In the DeFi space, Euler Finance has rapidly shot up the ranks to become one of the leading lending protocols, as seen by its ascension in both total supply and total debt figures.
Total supply and total debt at Euler Finance have both behaved much too “well”—that is, they’ve risen too much too fast for this to be sustainable. Both have risen more than 3.5 times since early February 2024, which, if you ask me, looks like one of the most active platforms there is. But on the platforms, what are lenders and borrowers doing?
Euler Finance has launched Risk Pulse, a new alert system that offers near real-time monitoring of key risk indicators. In an era when conditions can change at a moment’s notice, this new tool is about as good as it gets for keeping users in the know and allowing them to manage risk in a lending protocol that’s still very much a work-in-progress. If you want to talk about helping your user base stay well-positioned in a fast-changing environment, this is it.
Tracking the Shifts: Monitoring Key Indicators
The growth of Euler Finance is nothing short of impressive, with vault balances vaults shifting dramatically these past two months. But with this growth also come opportunities and challenges. We are experiencing rapid changes in our supply and borrowing rates—changes that affect the risk dynamics of our protocol and, accordingly, the decisions our users make. As we expand, it is more important than ever for our users to have a way to track all of this in real time.
The Risk Pulse alert system, introduced recently, is a response to these challenges. It enables users to get immediate notifications when key indicators—like our supply and borrow rates—hit new highs. One of the most notable examples of this is what happened with Euler’s $USDT Yield Vault. Recently, the supply and borrow rates for that vault have absolutely surged, hitting record highs and triggering alerts in our Risk Pulse feed. This gives users really crucial insights into the state of the protocol and helps them understand the changing risk landscape.
The alerts serve to give information that the user can act upon, so much so, in fact, that any user who receives a notification can simply click on it and reach the Risk Radar dashboard and all its corresponding detailed charts. However, the Risk Radar dashboard is not the only means of access one has to any alerts the system sends. The Risk Radar dashboard houses only one side of the equation. The alerts on their own house the other.
A New Approach to Liquidity: Ensuring Flexibility and Control
Another major worry for users of lending platforms such as Euler is liquidity. Assets come and go, and with them supply and demand; that much is normal. But with some assets and at some times, it can seem like there’s a lot of demand and not much supply, or vice versa; that is, some shifts in available liquidity that we call liquidity events can be significantly impactful. When you’re using a lending platform like Euler, and especially if you’re using it in a decentralized finance context, where things can seem quite uncertain, you want to know about impactful liquidity events. And so, Euler has a tool for that. It’s called the Liquidity Alert feature.
The Liquidity Alert tool provides users instant access to the most important data related to liquidity changes, allowing for real-time responses. This is crucial for people utilizing our DeFi services who require fast access to their funds or need to adjust their leverage based on changing market conditions. By utilizing the Liquidity Alert tool, our users can keep a close eye on liquidity shifts and maintain the most important aspect of trading and investing: the ability to exit their positions on their terms.
These traits are particularly beneficial in a quickly expanding ecosystem such as Euler Finance, where conditions can change in the blink of an eye. Whether it’s an uptick in supply and borrowing rates or major shifts in liquidity, the Risk Pulse system gives users a way to stay ahead of the curve and manage their effectively.
A New Standard for Risk Management in DeFi
The fast growth of Euler Finance and the introduction of the Risk Pulse alert system are emblematic of a trend not only in DeFi but also across the entire financial space: the real-time risk management of on-chain assets. When people hold assets on-chain, that is, when they’re in the world of DeFi, real-time risk management becomes even more critical to avoid events such as the LUNA collapse. The better a DeFi protocol can manage and signal risk, the safer it is to use. The Euler team is doing a very good job piling on the sophistication, both in what they assess is going on in the DeFi world and signaling that to their users.
DeFi platforms are not only growing in popularity but are also maturing. They are currently basing their developments on a standard of risk management that even the traditional financial system has trouble complying with. Euler Finance is one company within the DeFi narrative that is taking risk management seriously. The startup has developed a protocol that is increasingly being used for lending across decentralized finance platforms. It recently introduced a “Risk Pulse” system that provides users a simple and straightforward way of understanding how risky the protocol they are using is at any given moment.
Conclusion
The explosive growth of Euler Finance in the lending market demands attention. It is a clear sign that the world is turning to demand decentralized and uncollateralized financial solutions. However, this rapid expansion also introduces new challenges in risk management. To that end, we are launching the Risk Pulse alert system.
This system has a two-pronged approach to improve the visibility of Euler’s key risk indicators. The first front is comprehensive coverage of the key indicators. The second front is a new feature that provides quick and easy access to information about our key liquidity indicators.
As Euler Finance grows, its risk management and decision-making tools will become even more essential. Pulse, the new system for monitoring risk, enables both lenders and borrowers to understand how EDPs (Euler Default Probabilities) affect their investments. With Risk Pulse, we’re one step closer to a full picture of real-time risk in DeFi.
Disclosure: This is not trading or investment advice. Always do your research before buying any Metaverse crypto coins.