Blockchain

Circle To Release Tokenized Euro End of Month

Circle, the company behind USDC, is set to release an on-chain stable Euro (EUROC) on June 30th, 2022. EUROC is an on-chain token, backed 1 to 1 with fiat Euros in a bank account. To mint tokens, eligible entities can deposit euros into a Circle account with Silvergate, a California-based bank that will hold Circle’s Euro reserves.

The EUROC’s Euro reserves will be audited every month by Grant Thornton LLP which will publish a public report to ensure that the on-chain stable coin is in fact fully backed by off-chain Fiat Euros. The Euro-backed stablecoin, which is pegged to the EURO, will be issued by Circle, the issuer of USDC.  Currently, USDC is the second-largest stablecoin in the crypto market with a circulating supply of more than $50 Billion. 

Are Stablecoins Safe?

Stablecoins have been getting a lot of (negative) attention over the past couple of months leading into this bear market. Many attribute the start of our most recent crypto crash to the failure of UST, an algorithmic stablecoin on the Terra Luna blockchain. 

UST was algorithmically designed to stay stable against the US dollar through a series of on-chain mechanisms and blockchain-based reserve currencies.  

However, UST lost its peg – sending both the stablecoin and its backing token, LUNA to near zero. This collapse caused severe price drops throughout the crypto markets. 

Not All StableCoins Are Created Equal

Unlike UST, which is an algorithmic stablecoin, USDC is backed 1:1 by dollar denominated bank accounts. The circle is taking the same approach with the EUROC. 

Each EUROC will be linked to an underlying Euro at the California-based bank, Silvergate. 

Why Do We Need an On-Chain Euro?

An on-chain euro enables a host of benefits. 

On-Chain Payments in Euros

100% backed on-chain Euros will facilitate payments to anyone trying to receive or pay in Euros on the blockchain. Blockchain payments are often easier and have fewer fees when sending payments across borders for remittances. 

The EUROC will enable those looking to transact internationally with Euros to do so without having to deal with currency fluctuations between the Euro and either the dollar or typical blockchain currencies like Bitcoin. 

Defi Applications

Having the ERC-20 EUROC token launched by a prominent company like Circle means the EUROC won’t need much in terms of blockchain marketing.  The Euro-based stablecoin will be available on Compound, Curve, and Uniswap immediately. After that, the EVM-compatible Euro will likely proliferate quickly across other DeFi protocols. 

As of now, most defi applications only have US dollar-backed stablecoins as an option for users looking to save, borrow and lend within defi protocols. If you are a citizen of a Euro-denominated country, saving a “stable” coin in a defi application to earn yield isn’t quite as stable. The reason is, that there is still exposure to the underlying price fluctuation between the dollar and the euro. 

A Euro-based stable coin allows Europeans to utilize defi in a more predictable manner. 

On top of that, the launch of the EUROC includes opening the Silvergate Exchange Network as an on-ramp for Euros onto the blockchain. This added fiat to the crypto gateway for one of the world’s largest currencies should bring more liquidity into the blockchain space and DeFi applications. 

Commerce

With applications such as Coinbase Commerce, more and more merchants are accepting crypto payments. Currently, blockchain commerce platforms are somewhat limited to traditional cryptocurrencies like Bitcoin, Ethereum, and US-denominated stable coins. Having a reliable Euro-backed stablecoin, like the EUROC, may incentivize more European merchants to accept cryptocurrency. This brings more business and e-commerce onto the blockchain and outside of traditional banking and payment rails. 

Centralized Exchanges

Right out the gate, the EUROC will be listed on Binance, Bitstamp, FTX and Huobi crypto exchanges. 

Listing the EUROC on those exchanges will enable more traditional cryptocurrencies to be paired against the Euro. This opens up a host of opportunities for crypto traders and crypto trading bots that are looking to create Euro-denominated P&Ls. 

EUROC Conclusion

Circle, a large and trusted entity, is launching a transparently backed Euro-denominated stablecoin. This Euro-denominated stablecoin will open an onramp for more traditional capital to enter the blockchain world of DeFi and on-chain payments. 

While stablecoins have had their issues in the past, the EUROC will be backed 1:1 by Euro-denominated bank accounts. The EUROC will likely play a large role in bridging the crypto economy with the traditional economy. 

Look out for the blockchain-based EUROC token to launch on June 30, 2022. 

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