Guellord MbusaCryptocurrencies, known as stablecoins or stable cryptos, are a particular type of cryptoasset. In fact, they were developed with the aim of limiting the risks of volatility of digital currencies. To do this, their price is backed by a fiat currency, considered more “stable” (dollar, euro, etc.).
Thus, the price of a stablecoin backed by a fiat currency theoretically follows the same price as the asset to which it is backed. No bad surprises for traders and a better estimate of the real prices of cryptocurrencies.
Even though most stablecoins are backed by dollars, more and more stablecoins backed by the euro now exist. They are certainly much less popular than their American dollar counterparts, but the fact remains that many European traders seek to obtain them. If this is your case, here are the euro-backed stablecoins that are available on the market.
What is a stablecoin and what is it for?
While the mass adoption of cryptocurrencies seems slow in southern countries due to lack of access to the internet. In other countries, it is rather the big market volatility which slows down this adoption. It is precisely with the aim of remedying this problem that the idea of stablecoins.
The introduction of stable coins in the crypto industry has strongly contributed – paradoxically – to its expansion. With the use of stablecoins, it is easier to trade, for example. Indeed, before the introduction of stablecoins, it was difficult to know the price of a cryptocurrency. Trading pairs once included BTC as a reference value. However, the price of bitcoin itself being volatile, it was very complicated to know the value of a crypto. Dollar stablecoins then made it possible to have a real estimate of the price of cryptocurrencies. This allowed the crypto trading to literally take flight.
Thus, stablecoins are tokens that attempt to bring stability to the market. It combines the technical advantages of a cryptocurrency with the "stability" of traditional fiat currencies. Thus, it follows the price of a traditional financial asset. In most cases, this asset is a fiat currency. In their early days, stablecoins only followed the price of the US dollar. But for some time now, there have been some that follow the price of the euro, the yen or the pound sterling. We also talk about stablecoins gold-backed cryptocurrencies for example or on any other financial asset.
Are stablecoins really “stable”?
This is a double-edged question because even if the theory is that stablecoins are non-volatile cryptocurrencies with a more or less fixed price, history has shown us that they can also suffer from a certain volatility.
Sometimes stablecoins can also completely collapse… The infamous case of stablecoin Terra (UST), created by do kwon is a good example of this. This was the starting point, according to many analysts, of the bear market de the year 2022. However, this is particularly true for so-called “algorithmic” stablecoins.
Read the article : Algorithmic stablecoins are not as “stable” as they claim…
In principle, the value of a stablecoin is supposed to remain constantly equal to the asset it is backed by. Thus, a stablecoin following the price of the dollar should always be worth 1 dollar, regardless of the value of the dollar. Bitcoin or the state of the market as a whole.
In theory, and to benefit from the status of "stablecoin", the issuing company must own and justify the creation of cryptocurrencies with the same amount in FIAT currency, at a ratio of 1:1. For example, lthe Tether company who issues the stablecoin USDT must justify having the same amount in his treasury. If 10,000 USDT is created, then the company has 10,000 real dollars in reserve.
Lire: Here is the incredible saga of USDT (Tether) and here is why the story is scary
Of course, in the reality of financial markets, there are always variations, even minimal, in the price of stablecoins, because they follow the price of FIAT currencies which themselves undergo variations in the FOREX market.
What are the different types of stablecoins?
To date, there are many stablecoins that we can classify into three categories:
- Centralized stablecoins (off chain); This is the case of Tether (USDT) or USDC from Coinbase for example.
- Decentralized stablecoins guaranteed by other cryptocurrencies (on chain). This is for example the case of DAI, created on the MakerDAO protocol.
- Algorithmic decentralized stablecoins, as have been the cases of LUNA from the Terra blockchain…
- We can also cite synthetic stablecoins decentralized as are the jEUR cryptocurrencies of Jarvis Network for example.
What are the stablecoins backed by the euro?
Although they were, for the most part, backed by the US dollar, today there are stablecoins backed by the euro. However, due to their recent creations, these stable coins are not listed on all exchange platforms. Likewise, the majority of trading pairs include US stablecoins and this is where you will find more liquidity.
So, inevitably, for the moment in any case, the use of stablecoins is still very limited…Today, we must make choices when it comes to the EURO stablecoins that we use. It is important to choose the best audited stable coins, those which have consistent reserves of value.
1. THE EUROe
Developed by a Finnish fintech, theEUROE is a stable cryptocurrency backed by the euro. It is the first stablecoin backed by the euro which is entirely managed by a European entity, notably by the fintech Membrane Finance. It is issued in the context where Europe still lacks a benchmark euro stablecoin to compete with American crypto platforms. It would be guaranteed by euros deposited in the coffers of European banks and institutions. Launched on February 2, on the Ethereum network, the EUROe token is now available on decentralized protocols such as Uniswap.
See the EUROe website, here.
2. EURT
EURT is also a stablecoin backed by the euro. Since July 2022, the euro-backed stablecoin: Tether EURt (EURT) is now supported by the world's leading cryptocurrency platform OK. It is now accessible on the platform just like Tether Gold (XAUT), a stablecoin backed by physical gold. They are available on the OKC blockchain (OKX Chain), a network created by the same platform.
However, a significant trading volume takes place on the Bitfinex platform, according to Coinmarketcap.
3. EUROC
Euro-backed stablecoins are now numerous on the market. Tether EURt or EUROe are not the only stablecoins backed by the euro. There is also the Euro Coin (EUROC) which is issued by Circle, the American company that launched the famous USD Coin (USDC). Its market capitalization is estimated at more than $64 billion. This stablecoin was officially launched on June 30, 2022 on the Ethereum (ETH) blockchain. It is important to know that Euro Coin (EUROC) is issued within a regulated framework. It offers the same security and transparency as USDC.
You can get EUROC at Uniswap, on Bitvavo or on the Bitmart exchange platform.
4. EURL
The other stablecoin backed by the euro that currently exists is that of the French startup lugh : the EURL. Initially, EURL which is based on the Tezos ecosystem (XTZ) could only be purchased and held on the Coinhouse platform. It is a reference exchange in France registered with the AMF. But for almost a year, this stablecoin can be transferred between different external wallets.
For greater transparency, every month the stablecoin undergoes an audit (by KPMG) whose reports are publicly accessible via the website of lugh.
Why are there so many Euro stablecoins and not just one?
If you have read this article to the end, you are certainly wondering why there are so many cryptocurrencies backed by the euro and not just one. Moreover, we could also ask the question for the multitude of stablecoins backed by dollars, such as USDT, USDC, BUSD, DAI.
This is partly explained by the fact that there has not (yet) been a consensus on the issue of national digital currencies. For example, if the European Central Bank decides to create and issue its own euro-backed token. There is a good chance that it will reduce the impact of other EURO stablecoins…
Are Central Bank Digital Currencies (CBNCs) stablecoins?
In theory, MNBCs and stablecoins would be absolute equivalents. However, the big difference would be the entity that issues the cryptocurrencies. An MNBC would by definition be issued by a central bank, which in reality amounts to classic monetary creation except for the technology used.
Recently, the Bank of Spain has launched a pilot project for the creation of a stablecoin EURM. After a year of testing, the country will perhaps launch the project officially. This says a lot about the progress of the digital euro…
We do not know -at the moment- if the possible introduction of the digital euro, digital dollars or any other national digital currency (MNBC) would have an impact on existing Fiat stablecoins. We can assume that there will be an existence of these different cryptocurrencies or think of a radical scenario where only the MNBC would be allowed…
Final word
While there was a dire lack of euro-backed stablecoins, today there are several. If volatility scares you so much that you miss the great march to financial liberation, you can have a few EURO stablecoins in your wallets. This could make it easier for you to invest when you find a cryptocurrency that interests you. This is indeed the great advantage of stablecoins: Being able to have liquidity immediately for and to be able to make a future purchase of cryptocurrencies.
It could even be a comfort cryptocurrency for beginners who are not looking to get exposure to investing but are still looking to take a “simple” first step into cryptocurrencies. It is also the ideal type of currency for making payments, such as when you want to buy gift cards from different shops with Bitrefil for example.
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Please note: : No financial advice is given in this or any other article on zonebitcoin. This is information of which you are the sole judge and master. Be responsible with your investments and only invest as much as you are willing to lose.
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