessary, they are shared among all depositors proportionally to their shares.

It is also important to note that EulerEarn charges no protocol-level fees. However, curators may apply a performance fee of up to 50% of the positive yield generated.

• These fees never touch the principal, only the gains.
• They are distributed as additional vault shares, directly aligning the curator’s interests with those of depositors.

Finally, to avoid withdrawals being blocked when all funds are engaged, EulerEarn introduces specific mechanisms:

• Supply and withdraw queues: deposits and withdrawals follow a queue defined by the curator, allowing a balance between performance and liquidity.
• Idle reserve option: the curator may choose to keep a portion of assets in an idle reserve (either via escrow or in a special non-borrowable vault) to guarantee instant withdrawals, without compromising allocation flexibility.

This system ensures that users can always withdraw their funds on-chain and without intermediaries, even during periods of high activity.

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Conclusion

EulerEarn is an important new product in the Euler Finance ecosystem: it strengthens the utility of the protocol’s lending and borrowing markets while offering users simplified access to passive yield strategies managed by professionals.

Beyond individual users, EulerEarn may also prove useful for DAOs or protocols wishing to put their treasury to work, either by deploying their own Earn Vault or by joining one managed by a specialized curator.

The vaults are designed to be compatible with the ERC20Votes standard. This means that vault share tokens can be used as a governance tool, either to manage a community of depositors or for a curator who wishes to align users around collective decisions.

EulerEarn creates a framework where professional yield management becomes accessible to all, without compromising on security or transparency.