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June 7, 2022

Euler

By Sam Rosenblum

Crypto technologies are driving a transformation of the global financial system that has only just begun. DeFi Summer was less than two years ago. Since then, a flurry of builders and participants from around the world have entered the space to innovate with the goal of building a peer-to-peer financial system that is characterized by more inclusivity and transparency.

DeFi (decentralized finance) has the potential to remove key structural obstacles to building wealth that have been root causes of inequality for centuries. We believe these technologies could present meaningful competition to legacy players and expand access to economic opportunity for more people around the world. At the core of DeFi is the ability for anyone with an internet connection to borrow or lend crypto assets without an intermediary. With time, we believe this could be the key to unlocking financial services for the unbanked.

As with any new innovation, approaches to DeFi protocols vary and activity in the space over the last few years has produced many important technical, structural, and social lessons. We have been very interested in a new generation of DeFi builders who are bringing a deep knowledge of financial markets and crypto-native technical skills to the task of moving DeFi into its next chapter.

As we set out to understand and research new players in the space, we were introduced to Euler, a next generation DeFi protocol for permissionless borrowing and lending of crypto assets. Euler is led by an exceptionally talented, experienced team, including alumni of Oxford University’s doctoral program, Goldman Sachs, and the Federal Reserve Bank of New York. Euler has taken a unique approach to addressing the risks associated with lending and borrowing crypto assets which we believe represents a meaningful step forward for the DeFi ecosystem. While incumbent DeFi protocols have made trade-offs between permissionless asset listings and capital efficiency, Euler has developed a nuanced strategy for risk management that we believe enables the best of both. Additionally, Euler has implemented improved mechanics around liquidations which we expect will facilitate the maintenance of healthy markets without being overly punitive to borrowers.

We believe that DeFi borrow/lend volumes will significantly expand in the coming years as new entry points and improved user experiences make the category more accessible. The first generation of DeFi protocols were not designed to handle risks associated with illiquid or volatile assets and have largely relied on permissioned listing systems as a result. In the Euler white paper, the team details how the protocol addresses these challenges while preserving the DeFi ideal of permissionless listing with risk-based asset tiers to protect the protocol and its users.

Today, we’re proud to announce that we are leading a funding round to diversify the Euler DAO treasury, with participation from other investors including Variant, FTX Ventures, Coinbase Ventures, Jump Trading, Jane Street, and Uniswap Labs Ventures. We’re very excited to support the Euler protocol and meaningfully contribute to the DAO’s governance. Welcome Euler!

This post is for informational purposes only, and does not constitute a recommendation to buy or sell securities or to pursue any particular investment strategy. This post should not be relied upon in evaluating the merits of any investment or any particular investment strategy. You should consult your own advisers as to business, financial, tax, legal, and all other related matters concerning any investment. The views expressed in this post reflect the current opinions of the authors and do not necessarily represent the opinions of Haun Ventures Management LP or its affiliates. Certain information in this post may have been obtained from third-party sources, including portfolio companies of Haun Ventures. While taken from sources that the authors believe to be reliable, Haun Ventures has not independently verified the accuracy of such information. Content is as of the date posted and subject to change without notice. Haun Ventures makes no representations about the enduring accuracy of information or its appropriateness for any given situation. Please see https://www.haun.co/disclosures for additional important information.