Token Description & Project Background

Euler Finance is a peer-to-peer protocol that consists of a set of smart contracts deployed on the Ethereum blockchain. Euler enables permissionless listing enabling token holders to dictate which assets are listed on the protocol. The protocol relies on Uniswap v3 as a core dependency and requires that any asset listed in a lending market must have a WETH pair on Uniswap.

To combat the risks inherent in allowing virtually any asset to be borrowed from its decentralized coffers, Euler has introduced a series of “risk-based” asset-tiers to protect both the protocol and its users. The first of these tiers is an“isolation tier” which includes assets with relatively low liquidity. These tokens can only be borrowed in isolation and cannot be used as collateral to secure another loan.

Next are “cross-tier” assets which also lack the ability to be posted as collateral but can be borrowed alongside other tokens. Lastly, Euler’s “collateral tier” includes ERC-20 assets with relatively deep and liquid markets. Unlike cross- and isolation-tier assets, these tokens can be used to collateralize loan balances and can be borrowed freely without restrictions.

Euler utilizes so-called “reactive interest rates,” or those which dynamically adapt to the underlying market conditions of each asset listed on the protocol, documentation said.

This process autonomously dictates borrowing costs across the platform and supposedly results in a high degree of capital efficiency.

EUL is an ERC-20 that acts as the native governance token; it also distributes rewards to users engaging with the protocol through lending and borrowing. 

EUL was never sold publicly; In June 2022, 1% of the token was airdropped to users who had been engaging with the network. 

Euler Finance was founded by Michael Bentley (CEO), Jack Leon Prior (Blockchain Dev), Brandon Neal (COO) & Doug Hoyte (Full-stack). Their protocol’s mainnet officially launched in December of 2021. 

Risks of EUL

Like an investment in other crypto assets, there are some general risks to investing in EUL. These include:  (i) volatility risk and liquidity risk, (ii) short history risk, (iii) demand risk, (iv) forking risk, (v) code defects, (vi) regulatory risk, (vii) electronic trading risk, and (viii) cyber security risk. For additional information of these and other general risks associated with crypto assets and Uphold’s platform, please refer to the Risks Specific to Holding Digital Assets statement.

In addition to these general risks, an investment in EUL is subject to the following specific risks:

• The decentralized lending market faces significant competition. Any potential success associated with EUL depends on Euler Finance’s rate of adoption.

We emphasize that this Crypto Asset Statement is not an exhaustive description or summary of all risks associated with EUL. Investors should conduct their own research and perform their own assessment before trading any crypto asset to determine the appropriate level of risk for their personal circumstances.

The EUL community and Euler Finance founding team are not under any legal or regulatory obligation to disclose material information to the public regarding its activities. Holders of EUL have no recourse to the EUL community, its founding team, or Uphold if EUL declines in value for any reason.

Changes to applicable law may adversely affect the use, transfer, exchange, or value of any of your crypto assets, and such changes may be sudden and without notice.

Uphold’s Evaluation Process

Prior to listing EUL on the Uphold Platform, Uphold performed due diligence on EUL and determined that EUL is unlikely to be a security or derivative under relevant securities legislation. Uphold’s analysis including reviewing publicly available information on the following: 

• The creation, governance, usage, and design of EUL, including ensuring the source code is open-source, audited and peer reviewed, security, and roadmap for growth in the developer community. 
• The supply, demand, maturity, utility, and liquidity of EUL.
• Any marketing materials put forward by the EUL social team including on, Twitter, Medium blog, LinkedIn posts, Discord and Telegram channels.
• Material technical risks associated with EUL, including any code defects, security breaches and other threats concerning EUL and its supporting blockchain (such as the susceptibility to hacking and impact of forking), or the practices and protocols that apply to them.
• Legal and regulatory risks associated with EUL, including any pending, potential, or prior civil, regulatory, criminal, or enforcement action relating to the issuance, distribution, or use of EUL. 

General

Uphold has prepared this Crypto Asset Statement based on publicly available information. Although Uphold has taken steps to obtain information from apparently reliable sources, information contained in this Crypto Asset Statement may be inaccurate, incomplete or out-of-date. This overview is a starting point for you to perform your own research prior to investing in a crypto asset.

Uphold users should read the Risks Specific To Holding Digital Assets statement for additional discussion of general risks associated with crypto assets made available through the Uphold platform.  

Canadian residents, please note that Uphold has filed an application for registration in certain Canadian jurisdictions but has not yet obtained registration. Until such time as Uphold obtains registration, Uphold has agreed to abide by the terms of an undertaking available at the following link. Please also review the Uphold Canada – Crypto Risk Statement for additional discussion of general risks associated with the crypto assets made available through Uphold Platform. Please be aware that statutory rights of action for damages or rescission in section 130.1 of the Securities Act (Ontario) and, if applicable, similar statutory rights under securities legislation in the other provinces and territories of Canada do not apply in respect of this Crypto Asset Statement or other disclosures on the Uphold website and Risks Specific To Holding Digital Assets statement. 

Last updated on June 21, 2023.