EUROe is a European Euro–backed e-money stablecoin. This article explains its meaning, how it works, and how you can use it.
What is a “European Euro–backed e-money stablecoin”?
Stablecoins are a category of cryptocurrencies whose price is pegged to the price of another asset. For example, a euro stablecoin’s price follows the price of the Euro. However, as stablecoins are transacted and settled on the blockchain, they also benefit from the emerging technology. Blockchains, in short, are append-only data structures, i.e., anything that’s been recorded on a blockchain cannot be undone. This is especially useful for financial applications and payments where it is essential to ensure settlement finality (i.e., confirming the payment with certainty).
Generally, blockchain-processed payments are an improvement to the legacy payment systems as they are faster, cheaper, and allow for previously impossible features (such as programmability of money or fully transparent & public audit trails).
As a Euro–backed stablecoin, each EUROe circulating on the blockchain is backed by at least 1 Euro in a bank account somewhere.* More specifically, as a European stablecoin, those Euros are held in European financial institutions.
Lastly, EUROe is e-money – electronic money. This means a “store of monetary value on a technical device” which fits stablecoins. (1) However, e-money also comes with obligations from the EU’s regulatory bodies. Only authorised electronic money institutions can issue it.
How does EUROe work?
The EUROe stablecoin is a fully fiat-backed stablecoin first available on the Ethereum blockchain.
Anyone with a EUROe account can mint EUROe on any supported blockchain by depositing an equal amount of Euro to the customer asset account. The EUROe is issued directly to the customer’s on-chain wallet address once the bank transfer is completed.
After receiving on-chain EUROe, customers can use the stablecoin for near-instant & cheap international payments, remittances, investments, and more using the growing suite of decentralised finance (DeFi) applications.
EUROe can be redeemed back to Euros in the traditional financial system by generating a burn address through the EUROe account. Once the EUROe are received on the on-chain address, they are burned, and a payment is issued to the customer through the banking system.
How can EUROe be used?
On-chain EUROe can be used within the Ethereum blockchain like any other ERC20 token. It can be used for investing, trading, lending, payments, and purchases among a growing number of use cases enabled by DeFi.
EUROe can also be implemented as part of business operations to enable faster & cheaper international payments or integrated into any application to allow automated & programmable Euro–denominated value transfers.
EUROe is coming to more and more blockchains and environments to support integration into as many applications as possible. As e-money, EUROe can also be made available for large businesses on private blockchains and in non-blockchain environments.
* Some EUROe reserve assets are held in short-term Euro-denominated credit instruments, such as government bonds.
“Electronic Money”, European Central Bank, 2022, accessed on 27 October 2022, available at https://www.ecb.europa.eu/stats/money_credit_banking/electronic_money/html/index.en.html