The world is slowly coming to terms with the differential opportunities that DeFi presents, thanks to the emergence of platforms like EURxb.finance. The project looks to create an institutional demand for DeFi while preserving the stability of traditional securities.
EURxb.finance has begun to bring elements of the traditional market to the DeFi landscape with its new EUR stablecoin iteration, EURxb. While there are a handful of EUR stablecoins already existing, EURxb.finance’s comes with unique functionalities that appeal to institutional investors. Much of the added features of EURxb stems from its issuance framework. The decision to incorporate traditional securities as the underlying peg for EURxb unlocks new DeFi paradigms targeted at compliance-focused investors.
How Is EURxb Fueling Mainstream DeFi?
For a while now, the goal of DeFi proponents has shifted from creating working DeFi solutions to bringing open finance to the mainstream. To this end, it is imperative to isolate pain points peculiar to different market segments and offering DeFi solutions that tackle them efficiently. This is what EURxb is trying to achieve when it designed a traditional securities-pegged stablecoin that exposes DeFi to institutional investors.
EURxb.finance, through the concept of tokenization, created an investment instrument that reflects the regulatory compliance of ISIN-registered bonds. The protocol tokenized 100 million EUR worth of registered green bonds from Miris AS, a Norway-based sustainable real estate developer, and locked it in smart contracts to mint EURxb tokens. While this summarizes the process involved, there are certain things put in place to ensure that EURxb embodies the investment benefits of holding a bond.
Why Is It Unique?
First is the adoption of the over-collateralization principle that ascertains that the value of the tokenized bond does not surpass 75% of the total value of the underlying asset. In this case, EURxb.finance has collateralized its 100 million EUR worth tokenized bonds with securities valued at 133 million EUR. Also, the bond tokens are non-fungible. Hence, each token is unique and fully verifiable on the blockchain.
Notably, the green bonds generate a 7% annual interest. With the fungible EURxb pegged to these tokenized green bonds, the stablecoin offers the same interest rate to token holders. In essence, users earn a 7% annual yield when they store EURxb in their wallets. It is unheard of for stablecoins to generate yields without holders having to stake or lend them out. This feat is even more impressive because it provides a fixed return.
Interest, Rewards, and Extra Income
Since fixed interest offers are rare in the DeFi landscape, EURxb is positioning itself as an ideal DeFi product for institutional investors. EURxb has eliminated the risks commonly associated with a volatile investment landscape like the DeFi market. The value of the investment instrument is stable, so also is the interest it generates. This, coupled with the fact that the value of the token lies in the validity of its underlying green bonds, makes EURxb a regulated gateway to the DeFi market.
And apart from the 7% fixed interest, investors can use the token to capitalize on yield mining opportunities on other DeFi protocols.
Besides, there is an added advantage of earning rewards in the form of the EURxb.finance’s governance token, XBE. The platform is rewarding users through its liquidity incentive program. It is distributing 15,000 XBE to liquidity providers of specific EURxb pools on Uniswap and Balancer. Interestingly, the governance token distribution program does not give founders or the development team a share of the supply of XBE. With this, more XBE tokens will find their way to the EURxb community. Already 12,000 XBE has been claimed by liquidity providers.
Considering the length that EUXrb.finance has gone to carve out a DeFi niche of its own, it is starting to look like one of the solutions poised to mold the DeFi narrative in 2021.