In just three months, Euler Finance skyrocketed from a TVL of $99M to $671M—a staggering 575% increase that shook up the DeFi lending ecosystem. As competitors like Aave and Compound hold their ground, Euler is rewriting the playbook with modular vaults, permissionless asset listings, and aggressive network expansion. This blog decodes what’s driving Euler’s momentum and why its comeback story, post-2023 exploit, might make it one of the most resilient and innovative DeFi lending platforms of 2025.
Key Highlights
Euler Finance’s TVL surged by 575% in three months, reaching $671M by April 2025.
Euler’s Base (L2) deployment contributed $50M in TVL within its first month.
Following its 2023 $195M exploit, Euler returned stronger with upgraded safety protocols and transparency.
With 10,800 monthly active users and a 43% utilization rate, user engagement is outpacing larger competitors.
Euler’s flexibility makes it attractive to DAOs, builders, and long-tail assets seeking faster lending integration..
1. What is Euler Finance?
Euler Finance is a decentralized lending protocol built on Ethereum that enables users to lend and borrow a wide range of ERC-20 assets. Unlike traditional DeFi lending platforms where asset listings are strictly permissioned, Euler offers a permissionless lending market architecture. This means anyone can create a new lending market for any asset that has a WETH pair on Uniswap v3—opening the door for long-tail assets and newer tokens that might be excluded elsewhere.
Euler uses a modular infrastructure to allow developers to build, experiment, and launch custom lending strategies without needing full community or governance approval. Through key tools like the Euler Vault Kit (EVK) and the Ethereum Vault Connector (EVC), users can plug into existing infrastructure while tailoring functionality to suit unique asset profiles or risk appetites.
The protocol’s standout feature is its full modularity, which enhances composability for both developers and protocols. This architectural decision positions Euler not just as a lending platform—but as a flexible foundation for building next-gen financial products in DeFi.
2. Business Model and Revenue Mechanics
Euler’s business model is grounded in sustainability. A core component of its revenue generation lies in the reserve factor, where roughly 25% of all interest paid by borrowers is diverted to the protocol’s reserve pool. These reserves serve as a safeguard against insolvency or bad debt, improving long-term platform stability.
Additional monetization and differentiation points include:
Permissionless Asset Listings: Anyone can list an asset if it has a WETH trading pair on Uniswap v3, promoting asset diversity.
Custom Lending Vaults: Vault creators define their own parameters (interest rate models, collateral factors, reserve ratios) depending on the asset's characteristics.
Risk Tiering System: Assets are categorized into Isolation Tier (higher risk), Cross Tier (mid risk), and Collateral Tier (blue-chip assets), which helps manage systemic risk while maximizing capital efficiency.
Together, these mechanics make Euler a capital-efficient, resilient, and developer-friendly alternative to legacy lending protocols.
3. Euler by the Numbers: April 2025 Metrics
Euler’s April 2025 performance showcases a protocol in rapid ascension:
Metric | Value | Notes |
Total Value Locked (TVL) | $671M | Up 575% from $99M in Q1 2025 |
Active Loans | $231M | 43% utilization rate |
Monthly Active Users | 10,800 | Higher engagement than peers |
EUL Token Market Cap | $135.61M | Price hovering around $7.54 |
Total EUL Supply | 27.18M | Fixed; inflation capped at 2.718% annually |
A key contributor to this growth was Euler’s launch on Base, Coinbase’s Layer 2 network. Within just one month, it contributed $50M in TVL, drawing in new users and liquidity providers while reducing gas costs significantly.
4. Recovery After the 2023 Exploit
In March 2023, Euler suffered a major blow—a $195M exploit caused by vulnerabilities in its donateToReserves and liquidation logic. It was a defining moment for the protocol. Yet in an unexpected twist, the hacker returned the full amount within 23 days.
Euler took this opportunity to re-engineer its architecture and security processes. Key post-exploit improvements include:
Enhanced audit cycles with top-tier security firms
Layered fail-safes in liquidation and reserve mechanics
Greater community transparency and governance involvement
The release of Euler v2 marked a rebirth—rolling out with a renewed focus on risk mitigation, modular scalability, and community-aligned incentives.
Today, the protocol’s ability to bounce back is considered one of the most remarkable comeback stories in DeFi.
5. Euler vs. Competitors: Is it Ready to Lead?
Euler still trails giants like Aave ($12B+ TVL) and Compound ($2B+) in raw numbers, but the qualitative differences are beginning to show:
Key Strengths:
TVL Momentum: +575% in three months, while others grow steadily or plateau
High User Engagement: 10,800 monthly active users
Capital Efficiency: 43% utilization rate indicates healthy lending activity
Onboarding Flexibility: Permissionless asset listings make it easy for DAOs and protocols to spin up lending pools without bureaucracy
In contrast to Aave’s conservative governance model or Compound’s template-based listing approach, Euler’s modular toolkit appeals to developers and smaller communities looking to launch fast, experiment safely, and scale quickly.
Euler is becoming the go-to infrastructure for lending-native apps, cross-chain integrations, and experimental on-chain credit products.
6. Final Thoughts
Euler Finance is no longer just a comeback story—it’s a template for the future of decentralized lending. Its growth in 2025 is powered not just by hype, but by real architectural advantages: flexibility, safety, and composability.
Its permissionless design gives developers a powerful platform to launch custom markets. Its risk-tiering mechanism balances innovation with security. And its post-hack turnaround shows a protocol that learns, adapts, and executes.
As DeFi continues to evolve across chains and narratives, platforms like Laika AI are helping users keep up with fast-moving trends like Euler’s. From tracking protocol TVL surges to monitoring token unlocks, developer activity, and DAO updates—Laika helps surface signals that matter.
Explore Laika AI or add the Laika Chrome Extension to follow Euler’s rise and other DeFi lending protocols in real time.
FAQs
1. What makes Euler Finance different from other DeFi lending platforms?
Euler allows permissionless asset listings and custom lending vaults. It’s modular, developer-friendly, and offers a risk-tiering system — features that set it apart from traditional, governance-heavy platforms.
2. How did Euler’s TVL grow so quickly in 2025?
Euler’s Base (L2) deployment, custom vault tools, and increased developer adoption drove a 575% TVL surge from $99M to $671M in just three months.
3. How did Euler recover from its $195M exploit in 2023?
After the incident, Euler implemented stricter audits, safer liquidation logic, and transparent governance—resulting in the launch of Euler v2 and regained user trust.
4. What is Euler’s risk-tiering system?
Assets are grouped into Isolation, Cross, and Collateral tiers—designed to manage systemic risk while maximizing capital efficiency in lending markets.
5. What role does the EUL token play in the ecosystem?
EUL is used for protocol governance. It has a capped supply of 27.18M and low inflation, helping secure long-term value.