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Better Yields for Uncertain Times on Euler Finance - The Edge Podcast
Recorded: April 4, 2025 Duration: 0:42:38Space Recording
Short Summary
In a recent Yield Talks session, Euler Finance's resurgence was celebrated as the platform surpassed a billion dollars in deposits, showcasing significant growth in user trust. The discussion delved into innovative yield strategies and the introduction of a lending super app, highlighting the evolving landscape of DeFi and the importance of strategic engagement in current market conditions.
Full Transcription
Thank you. Thank you. Thank you. Hello?
Hey, Michael. Hey, there we go.
Hey, we'll get started in just a minute.
I'm just trying to add Nomadic, and yeah, we'll get started.
By the way, so you'll speak from your personal account then
and the Euler Labs account.
Will anyone speak from that, or we'll just have that in the space?
No, I think we'll just have that in the space, yeah.
Perfect.
That's all right. Can I have we'll just have that in the space, yeah. Perfect.
Can I have just one minute to go to the bathroom?
I've been on calls for like hours now
and I just need to pay a visit.
Of course, yeah, yeah, take your time.
I'm gonna put myself back on mute
and turn the elevator music back on here.
And yeah, we'll get started in just a minute, okay?
All right, thanks.
For anyone joining, by the way, we're going to get started here in just one minute.
So thanks so much for joining us, and we'll see you in just a bit. Hey, Nomadic. While we're waiting, I was just, yeah, I was just opening the S&P 500 and yeah,
wow, just markets are melting down. The world is melting down around us. So, oh well.
Yeah, it's awful out there. I actually don't check boomer stocks quite as much, but I was very, very shocked to see
two horrible days in a row.
Crazy.
Yeah.
Yeah, right.
And you see that gap too from like yesterday to today.
It's, yeah, it definitely reminds me a little bit of COVID.
Obviously, totally different macro conditions.
Like that was like the black swan of black swan type types of events in my
lifetime. But yeah, yeah. Some pretty crazy price movements.
Hey, Michael.
Hey, what's the S&P doing now? Are we in trouble?
It's down like 4%, you know, just, just.
Wow. Just a generational drop.
From a crypto standpoint, I know, right? I have to readjust my lens because when I look at stocks, I just go, oh, well, they're not down 10% or 20%. I'm used to seeing my net worth drop by 40% or 50% on its worst day.
Yeah, yeah.
Well, hey, we'll go ahead and get started then so I can hear you, Michael, and Nomadic okay.
You guys can hear me fine.
No audio issues.
Yeah, I just got a guy with a chainsaw right outside my house.
So epic timing on that.
Is it Mark Zeller? Exactly what you want epic timing on that. Is it Moxella?
Exactly what you want.
What's that?
Is it Moxella?
Yeah, could be Moxella.
Hey, Nomadic lives in Canada.
So, you know, that's what they do.
They cut down trees.
That's how they were framed to me growing up.
They all look like Paul Bunyan
and they chop down trees and make maple syrup. So, uh,
we've got running water now, so that's good.
That's that's great. You also have a lot of crypto founders too.
Canada has a lot, a lot of crypto investors, a lot of founders. Uh,
but anyways, thanks everyone for joining us.
This is a new session of yield talks on the edge podcast.
I'm defy dad here with Nomadic.
Every Friday, we host a live space to review new and interesting DeFi and to spotlight what we believe is an opportunity more of you should know about.
Now, today, we're going to be talking about Euler finance yields.
And thankfully, if you subscribe to the Edge newsletter at the-edge.xyz. We've been covering Euler forever.
Euler is a protocol that has been around for a very long time, but they've got an epic comeback
story we're going to highlight just before we do talk more about yields. Fun fact, back in September,
we had Michael on the Edge podcast just to talk about Euler V2 launching.
It was an exciting release for us, having been Euler V1 users.
And again, I'll let him tell a bit about what happened with Euler V1 and basically how they returned to glory here with V2.
But at the time, they had, I believe, $4 to $5 million of deposits.
We're talking weeks into the V2 launch.
We were learning about all the different partners they were trying to onboard.
I mean, it felt like an exciting time, but also I think a time of like,
can these guys do it?
They've rebuilt the protocol.
Can they ultimately come to market now and regain the trust of DeFi users?
And as of today, as of this recording, they've got over a billion dollars in deposits.
So it's been one of the most remarkable comeback stories in DeFi.
I know a lot of builders who have just been excited to celebrate that comeback and to see them
back on top. So Michael, just congrats on all of this. I know it's a small step towards the end
goal. The job's not done quite yet, but we're really excited for you all. And yeah, thanks for
joining us. Yeah, I really appreciate you having me back on.
I can't remember how many times I've been on now, maybe my fourth time.
But yeah, I mean, it's a really good moment for us.
It feels great at the moment.
I think when we came on last time, there was, yeah,
it was a very different situation, as you said,
getting started again after so long, the first few weeks,
maybe even the first few months, were really, really tough, honestly.
There was a lot of people who welcomed us back
and said a lot of positive things,
but we kept saying this kind of phrase like,
oh, you know, it's really admirable what you guys are trying to do.
You know, there's a lot of um i think a lot of doubt in
people's mind that we could uh that we could really um really come back and and be successful
ever again and um yeah fast forward a few months and i just can't believe where we're at it's been
it's been uh incredible to see uh hugely thankful to all the people that kept with us and supported
us like yourself and uh and lots of lots of other builders in the in the community i think um yeah i think anybody who builds in in this industry just knows how
incredibly tough it is and so we all even though we sometimes uh have a little scrap with one another
uh we all have a lot of respect for one another because it's incredibly tough but um it's i think what we're sharing is that yeah it's uh now like it is
possible to come back and uh and like quality kind of um quality products and and like bad
working builders um yeah can can still develop very cool stuff and be successful in the industry
uh even after the very worst thing that can happen happens to you.
So I do want to drill down into like what makes Euler a like lending super app, like what makes
it unique? Because one of the things that stood out when we were talking back in September is that
I think all of us applaud the success of like an Aave. We've all fallen in love, I think,
with some of the unique things that Fluid has brought to market. We are all big fans of Morpho.
What's interesting is my understanding is you could essentially rebuild a lot of the
favorite features across these different designs using this modular credit
layer that is Euler.
But before we do that, can you give just a little bit more of what actually happened?
I mean, obviously, it ties back into the birth of one of your children with the exploit of
And then we'll move forward from this.
But it is such like an unreal
story if someone has never heard it yeah um can you still hear me okay by the way it keeps telling
me that my connection's being lost on my phone you sound great yep i'll stop you if i if i hear
you cut out if i uh if i suddenly go silent that's why yeah i mean it was an incredible um an
incredible set of events um as you said like it was the it was just following the weekend in which uh circle uh usdc um you know
had a had a dpeg uh just a few days after my son was born and uh we had a home birth as well so he
was he's born at home and then uh yeah it's monday morning and we got the worst news possible right
that um the oil of e1 had suffered a devastating attack
draining the protocol of a couple of hundred million of dollars
of people's money.
Yeah, very unfortunate circumstances leading up to it.
Obviously, the protocol itself was extraordinarily heavily audited
and we were known for taking security extremely seriously.
We wrote blog posts about security all the time
and looked very deeply into everything and ultimately um the downfall was uh yeah i don't
want to get into the specifics of the bug but essentially a much smaller bug bounty had been
reported we had at the time by the way one of the largest bug bounties in the industry
but we had a much smaller bug reported to us that was paid out um a year prior and it turns out that the fix that uh fix for that
bug essentially held within it a much more serious bug and uh ultimately that was the downfall of the
protocol but yeah the the weeks that followed were kind of crazy i mean we worked extremely hard to
to track down the exploiter and to ultimately recover the funds. Bizarrely, because the ETH price had gone up in that time,
we recovered $240 million rather than the original $200 that was taken.
So, yeah, kind of unusual.
Somebody said it was the most bullish hack they'd ever experienced.
North Korea got involved during the recovery process,
tried to counter-exploit the exploiter.
The exploiter was playing all sorts of games
and running all sorts of crazy things online
with, you know, very interesting personality,
shall we say.
So it was just a, yeah, a wild, wild time.
Like right at the end, the last week of it,
well, the whole family got COVID, of course,
and my pregnant wife had to go to hospital.
And man, it was just the hardest
of times but yeah thankfully it's all behind us it's a long time ago everything worked out
100% of funds were covered and immediately after that we took some time obviously as a team to
reflect on what we wanted to do and we all realized we would still want to work in the industry,
that we would probably all still want to work together.
And so the question was, well, should we stop
or should we just keep working together on the thing
that we've been excited to work on so far for several years already?
And so that's when we decided to sort of rebuild.
And honestly, V1 itself, the fix to this protocol
would have been very, very easy.
And V1 still is a very, very high quality protocol.
And I think there might even be a successful fork of it
somewhere on another chain.
But yeah, it's ultimately, it was limited in various ways
that we were already aware of in terms of its positioning
in the market as a product.
And so what we wanted to do with V2 was come back with a, yeah.
Hey, Michael, if you can hear me, you started to cut out at what we wanted to do with V2.
So if you can just start from there.
Actually, I'm going to give it just a moment until I can hear you.
And Nomadic, you can hear me okay? Yeah, I can hear you. Yeah, cool. Once we get Michael back,
we'll, oh, there we go. I'm going to add him again as a speaker. I think he might have just rejoined.
And yeah, once we've got him back, we'll start from there.
I think he's back.
By the way, I was having, yeah, that's right. I'm trying to add him here. Not sure if he's
able to accept it. I was having issues myself with X spaces this morning. I don't know what
the deal is. Elon stepped away from Doge and doesn't look
like he's helping X spaces. Yeah, he's juggling a few balls, I'd say right now.
Actually, I'm going to check Telegram here too and see if Michael can hear us because if...
Oh, there we go. All right, there we go. Hey, Michael, we can hear you again if oh there we go all right there we go hey Michael we can hear you again
you sound great okay you got cut off Michael right as you were saying if you can just start from here
you said when we when we started with v2 or when we launched v2 something like that yeah I think
I was saying when we when we decided to come back with the two we wanted to build something
We decided to come back with the two.
We wanted to build something.
We wanted to build this lending super app that was more flexible.
We decided to abstract a lot of the features of any credit market, really,
and what we wanted to do is allow people to build back credit markets
in their own image, build something bespoke for particular scenarios.
In the early days of lending and borrowing in DeFi,
there was only a few use cases, I that people really wanted to access and so protocols like Carver were
incredibly successful because they provided that focal point for that one major use case but
more generally and outside of you know DeFi credit market incredibly complex there's all
sorts of different demands for for risk rewards that are
very different from one another some people have seek out really low risk low reward type
opportunities whereas others are you know happy to go into more uh more more risky um markets and
and potentially receive more favorable yields and um yeah there, there's no one size fits all
when it comes to lending and borrowing markets.
What's good for you might not be good for me.
And so it's important to provide a product
or a piece of infrastructure really,
which allows people to create
all sorts of different types of markets
suitable to different types of user needs.
And so that's what we set out to do with V2.
And that's what we've built effectively.
That's why we call it this lending super app
because it can be used really to replicate
and rebuild any of the existing protocols out there.
So you could create something like a Morphe market
or all the way through to an Aave market
or anything in between.
There are great products like Silo and Compact V3
which work a little differently but
either of those types of setups could be created uh recreated in oiler and um yeah on oiler it's
mostly the risk create risk curators or governors or yeah other developers um that ultimately make
these markets and they make them in their own image for their own users, for their own needs. Michael, I want to get more into these risk curators a bit, but first, so I've been writing
a weekly column called Yields of the Week for probably the past, I don't know, six,
seven months now.
And I would say maybe like two to three months ago, maybe three months ago, I noticed kind
of like a big shift.
And one day I created it and, you know, I do stablecoin yields and Volatile token yields,
mostly Bitcoin and ETH and maybe Solana. But I noticed that I had a clean sweep. The top five yields all came from Euler. And yeah, probably about three months ago. And I was like, wow,
this is crazy. So I guess like, I think you're starting
to key in on it, but like, what is the special sauce here behind this? Because I'm a big believer
in like, if you come to the table with a new mechanism design, it can create new and fresh
yields that the market wasn't capturing before. But I guess in your words like what what do you think is like the special sauce behind how you're generating these yields yeah so in in order
at the lowest level like the simplest market you can you can create on euler is consists of a single
vault which holds assets as collateral and a single vault which then lends and borrows um assets out
and that that is effectively similar to Morpho, right?
That's the simplest possible market you could ever create
for collateralized lending and borrowing.
Now, on Morpho, the collateral vault by default is non-yielding.
The assets are simply held in escrow.
But if you look at more complex markets like Aave,
Aave is a cost-collateralized market.
And so when you're depositing your USDC
and using that as collateral to borrow something else,
your USDC is being re-hypothecated
and it's also available,
you're also lending it and earning yield at the same time.
And a lot of the yield-bearing strategies
that you have been seeing recently
are coming from newly issued stable coins
or assets that are kind of correlated in nature.
So you've got like your Athena's, right?
So Athena, S-U-S-T-E can be used.
It's a yield-bearing asset.
It's often very high-yielding, and it can be used to borrow
a non-yield-bearing asset, and then it can be looped.
So if you loop those assets uh if you
loop that trade you can amplify the yield that you're exposed to and also obviously amplify the
risk but you can essentially amplify the yields that you get what's unique about Euler is that
many of these markets unlike on Morpho where people do the same kinds of trades some of them
also have this very hypothecated nature which in some cases can give
rise to even higher yields because uh rather than just holding the asset as um as collateral you're
also earning a little bit of extra yield on it on top so for instance some people uh like to hedge
the risk of athena they like to borrow susde and and take a directional bet on it,
and they will be short the asset.
But whilst they're shorting it
and they're hedging out risk elsewhere,
they're actually paying yield to the people
that are depositing that asset
and using it for these leverage trades,
which means if you were getting 10% Athena yield
on just by default, the intrinsic yield of the asset,
you might be getting maybe 11% or 12 percent on oiler instead because of the extra bit of borrowing that's happening
and that that extra can make a big difference when you do these looping trades when you're
when you use the multiply function on oiler you essentially take the take the spread between the
yield bearing asset and the non-yield bearing asset and multiply it by an actor of, you know, three, four or five X or whatever.
And so that one or 2%, that tiny bit of extra yield can add up to maybe five or 10% extra
when you get a leveraged or multiplied carry trade.
And so I think that's partly why Euler has been so successful,
is it's extremely capital efficient.
You're not restricted to just creating pairs at the bottom That's partly why Euler has been so successful, is it's extremely capital efficient.
You're not restricted to just creating pairs at the bottom
where you have these assets held in escrow as collateral.
You have mini Aave instances, effectively.
And those mini Aave instances are just
that little bit more capital efficient.
And that's ultimately when you start
doing these pairwise borrowing leverage carry trades, it's just gives rise to higher yields.
Can we talk about some of the different strategies that are available on Euler? So
like when you look at Euler as this like lending super app, one side of the app is just Earn. So that's very familiar. We're going to lend some sort of
asset like USDC or ETH or wrapped Bitcoin and Euler supports quite a few networks too. So
Ethereum mainnet tends to be my favorite still, but you guys have Barachain and Sonic and Bob and Base, of course. So that's one part of the app
that feels like the simplest to get involved with, just earning a lending yield. Then we've got
borrowing, which again, if someone wanted to put up some collateral, they can go ahead and borrow
and they can maybe find the right pairing there that makes sense based on the type of collateral and the type of debt they want to borrow. But the strategies is the most interesting part of this
for me. I feel like this is what's made Euler Euler the last six months. So I guess, what can
you tell us about, what are some of the things that those that are successful with strategies are looking for. Like I've got one,
actually, I've got two suggestions, Michael, and I wanted to affirm these with you.
One for me is if I can ever find a collateral that has a fixed yield, like S-U-S-D-S from
Maker Sky, like that's huge to have that. Or if I've got Athena's S-U-S-D-E, and if the yield's
higher than where it is today, you know, it's notably higher than the borrow rate. That's
something that I tend to focus on. And then I guess the second thing is just, obviously,
if you're going to loop up a strategy, I want to find the largest spread between what is the collateral lending rate plus whatever
intrinsic yield might be there versus the borrow rate.
Anyways, can you affirm any of this is like the right way to approach this?
Am I thinking about some of the more common strategies or anything else top of mind for
those that you know are your power users of Euler?
Yeah, I mean, that's certainly what I see happening a lot is these, they call it,
you know, often call it a carry trade or, you know, basis trade. So you're taking advantages
of differences in interest rates effectively. And there are a lot of those opportunities in the market today, which frankly didn't exist maybe even like a year or two ago. And that's partly
because as the industry matures, there's more and more stable coin issuers and more traditional
type assets being tokenized and being bought on chain. A lot of those do come with some associated yield.
And when you've got something that intrinsically has a yield associated with it,
but you can then use that to borrow a non-yielding or a low yielding asset,
the difference between those two yields means that you can profit.
Essentially, what's going on under the hood is something people used to do
way back in DeFi 1.0, early
compound days, they would deposit the collateral asset and say 8%, borrow something at 2%.
So now you're earning net 6% yield.
But then you can swap that thing you've just borrowed into more collateral and then redeposit and another 8% now on the new deposit
and then borrow again and loop back.
Each time you do one of these loops,
the amount that you can loop is actually decreasing a little bit.
So it's getting smaller and smaller.
So there's a finite amount of multiply that you can kind of do,
but you can still sort of get an equivalent to like a 5x
your initial starting position so you
take essentially that spread of six percent and you might get five times that plus the original
that you were getting so you might get like 30 to 35 percent uh yield on this position now it's not
risk-free right it's everyone should be very clear right there's there's no uh risk with that there's
no reward without risk.
And when you do one of these strategies,
on Oilo, it's a single click.
There's a strategies page that highlight these kind of carry trade strategies.
And when you do one,
obviously you're relying on there being stable prices.
And so people typically do this just for assets
that are highly correlated in price. Usually it's stable coins or uh eth lrt to eth is a popular trade that's a new bitcoin
lrt's that provide similar opportunities um and yeah ultimately you're you're essentially
assuming that the prices won't change over time and And if the prices don't change, then there's a low risk of liquidation.
And therefore, you can essentially take advantage of increased exposure to the yield of the asset.
But in the event that prices do move, then even small movements in prices can then lead to liquidation.
And because you're effectively leveraged, the cost of liquidation will be amplified too.
So a 2% movement in price might not sound like a big deal, but since you're highly leveraged, the cost of liquidation will be amplified too. So, you know, a 2% movement
in price might not sound like a big deal, but since you're highly leveraged, it could lead to
liquidation. And if you're 5x leveraged, you could face 10% losses, right? Amplified risk exposure
to compensate for the amplified extra yields and rewards you're getting um yeah and it all started with the i think athena was
the biggest trade of last year uh it was one of the reasons more focused so quickly um but there
were many many such examples like this increasingly number an increasing number of these types of
trades available to people hey michael do you have any uh comment on on how that's changed since last year? Like SUSDE, I think the APY on that is something like 3% to 4% today.
I guess anything else just to comment on how that has impacted strategies that would have been popular or are popular on Euler?
Yeah, I mean, it's massively, massively changed, honestly. I mean, last year, there was a bull
market. When there's a bull market, people want exposure to, like, price change in ETH,
and they want long exposure. So as they put on those as those long positions that generates the opportunity for
um people to profit from a basis trade so athena is like a tokenized basis trade where people
essentially um holding a delta they create a delta neutral neutral position in the background
uh and profit from that delta neutral position because there's often a discrepancy between the
funding rates on perp exchanges
and the kind of yields that you would get from staking
and just being long on a lending market.
So essentially, as the demand for going long ETH has subsided,
so has the yield from the basis trade.
And then so has the yield from Athena, S-U-S-D-E.
And with that, the strategy that used to be like once upon a time very profitable is now much less profitable.
And so you've seen a massive decrease across the board in the kind of take up of these strategies.
Nevertheless, you know, these strategies don't necessarily just always happen with intrinsic yield.
Sometimes they're used to loop points and other systems.
So whenever there's some kind of reward or yield associated with the asset that you can use as collateral,
you can always get increased exposure to that by using a multiply type function on Euler.
And as more assets come on chain,
a lot of them do come with initial rewards
and extra incentives for holders
and depositors of those assets.
And so, yeah, places like Euler are great for this.
People can spin up lending and borrowing markets
fees very quickly.
And you can either go long on that side
and go uh
amplify exposure to the the new rewards and incentives or you can just be a passive lender
and effectively supply usdc or something like that on the other side of the trade and ultimately
you don't then necessarily have as much exposure to the underlying asset you still have some
exposure because you're lending but you can you get you know some of the rewards from that because
when you lend usdc and people doing lots of multiply functions they're lending, but you get some of the rewards from that because when you lend
USDC and people doing lots of multiply functions, they're prepared to pay you a lot of interest for
borrowing your assets and for looping essentially. So yeah, there's always new opportunities out
there for this kind of trade, honestly. So I don't see it going anywhere anytime soon.
Yeah, I think it's good to call out the points versus intrinsic yield. And on the UI,
you guys make it really easy to kind of click on or click off how you want to view some of like the
ROI on these strategies. One thing I want to call out too, Michael, is there anything maybe on the
Euler platform that you think people are, like any sort of strategies or techniques
that you think are underutilized
by maybe the general public right now,
or maybe any just kind of yields or strategies
that you personally wanted to call out
or anything you wanted to highlight?
Well, what would I say?
Firstly, I don't do a lot of trading personally.
I don't, I do use Euler and I've been, in fact,
I got liquidated fairly recently on my own lending platform
using Euler to go long ETH.
So if I do use strategies, I use them badly.
So you probably shouldn't listen to me for pointers.
Yeah, I've played around and I i've uh you know i've i've had a i've done a few
things on sonic i think anybody's not tried sonic it's worth a worth a worth trying out because it's
quite different to the kind of experience you get another network so oil has oil has grown really
quickly on sonic over the past few months so that's yeah definitely interesting over there um
baritrain has been completely new experience there's some been some
massive massive yields obviously probably associated with increased risk i should always
say but that's that's been quite an interesting uh yeah to watch over the past few weeks uh with
their launch um being lots of opportunities uh and some interesting things happening over there
on main i typically tend to just uh personally be long eth or go up go uh go long
on some looping strategies with lrt's or lst's i probably shouldn't call them out because the other
the other the other uh specific ones that i don't call out will get angry at me
for not not helping uh spread the word about their their um their assets so yeah but um
yeah don't get liquidated like me don't go long eth michael
you're you're that one guy that's still long eth eh i think there's well not not not anymore since
my position was closed out although we do do um we do this thing on oiler we started fairly
recently to get a better feel for the platform and how it's used um uh we actually encourage
uh the whole team to do a
small trading competition every month which is quite a fun way to make sure that we're battle
testing our app and like eating our own dog food in a way and uh yeah so i'm currently long eth in
that trading uh competition the monthly trading competition and i'm down quite heavily at the moment on that. So, yeah, I'm just that guy, I suppose.
Michael, speaking of ETH,
one of the hot sectors within DeFi that's definitely gotten a little quieter
is restaking and staked ETH.
restaking and staked ETH. I have noticed there's some like fairly large, there's some larger
looping strategies available. So if you look at math, for example, by mantle, like that strategy
is around 20% annually. And that's like looping up or borrowing Weeth against Meth. I think Meth has
a yield of somewhere around like 3% to 4%. I see Easy ETH here by Renzo. I see T ETH by
Treehouse. Have you guys noticed anything within those markets? are they flat? Are they growing? Like, this is something
I was just noticing looking at the platform as we're talking. I'm like, oh, okay. I thought that
these were, you know, less popular right now, or at least being talked about less on crypto Twitter.
But I'm looking at these markets, and they look like they're some of the best opportunities outside of the stable coin looping. Yeah, I think there has been a bit of a resurgence. I mean, I did
notice that some of the yields on those dropped on the strategies, like below 20% at some point.
It's been interesting, right? The whole restaking narrative grew very quickly,
probably bubbled up a bit too too much maybe it was a
little bit frothy um and now i think it's time for that sector to to kind of prove its value
and prove that there's real real utility there and and so there's a bit of a consolidation period
but i think the ideas the reason people got excited so so so much in the first instance
is because the ideas were good right right? And I think there is a
clear long-term advantage there. So yeah, I don't think those strategies will ever go away.
Ultimately, you should be aware if you engage in one of those strategies, there's a little bit of
extra risk being taken. When you deposit a restaked asset you're not just uh exposed to the risks of staking itself
um but also the restaking risk which you know increasingly will include things like slashing
but as more as there's more and more utility for restaking i think you'll also bring you also see
a resurgence in yields there'll be uh you know the whole point of restaking is that you can
restate those assets and earn additional yield on top of what you would have got from from staking alone so as as those yields go up there'll be more opportunities
for for for looping those strategies um so i don't think they're going to go anywhere i think um
yeah it has been interesting to see them bounce back a little bit recently it's possible that
that's that's you know sometimes the strategy emerges because there's higher rates of interest
on the collateral uh you know with athena we said that the interest rates go up when people go long
because of the basis trade yield but um it's also possible that the the rates of return can increase
because the ultimately the borrowing costs for eith have gone down uh and i i do think across
the board right now there's a you know it's a yield i. And I do think across the board right now, there's a, you know,
it's a yield I've got quite flat across the industry. Like we saw even on Aave,
some of the stablecoin yields were well below the treasury rate yields for assets, which is
quite surprising. So I think, yeah, I think right's it's a little bit flat out there and it's
the lower rates of lower cost of borrowing on eath that's creating some of these strategies but
yeah an equilibrium will be found i'm sure the market is very good at finding finding exactly
the place that it should be and so we might see those rates go up if there's you know looping
looping strategies become profitable again but that means borrowing
more eeth driving up the rates again so yeah we'll see where it goes yeah i i recently entered
a looping strategy where the collateral was s-u-s-d-e and just a lot has changed over the
last few weeks i feel pretty fortunate because I entered it when it was very profitable.
I was keeping a close eye on it.
I noticed that the looping became unprofitable based on the drop on the S-U-S-D-E-A-P-Y.
And so I exited it.
I exited at a small loss, but it was just a reminder to me that there's no free lunch with
these looping strategies. They can be hugely profitable when there's a nice big spread between
the collateral underlying yield and the supply rate for lending that versus what you borrow.
There's a lot of uncertainty though right now, you know, that obviously like
with the stock market down and I think T-bill yields just came down a bit and that has an
impact on everything that happens here in DeFi. And so go back to Old Faithful. I think that like
just earning by lending in Euler Finance under the earn tab there. I think the USDC is something like 4% to 5% right now.
And then you pointed out Aave's been sitting around like 3%. I know Fluid is around 5% as well.
So there's risk in all of this. At any DeFi, there's always a risk of an exploit and lots
of other risks to consider. But there's some pretty awesome,
simple types of yields there to still secure. But I think this is a good place, guys, for us
to start to wrap up. So I want to remind our listeners that they can learn more about Euler
by going to Euler.finance. Follow Euler Finance on X. Follow Euler underscore M A B, which stands for Michael's name.
And that's Michael's personal handle. You can follow him for updates on Euler as well. And then
Michael, thanks so much for coming on. It's great to reconnect since the last podcast. You know,
congrats on all the traction you guys have. I'm really excited for you to just continue to grow.
on all the traction you guys have.
I'm really excited for you to just continue to grow.
Love the yields.
That's the point of having you on Yield Talks.
Like we are constantly highlighting yields on Euler Finance.
And I was hoping that some of these like questions
and nuances would help some of our listeners
and subscribers just start to think a little bit more
about how they're earning yields
and also caution them about
the double-digit yields that they see when they're looping. It's really important to consider
how that trade can ultimately result in losses as well. But Michael, before you go,
any thoughts on anything else that maybe you would have missed in V2 that you're excited to build in a future
version of Euler or just, yeah, anything that you felt you might have left out in V2.
Oh, actually, I forgot. I think Michael dropped off there, which makes sense. He had a, I think
he had another call right after this. So what I'll do is I'll just
close this out here then. So anyways, everyone, thanks for joining us. Appreciate Michael joining
us. Thanks for staying over, Michael. We were scheduled for 30 minutes and we went over to 40
minutes here. And then for anyone that is listening to the space live, If you've never listened to the podcast, you can go to link tree
and it's just edge underscore pod or go to the hyphen edge dot xyz. And there you can subscribe
and you'll get updates and notifications anytime we put out a podcast like this. So this conversation
will be edited shortly into a cleaned up version of the podcast. So if you prefer to listen to this on,
you know, Apple podcasts, or Spotify, or pods.media, just subscribe at the hyphen edge.xyz,
and you'll get updates there. And it's a great way to be able to share the podcast with friends
versus listening to it here on an X space. But otherwise guys, thanks for joining us.
Everyone have a great weekend and we will see you next time.
