COMPARISON OF LENDING PROTOCOLS - RESEARCH EULER FINANCE

There’s news that WinterMute invested in Euler Finance, and $EUL can be said to have revived after the previous downturn. I’ve compiled an article about the current top lending protocols.

1.Overview of protocols in the industry

-#AAVE : The largest DeFi lending protocol, with a Monolithic model, supporting multiple assets, providing features like Flash Loans, Isolated Mode, and Efficiency Mode.

=> TVL: Over 17.8 billion USD

-#Compound : An established lending protocol, transitioning to an Isolated model with Compound v3. Focused on security and decentralized governance, with tools like Debt Simulator and Collateral Swap.

=> TVL: Over 2.1 billion USD

-#Morpho (Morpho Blue): A modular lending protocol, operating under the Isolated model and optimizing yield through individual pools. Supports "exotic" assets and reduces the spread between borrowing and lending rates.

=> TVL: Approximately 2.56 billion USD

-#EUL : A modular lending protocol that combines the advantages of both Monolithic and Isolated models, aiming to become the primary liquidity layer for DeFi.

=> TVL: 680 million USD, this figure for Euler is quite small compared to competitors, but it has increased 10 times since December 2024, surpassing its all-time high and showing signs of further growth.

2. Capital efficiency

-$AAVE : High capital efficiency due to pooled collateral, but reduced by rigid requirements and high liquidation penalties.Capital utilization ratio: approximately 56.97% ($10.613B borrowed with $18.63B TVL)

-$COMP : Lower capital efficiency due to the isolated model fragmenting liquidity and preventing rehypothecation.Capital utilization ratio: Approximately 37.72% ($813.2M borrowed with $2.156B TVL)

- $MORPHO : Improves capital efficiency compared to Compound by optimizing interest rate spreads, but is still constrained by the isolated model.Capital utilization ratio: Approximately 66.56% ($1.712B borrowed with $2.572B TVL)

- $EUL : Superior capital efficiency due to the ability to connect vaults (via EVC) and reuse collateral, reducing liquidity fragmentation.Capital utilization ratio: Reaching 85.40% ($587.51M borrowed with $687.98M TVL)

=> Conclusion: Euler leads in capital efficiency with an 85% utilization rate

*Detailed comparison table

3. Personal conclusion

- Euler, after reviving from last season, now has an update v2 with advanced, flexible, and efficient liquidation mechanisms, causing TVL to increase rapidly, with capital utilization reaching the highest ratio among lending protocols, proving its safety in the liquidation mechanism.

- Currently, users on Euler are also increasing rapidly, but in this segment, it is still smaller than older protocols like Aave, Compound, or Morpho.

- With investments from top market makers like WinterMute (the amount and valuation of this round have not been disclosed), will Euler soon become a force in the Lending space like the rapid development of Morpho?

- What do you all think?

#steven_research