Euler Unveils EulerSwap: A Next-Gen DEX Merging Lending and Yield Optimization
Ethereum-based DeFi protocol Euler is preparing to launch EulerSwap, a decentralized exchange designed to transform how liquidity providers (LPs) earn yield and manage risk. By combining lending mechanics directly with trading infrastructure, Euler aims to offer deeper capital efficiency and more strategic flexibility than traditional automated market makers (AMMs).
Built natively on Uniswap v4’s new hook architecture, EulerSwap allows LPs to do more than just facilitate trades. Deposits are routed into Euler’s lending vaults, enabling users to earn interest, collateralize positions, and execute sophisticated strategies—like dynamic hedging—all within one streamlined platform.
Unlike conventional AMMs, where deposited capital primarily supports trading, EulerSwap makes each asset multitask. For example, a single USDC deposit can power swaps, generate lending yield, and serve as collateral for borrowing, all at once. This model transforms lending vaults into shared liquidity hubs and, according to the team, can replicate up to 50 times the liquidity depth of standard AMMs, especially when trading low-volatility pairs like stablecoins.
Each pool on EulerSwap is managed by a single LP who has full control over the trading curve, price points, and liquidity settings. This structure is particularly appealing to DAOs, token projects, and institutional players, allowing them to launch fixed-price pools, implement delta-neutral strategies, or deploy stablecoin-optimized yield models. Pools can also support asymmetric, concentrated, or even single-sided liquidity.
Despite these complex backend operations, the front-end user experience is designed to remain intuitive and familiar. Swaps will feel just like those on traditional DEXs, while behind the scenes, Euler’s engine handles lending, borrowing, and routing logic to optimize returns.
EulerSwap is fully compatible with Uniswap v4’s broader ecosystem, including its routing and solver networks. The DEX builds on the momentum Euler regained after a massive setback—a $197 million flash loan attack in March 2023. Following a major protocol upgrade and renewed investor confidence, Euler v2 was relaunched in September and now boasts $1.8 billion in total value locked, according to DeFiLlama.
Security has been a top priority in this launch. The Euler team reports that EulerSwap has passed five audits and has been under continuous testing via a bug bounty program since January. To further pressure-test the system, Euler is launching a $500,000 “capture-the-flag” security contest, encouraging white-hat hackers to probe the platform in real time. Developers are also being courted with a $50,000 contest to build new integrations and tools atop the EulerSwap infrastructure.