The isolation model is working as intended - markets and vaults are isolated, which keeps risk where it originates.
Most people are missing that this isn’t a protocol failure but a curator-level risk event. Euler’s architecture is holding up under real stress, which is exactly what you want to see.
Speaking as someone who works in Web3 security - this is what proper containment looks like.
Striking a balance is always tough. In credit markets there will always be different preferences for risk, reward, assets, rates, duration, collateral exposure, LTVs, oracle choices, and more.
Different markets on Euler are isolated by design. The majority remain unaffected by the recent insolvency announcement from Stream, including DAO-curated markets such as Euler Prime and Euler Yield.
If DeFi is to form the foundation of the future of finance, it needs modular credit-market infrastructure that allows people to express diverse views on risk and return.
The Euler protocol provides non-custodial, permissionless infrastructure where independent curators can do exactly that, creating risk-isolated markets tailored to different user demands.
Even in a simple collateral–debt pair, small parameter changes can shift risk and reward outcomes significantly. There are only trade-offs in building a market.
Modular systems don’t promise to prevent risks, but they do help contain them.