Euler Launches DEX with Integrated Lending and Yield for LPs

• DEX EulerSwap uses lending to optimize LP yields
• Ethereum gains new DEX focused on capital efficiency
• Euler integrates swaps and lending into a single DeFi protocol

Ethereum-based DeFi protocol Euler has revealed the launch of EulerSwap, a new decentralized exchange (DEX) that combines automated market functionality with a native lending system. The proposal aims to increase yields for liquidity providers (LPs) and improve capital efficiency on the network.

Unlike conventional automated market maker (AMM) models, EulerSwap directs the assets deposited by LPs directly into the protocol’s own lending vaults. This allows the funds to be used simultaneously to support trading, generate yield, and collateralize loans. The team behind this explained that this system transforms Euler’s vaults into shared liquidity hubs, maximizing the utilization of assets like USDC across multiple pools.

The DEX is built with support for Uniswap v4’s hook architecture, enabling seamless integration with existing routing tools and offering expanded functionality. According to the protocol, the combination with the just-in-time liquidity model can simulate up to 50x greater liquidity depth compared to traditional AMMs, especially on stablecoin pairs where there is less risk of price fluctuation.

Each EulerSwap pool will initially be operated by a single LP, who will be able to configure price curves, liquidity allocation, and advanced strategies such as delta-neutral positions or fixed-price pools. This approach is intended to serve DAOs, token projects, and institutional market makers seeking granular control over their operations.

The platform has undergone five security audits and has been running an active bug bounty campaign since January. In addition, Euler announced a $500 capture-the-flag competition to test the robustness of the code, and a parallel $50 challenge for developers interested in contributing to the protocol.

After recovering from a 2023 attack that resulted in the loss of $197 million, Euler relaunched its lending protocol and has since seen its total value locked surpass $1,8 billion, according to DeFiLlama data . With EulerSwap, the protocol seeks to consolidate its position in the DeFi ecosystem.