# Why Ketju rejected Euler v2

- URL: https://riadefi.com/rejections/euler-v2/
- Exposure: stable lending
- Memo version: v1
- Reviewed: 2026-08-16
- Next review: 2026-11-16

## The memo

REJECTED PROTOCOL-WIDE, WITH A VAULT-SPECIFIC REOPEN PATH; not a postponed judgment. The original Euler lost about $197M in March 2023 and recovered 100% of the stolen assets; their value was about $240M when returned. Euler V2 launched in September 2024 after a ground-up rebuild. Those facts deserve weight, but they do not support protocol-wide approval. This review corrects a material error: Euler did not report $137M of protocol bad debt from Stream Finance. Its 2026 retrospective says Ethereum DAO-managed markets had zero direct Stream exposure, while the incentivized Plasma deployment lent heavily to Stream and was effectively wiped out. That is still a serious allocation and governance failure, not a second core-contract exploit. V2 is permissionless infrastructure: each EVK vault chooses collateral, LTVs, interest-rate model, oracle, hooks, governor and upgrade posture; EulerEarn can allocate across as many as 30 ERC-4626 strategies, including external ones. “Known” vault metadata is explicitly not an endorsement and curators can later change parameters. The formal rejected verdict records the decision clearly: reject Euler as a protocol-level exposure and reopen only a named vault after an independent, address-specific dossier. Brand, aggregate TVL and audit count are not substitutes.

## What would reopen the file

- No protocol-wide approval: only a named vault can be reopened
- Any candidate vault holding or accepting an asset outside the approved list
- Any realized bad debt, oracle failure, or loss in the candidate vault or an underlying strategy
- Governor, curator, strategy, oracle, implementation or upgrade posture changing outside the documented exit window
- Proposed-size withdrawal failing the written stress-liquidity limit

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Published by Ketju Research (https://ketjuresearch.com). Educational analysis only; not legal, tax, compliance, or investment advice.
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