Gauntlet’s EURC Recommendations
Summary
We recommend the launch of EURC on Moonwell Base, supporting it as a fully backed euro stablecoin issued by Circle. As the leading euro stablecoin compliant with MiCA, EURC is redeemable 1:1 for euro, enabling substantial market potential.
Risk Parameter Recommendations
| Parameters | Values |
|---|---|
| CF | 83% |
| Supply Cap | 4.2m EURC |
| Borrow Cap | 3.9m EURC |
| Protocol Seize Share | 30% |
IR Recommendations
| IR Parameters | Recommended |
|---|---|
| Base | 0 |
| Kink | 0.9 |
| Multiplier | 0.056 |
| Jump Multiplier | 9 |
| Reserve Factor | 10% |
Supporting Data
Market Specifications
Circle’s Euro Coin (EURC) is designed with a similar structure to its USD Coin (USDC), employing a full-reserve backing system. This stablecoin aims to provide a reliable digital representation of the euro. The key feature of EURC is its complete backing by actual euros, which are held in dedicated bank accounts denominated in the European currency. This backing mechanism is intended to maintain EURC’s stability and ensure that users can consistently exchange one EURC for one euro, establishing a dependable 1:1 exchange rate between the digital token and the fiat currency it represents.
EURC has shown exponential growth since launch with currently over 10.5M EURC in circulation.
Interactions with EURC have also been trending up and to the right with Daily Active Users (DAUs) showing strong growth.
Supply and Borrow Caps
Liquidity and Market Insights
| Metrics | EURC |
|---|---|
| Primary Liquidity Source | Aerdrome >$8m TVL in EURC-USDC pools |
| Slippage Concerns | 25% DEX Slippage is slightly over 4.5m EURC |
Gauntlet recommends setting the supply cap to 40% of circulating supply and borrow cap to a level slightly above kink. This translates to the following caps
| Asset | Cap Recommendation |
|---|---|
| Supply Cap | 4.2M EURC |
| Borrow Cap | 3.9M EURC |
Gauntlet will continue monitoring the caps and will use Guardian to make further changes based on market demand.
IR Parameter Specifications
EURC IR Curves
Gauntlet recommends aligning the IR curves to that of USDC.
Projected APRs for EURC
| Utilization | Borrow APR | Supply APR |
|---|---|---|
| 0 | 0 | 0 |
| kink | 5.05 | 4.08 |
| 100 | 95.05 | 85.45 |
Collateral Factor (CF) and Reserve Factor (RF)
Due to the similar nature of EURC to USDC, we recommend mirroring the CF and RF to that of USDC. We therefore recommend a CF of 83% and RF of 10%