It is one thing to create a regulated securities-backed EUR stablecoin, it is another to deliver transparent interests to token holders. EURxb.finance has achieved both goals in stunning style.
EURxb.finance, a platform looking to enable safe and conducive DeFi opportunities for institutional investors, has introduced an advanced iteration of EUR stablecoin that bears a fixed interest. While the concept of stablecoin is not new, EURxb’s approach showcases a unique system that provides the stability that appeals to institutional investors.
Multiple Token Issuance Approach
EURxb.finance has incorporated both the non-fungible and fungible token frameworks to undertake multiple tokenization processes. The project created tokenized bonds by collateralizing non-fungible security tokens initially backed by the cash equivalence of regulated securities. The resulting ERC721 Bond tokens are in turn locked in smart contracts to mint an ERC20 token, EURxb, that is pegged to the EURO.
This complex but sturdy issuance system provides differential utilities for EURxb such that holders can enjoy the added benefits of interest-bearing bonds. Since EURxb draws its stability from regulated bonds, the interest generated by the underlying bond applies to EURxb holders.
In this case, the underlying green bonds provided by Miris AS, a Norwegian sustainable real estate developer, generate a 7% annual yield. Hence, EURxb holders earn 7% interest by just holding the token. This is unlike any other stablecoin project as it does not require holders to lock tokens in smart contracts or savings account vaults to generate interest. The ownership of EURxb automatically unlocks fixed income opportunities.
EURxb.finance claims that the interest-bearing green bond is ISIN-certified and compliant with the highest standards. Also, these green bonds are tokenized using the non-fungible ERC721 token framework to collateralizes 133 million EUR worth of regulated securities tokens to mint 100 million worth of tokenized bonds. Subsequently, the tokenized bonds are locked in smart contracts to mint 100 million EUR worth of EURxb tokens.
EURxb Brings Regulated Securities to DeFi
Even though DeFi has emerged as a potent financial order, it is yet to achieve mainstream success. Much of its limitation revolves around the lack of stability and regulation coveted by institutional investors. These entities will only take a huge gamble on DeFi if regulated gateways are providing secure and trusted means of accessing the market. This is why EURxb has opted for its securities-backed architecture.
Notably, EURxb is not just a means to enable EUR-backed tokens but also a regulated portal to access the DeFi market. The decision to incorporate elements of the traditional market in the issuance of EURxb makes the stablecoin an ideal DeFi solution for compliance-focused investors. By bringing interests from traditional securities to the DeFi ecosystem, EURxb has bridged two opposing financial ideologies such that risk is no more a limiting factor for DeFi penetration.
Besides, EURxb unlocks more DeFi opportunities to investors thanks to the composability of the Ethereum network. EURxb holders can purchase other DeFi instruments with their tokens or even participate in supported open finance protocols, thereby exposing them to more yields.
As expected of a DeFi project, EURxb.finance has opted for community-based governance. It is granting token holders the voting power to shape the future of EURxb. In line with this design, EURxb.finance has distributed its governance token, XBE, through a liquidity incentive program. Anyone who provided liquidity to selected liquidity pools on Balancer or Uniswap received a share of the governance token earmarked as rewards for this program. Additional liquidity events will be announced on their socials in future.
The unique thing about this program is that EURXB.fnance had opted for a free and fair token distribution system. There are no special allocations for the development team or the founders. Hence, there is room for more users to play pivotal roles in the governance of the protocol. Already, the project has minted 15,000 XBE. Of the total, 12,000 XBE has been distributed to liquidity providers.
Judging by the community-focused approach of this program, it is safe to say that EURxb.finance is embracing the DeFi side of its solution as much as it identifies with regulated financial paradigms.