What is sEURO, and why buy stablecoins?
What is the sEURO?
TheStandard.io is aiming to revolutionize stablecoins in the cryptocurrency market. Stablecoins have become a cornerstone in crypto, especially decentralized finance (DeFi). They are cryptocurrencies pegged in value to other existing assets. In TheStandard.io case, the sEURO will be pegged at a 1:1 ratio to the EURO.
These pegged crypto assets allow retail and institutional investors access to a blockchain-based product that is programable money, familiar in value but also does not suffer the same volatility as many cryptocurrency assets on the market today. Stablecoins are vital to the mass adoption of cryptocurrencies as they help investors with stability and familiarity.
The most popular use of stablecoins is for DeFi projects, allowing users to receive a yield for depositing their crypto into various smart contracts. The returns on these smart contracts surpass that of the traditional banking system because they cut out all the inefficiencies of the traditional finance world. The Standard protocol seeks to be the next-generation monetary system fully backed by rare assets, so it can not collapse.
With TheStandard DAO, The Standard protocol will use decentralized governance to create a series of stable crypto products that investors can potentially profit from, starting with the euro-pegged stablecoin, sEURO. The aim is to have investors placing their existing assets, which include cryptocurrencies such as Bitcoin, Ethereum, and Matic, as well as real-world assets such as gold, in private Smart Vaults for collateral against the value of the sEURO. After depositing one’s assets into a Smart Vault, investors can borrow close to an equivalent value of sEURO at 0% interest. The sEURO borrowed by the user is freshly minted by the user. Therefore, investors get to keep their original assets even as they go up in value and can use sEURO at no cost. To access their locked assets, they simply pay back the loan.
What makes sEURO different?
While stablecoins are necessary in the crypto world, it does not mean all stablecoins are created equal; not all are good protocols. A stable project losing its pegged value can destroy the project and the users’ investment. The most well-known recent example of this is TERRA LUNA. TERRA created UST, a US dollar-pegged algorithmic stablecoin, which used its governance token, LUNA, as collateral. Algorithmic stablecoins are high risk due to the lack of true collateral and susceptibility to attacks, exactly what happened to LUNA/UST. When holders were dumping UST, UST began to lose its peg to the US dollar. The algorithm then started printing LUNA (which had an unlimited mint function, a function that can quickly devalue an asset) to liquidate said printed LUNA in an attempt to regain the peg to $1 USD. The result was UST’s complete collapse, LUNA went to zero, and millions of dollars were lost for investors and users alike.
The Standard protocol aims to solve this primarily in two ways. The first is using assets for collateral that they do not have access to minting. This is why they are starting with assets such as Bitcoin. Although Bitcoin will mint new tokens, it is on a set and limited minting schedule with a capped limit that is not in control of TheStandard.io DeFi protocol. Also, assets such as tokenized physical gold cannot be minted in the same way cryptocurrencies can. The second way they aim to solve this problem is through over-collateralization, aiming for their Smart Vaults to have a minimum of 110–120% of the collateral for the sEURO in circulation.
Why crypto investors are excited about the launch of sEURO
Operation Deep Liquidity will be the event to launch the first stablecoin on The Standard Protocol. The goal is to offer yield farmers a great return, and in return, they build a deep stability pool for the first stablecoin issued by The Standard DAO. This stability pool will enable the protocol to offer zero percent interest loans because stability will not be linked to a variable interest rate like MAKER DAO. Operation deep liquidity will roll out in three stages.
STAGE 1. Initial Bond Curve Offering (IBCO)
Incentivized minting of sEURO at a discount via a “public smart vault,” which will provide a pool of Protocol Controlled Value, a portion of which will be used to fund Liquidity Pools to help maintain the peg. The discount starts at 80 cents to the sEURO. If you send in 100 euros worth of Ethereum, you will receive 120 sEURO immediately. The more volume that comes in, the more the discount reduces until it reaches a 1:1 peg. sEURO is not considered a stablecoin until it reaches the 1:1 peg.
STAGE 2. sEURO Liquidity Pool Bonding
Swap your sEURO, and a TBD paired asset for a 7-day, 1-month, 3-month, or 6-month bond. This bond will pay out a ROI% at the time of maturity in TST.
STAGE 3. TST Staking
Stake (loan) your TST for a share of PCV Liquidity Pool income and future income from private Smart Vault fees.
Holding TST will also give investors voting rights in TheStandard DAO, where active participation will generate further rewards. TST holders will get rewards down the road every time someone mints or burns sEURO from smart vaults. Imagine being able to take a small cut from every loan taken out in every currency around the world; this is the power of TST.
Stablecoins should offer peace of mind and solid returns for holders and people that place these currencies into automated market makers. The Standard protocol is no exception. Early investment in the sEURO offers fantastic returns quickly, which is ideal for many investors, and in return, the protocol builds its liquidity pools. With planned growth into other pegged crypto projects, such as sUSD and sGBP, it gives ample opportunity for investors to receive an excellent return for the foreseeable future, much better than simply staking in DEFI.
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