Ethereum DeFi protocol Euler to launch EulerSwap DEX with lending-boosted yield

Ethereum-based decentralized lending protocol Euler is set to launch a DEX offering lending-boosted yield.

Built with native support for Uniswap v4’s hook architecture, the platform allows LPs to earn lending yield, collateralize positions, and deploy advanced strategies like dynamic hedging within a single integrated system designed for greater capital efficiency, according to a statement shared with The Block.

Unlike traditional automated market makers, EulerSwap routes LP deposits directly into Euler’s lending vaults. This enables capital to simultaneously support swaps, earn yield, and act as collateral for borrowing. A key benefit is that a single asset, such as USDC, can be reused across multiple pools, turning Euler’s vaults into shared liquidity hubs, the team explained. Combined with just-in-time liquidity provisioning, the architecture can simulate up to 50 times the liquidity depth of a traditional AMM, especially in stable or pegged asset pairs where pricing risk is minimal, they said.

By default, each EulerSwap pool is managed by a single LP, who can customize AMM curves, pricing, and liquidity profiles, the team added. This design gives DAOs, token projects, and professional market makers full control over liquidity strategies, including fixed-price launch pools, delta-neutral positions, and stableswap-style yield optimization. Pools can be configured for asymmetric, concentrated, or single-sided liquidity setups.

EulerSwap is designed to be fully compatible with Uniswap v4’s routing and solver networks while extending its functionality through Euler’s existing lending protocol. For end users, the idea is that swaps remain simple and familiar while under the hood, lending, borrowing, and execution logic dynamically optimize liquidity deployment and returns.

Extensive security testing

Euler reemerged to launch its v2 modular DeFi lending protocol in September following a $197 million flash loan attack on the platform in March 2023. It has since recovered to attract a surge in total value locked of $1.8 billion, according to DeFiLlama data. Euler’s native token EUL is currently trading for $9.18, according to The Block’s Euler Price page.

Euler TVL. Image: DeFiLlama.

Euler claims the new DEX has undergone extensive security testing, including five audits and a continuous bug campaign since January. To further stress-test the system, Euler also plans to launch a $500,000 capture-the-flag competition, inviting security researchers to battle-test the code in a live setting. The platform is expected to go live soon, with developers invited to join a $50,000 contest to build on top of the new protocol.

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