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Euler Vault Kit (EVK)

The Euler Vault Kit is a framework for building custom lending vaults - think of it as "Uniswap V4 hooks but for lending." Each vault is an ERC-4626 token with creator-defined collateral, oracles, interest rates, and liquidation rules. The Ethereum Vault Connector (EVC) ties vaults together, enabling cross-vault collateral and composable lending strategies.

EVC Architecture

The Ethereum Vault Connector is the middleware layer that lets vaults compose. Collateral in Vault A can back borrowing in Vault B - all routed through the EVC.

Vault Creation Parameters

When creating an EVK vault, the deployer configures these parameters. Each vault is independent - its risk is isolated from every other vault.

Collateral Types

Choose which assets can be used as collateral. Each vault can accept multiple collateral assets, each with its own LTV ratio.

Oracle

Pick any price feed: Chainlink, Uniswap TWAP, Pyth, Redstone, or a custom oracle. The vault uses this to calculate collateral values.

Interest Rate Model

Set the IRM that determines borrow/supply rates based on utilization. Can use Euler's adaptive IRM or a custom model.

LTV Ratios

Define loan-to-value ratios for each collateral type. Separate borrow LTV and liquidation LTV for safety buffer.

Liquidation Parameters

Configure the Dutch auction liquidation: starting discount, ramp speed, and cooldown period. More efficient than fixed-bonus liquidations.

Governor

Set who controls the vault: a DAO, a multisig, an individual, or nobody (immutable). This determines the vault's trust tier.

Sub-Accounts: 256 Positions Per Wallet

Each address gets 256 virtual sub-accounts. Each sub-account holds its own collateral and debt, enabling isolated strategies from a single wallet. No risk of cross-liquidation between sub-accounts.

Operators: Delegated Control

Operators are smart contracts you authorize to manage your sub-accounts. Grant an operator permission to a specific sub-account, and it can execute transactions on your behalf - rebalance collateral, manage leverage, or run automated strategies. Permissions are per sub-account, so you keep fine-grained control.

Auto-Leverage

Operator contract loops borrow-deposit to reach target leverage ratio

Rebalancer

Moves collateral between vaults to optimize yield or reduce risk

Stop-Loss

Automatically repays debt if collateral ratio drops below threshold

EVK vs Morpho Blue: Permissionless Lending Compared
Euler Vault Kit
  • Vaults compose via EVC
  • Cross-vault collateral possible
  • 256 sub-accounts per wallet
  • Operator delegation for automation
  • Flexible governor system
  • Permit2 gasless approvals
Morpho Blue
  • Fully isolated markets
  • No cross-market interaction
  • 5 immutable parameters
  • MetaMorpho vaults for curation
  • Simpler, minimal design
  • No sub-accounts