Cumulative loans exceed 2 billion dollars! Can Euler's Dutch Auction liquidation mechanism disrupt the Decentralized Finance lending market?

Euler Finance, as an innovative non-custodial lending protocol on Ethereum, has shown strong recovery after the $200 million hacker incident in 2023. By October 2025, the total borrowing amount exceeded $2 billion, with total deposits surpassing $4.18 billion. Its core innovations, the Dutch Auction liquidation and soft liquidation mechanisms, significantly enhance capital efficiency, supporting up to 90% LTV. Although the top five addresses hold 46.43% of the EUL token supply, posing a concentration risk, and it faces regulatory and market competition pressures, its multi-chain deployment across 8 chains and a strategic layout with over $100 million TVL on Sonic, combined with nearly 100% revenue growth in Q3 2025, make it a noteworthy target in the DeFi lending space that combines technological innovation and recovery potential.

01 Project Overview and Core Highlights

Euler Finance is an important non-custodial lending protocol on Ethereum, which has held a unique position in the DeFi lending space since its launch in 2021. Despite facing a significant hacker attack in 2023, the project has demonstrated strong resilience, with a market cap reaching $172 million and a token price of about $9.236 as of September 2025. Notably, the protocol achieved a significant milestone in early October 2025, with cumulative borrowing surpassing $2 billion, while total deposits also reached $4.18 billion, showcasing its robust business growth and community resilience.

The project's core positioning is as a DeFi super application, which has formed a differentiated advantage in the highly competitive DeFi lending space through its innovative layered asset system and unique liquidation mechanism. Euler has been deployed on 8 chains, including over $100 million in TVL on Sonic, reflecting its multi-chain expansion strategy. In the third quarter of 2025, protocol revenue grew by nearly 100%, and capital efficiency remained at a high level of 48%, all of which validate its product-market fit.

02 Fundamental Analysis of the Ecosystem

Key Indicators and Market Position

Euler Finance's core business metrics show a strong rise:

Total Borrowing Volume: Exceeded 2 billion USD (data from October 2025), of which approximately 871 million USD is on Ethereum.

Total Deposits: Over 4.18 billion USD, approximately 1.77 billion USD on Ethereum

Loan to TVL Ratio: Reached 0.45, higher than Aave ( 0.38) and Compound ( 0.3), indicating higher capital efficiency.

The protocol achieved an astonishing performance of a 1000% rise in deposits over a 4-month period from October 2024 to early 2025, reflecting the market's recognition of its innovative features. Recently, the emerging Layer1 blockchain Plasma deposited over $1 billion on Euler within just 10 days of its launch, which fully demonstrates Euler's attractiveness as a foundational lending protocol for emerging projects.

Technological Innovation and Competitive Positioning

Euler's core technological advantage lies in its revolutionary clearing mechanism:

Dutch Auction Clearing: Unlike the fixed discount clearing of traditional lending protocols, Euler adopts a mechanism that increases the clearing discount over time. This reduces the crowded competition among liquidators, alleviates the MEV problem, and helps stabilize Gas prices.

Soft Liquidation Mechanism: This is Euler's groundbreaking innovation. When the value of a borrower's collateral decreases, only a portion of the collateral will be liquidated. If the collateral price rebounds, the borrower can reclaim the liquidated portion, significantly reducing the borrower's risk.

These innovations enable Euler to offer an average loan-to-value ratio (LTV) of up to 90%, significantly higher than most other DeFi platforms, providing borrowers with greater capital efficiency.

In the competitive landscape, Euler competes with established protocols such as Aave and Compound, as well as emerging projects like Fluid. Although Fluid DEX has structural advantages in blue-chip non-volatile trading pairs due to its unified liquidity layer and Smart Debt design, EulerSwap (Euler's DEX component) has more advantages in creating permissionless markets, making it particularly suitable for long-tail assets, new stablecoins, and DAO Tokens.

Token economic model analysis

The core value support of the EUL Token mainly comes from governance functions and protocol revenue sharing:

Token Distribution: The top five addresses hold a total of 46.43% of the total supply, indicating a high concentration and potential risks of market manipulation and volatility. Two addresses account for more than 14% each, while the remaining 53.57% of the tokens are distributed among other addresses.

Value Accumulation Mechanism: The protocol generates income through the interest rate spread from lending, with the ability to generate fees reaching $557,000 per week in 2025. Token holders may participate in protocol governance and profit sharing through staking, although the specific mechanism is not detailed in the search results.

Market Performance: EUL reached an all-time high of 15.81 USD on July 11, 2025, but subsequently fell back, down 41.58% from its historical peak as of September 24. The increase over the past year is still 93.33%, indicating that the long-term trend remains positive. CMC market data shows that EUL is currently priced at 8.42 USD, with a 24-hour rise of 105%.

03 Technical Analysis and Price Prediction

Price Trends and Technical Indicators

By early October 2025, the EUL price found strong support around the key psychological level of 10 USD, having rebounded from a low of 8.80 USD to a high of 10.80 USD. This price movement suggests that after the adjustment following the July peak, the market may have established a new equilibrium at the current level.

From a technical indicator perspective:

Market Sentiment: The Fear and Greed Index is at 44 (Fear), indicating that investor sentiment is cautious, which may provide positioning opportunities for long-term investors.

Recent Performance: Down 15.09% in the past 7 days, down 11.44% in the past 30 days, reflecting short-term adjustment pressure.

Trading Strategy: Analysts recommend using moving averages to determine trends and reversals, with RSI assisting in identifying overbought and oversold areas.

price prediction and target range

Based on historical performance and future growth prospects, the following is the potential price trajectory of EUL:

Short-term outlook (2025: ):

Conservative range: 7.91 - 8.55 USD

Neutral range: 8.55 - 9.20 USD

Optimistic range: $9.20 - $9.84 (requires the market to continue to improve)

Mid-term Outlook (2027-2028 ):

Predicted range for 2027: 8.79 - 11.94 USD

Predicted range for 2028: 7.39 - 13.89 USD

Main driving forces: application popularization, technology upgrade

Long-term Outlook (2029-2030 ):

Basic scenario: $12.55 - $15.18 (market is stable and continuously growing)

Optimistic scenario: 15.18 - 17.82 USD (with a strong bull market)

Transformational Scene: $17.82 - $21.71 (Significant Innovation and Wide Implementation)

04 Summary of Opportunities and Risks

Bullish Catalyst

Innovative Technology Advantages: The Dutch Auction clearing and soft clearing mechanisms address key pain points in DeFi lending, establishing a sustainable competitive barrier for the protocol.

Strong fundamental support: Cumulative borrowings exceed $2 billion and deposits surpass $4 billion, indicating a solid market fit for the product.

Multi-chain expansion potential: Deployed on 8 chains, with the possibility of capturing more cross-chain market share in the future.

Institutional Adoption Rise: The total TVL of the DeFi market is approaching a historical high of $206 billion, with institutional capital accelerating its inflow through channels such as RWA and compliant loans.

DeFi Veteran Revival: As a seasoned “DeFi veteran” that has endured market trials, Euler excels in the “Veteran Counterattack” of summer 2025, reflecting the market's renewed recognition of projects with solid fundamentals.

Risk Factors

Security Risk: In March 2023, it suffered a flash loan attack, resulting in a loss of approximately $200 million. Although the team has patched the vulnerabilities and rebuilt, the risk of smart contracts remains.

Regulatory Uncertainty: The DeFi regulatory environment is changing rapidly, and KYC/AML mechanisms may need to be introduced in the future, which may affect the permissionless nature of the protocol.

Market competition intensifies: Facing dual competition from established protocols like Aave and Compound, as well as emerging projects like Fluid, market share may be eroded.

High Token Concentration: The top 5 addresses hold 46.43% of the supply, posing a risk of large holders manipulating prices.

Systematic Market Risk: As a DeFi asset, EUL is highly correlated with the overall cryptocurrency market, and the volatility of benchmark assets like Bitcoin can significantly affect its price performance.

05 Investment Conclusion

Euler Finance represents the innovative frontier in the DeFi lending space, with its unique liquidation mechanism and solid business growth creating a strong foundation for long-term value. Despite experiencing significant security incidents, the protocol's robust recovery demonstrates its technical resilience and market demand. For investors who can withstand the inherent volatility of DeFi assets, EUL offers an interesting risk-reward balance at current price levels.

Investor Strategy Recommendations:

Conservative Investors: Positioning advice 1-3%, with a focus on protocol security records and regulatory developments.

Aggressive Investors: Positioning advice 5-10%, combining long-term holding with active trading, using volatility to accumulate positions.

All investors: Strict stop-loss points should be set, and most assets should be stored in hardware wallets.

Euler's future success will largely depend on its ability to maintain technological innovation momentum, effectively manage security risks, and navigate the evolution of the global regulatory framework. If the team can execute its roadmap and continue to grow without compromising security, EUL is expected to maintain a significant position in the DeFi lending space and bring considerable returns to investors.

Disclaimer: This report is based on publicly available information and does not constitute investment advice. The cryptocurrency market is highly volatile, please make decisions cautiously according to your own risk tolerance and consult a professional financial advisor.