The market of stablecoin $ is currently exploding, Tether and USDC have reached $90B in market capitalization, but their counterpart in € was still missing. LUGH’s project, supported by leading partners, aspires to become a reference with its stablecoin €, called EURL.
What is a stablecoin ?
A stablecoin is a crypto-asset which is one of the major applications of blockchain for finance. Crypto-assets are commonly defined as « a type of private assets that depend primarily on cryptography and distributed ledger technology as part of their inherent value ». Thousands of digital assets are currently in circulation, serving different purposes and having different features, the most popular being Bitcoin.
A stablecoin is a new type of crypto-assets that attempts to offer price stability and are backed by a reserve asset. Stablecoins have gained traction as they attempt to offer the best of both worlds — the instant processing, security and privacy of payments of crypto-assets, and the volatility-free stable valuations of fiat currencies.
In most cases, a stablecoin is produced via the sequestration of a defined amount of fiat currency units, generating a strict equivalence between the monetary mass of the stablecoin and this deposit (this deposit being only € for Lugh, wheras the Libra project of Facebook at first wanted to be on multiple currencies)
Focus on LUGH
Lugh is a consortium created with sucessful digital entreprenors such as Olivier Ou Ramdane and Gonzague Grandval along with the support of the Group Casino (a major international retailer with $30B annual turnover). Lugh is the first actor to issue a stablecoin € in a reliable environment — the key was to be able to create an environment of trust around this digital asset. Indeed, the various players in stablecoin $ differ from one another in their transparency and efforts in attesting their accounts.
The project has then to be supported by experts in their field, such as Societe Generale, the account holder of the issuing company, and a world class audit firm which has been requested to certify each month the number of Lugh tokens issued and the balance of the associated Société Générale bank account.
LUGH also benefits from the expertise of Nomadic Labs, a french specialist of the Tezos blockchain, where the digital asset was issued. The choice of Tezos was key for the success of Lugh. We chose it for three main reasons:
· Robustness (formal verification, complex programming language)
· Local Initiative (french government backed blockchain, francophile environment of the community)
· Upgradibility of the protocol and its cost
It also benefits from the expertise of SCEME (co-founded by Gonzague Grandval) which has encoded EUR-L smart contract on the Tezos blockchain and edited EUR-L emission and management platform.
The EURL has also been presented to the French regulatory authorities (AMF, ACPR) and is intended to be part of the current regulatory framework.
What are the advantages of a stablecoin € ?
Today, the main use for a stablecoin is : « safe haven » for crypto-assets traders.
Initially, the Lugh digital asset will then be offered to clients of our partner Coinhouse, a key player in crypto-assets investments for individuals and institutions in France, and which was also the first to obtain the mandatory regulation by AMF in France (PSAN). EURL facilitates cryptoassets transactions for retail or professional investors seeking to protect themselves from the risk associated with the volatility of these markets.
Indeed for an investor, a stablecoin € is a key tool for their investments and has several advantages :
· « safe haven » statuts
· transactions instantaneity
· reduced transactions costs (both for the platform and the investor)
· tax optimisation
One can wonder what is the objective of a stablecoin € if for example, I can trade freely on my Revolut account using my €, and what could be the difference with traditional euro digital transactions. The real innovation is linked with the blockchain, all the balance of the users are decentralized on the blockchain which makes them more efficient, transparent and secured.
Now that the stablecoin € is live on Coinhouse, the goal of Lugh team is to massify the adoption by multiplying the exchanges platforms offering the EURL.
However, blockchain offers multiple use cases not only for crypto-traders or decentralized finance adopters but also for fintechs who wants to operate digital flows in €, firms who want to receive instant payments or other retail related usecases. The next challenge for Lugh will be to federate an ecosystem of partners around EURL and make it become a new innovative mean of payment and the next tool for financial services.
Alban Vendeuvre / COO Lugh