EURxb protocol has announced the launch of its EURO denominated stablecoins, EURxb, as part of its ongoing plan to launch disintermediate financial solutions. The project has designed and created a functioning infrastructure for tokenizing registered and regulated bonds. Investors will be receiving a fixed interest of 7% per annum when they hold the EURxb token in their wallet.
Tagged the world’s biggest EUR stablecoin, EURxb is said to bring much-needed stability to the DeFi market. It also establishes an enabling environment for institutional investors in the open finance terrain.
EURxb believes that the integration of key elements of conventional financial systems and decentralized finance can open up new possibilities for advanced monetary and economic systems. Hence, it has focused on capitalizing on the strengths of the two opposing financial ideologies while introducing viable means of eradicating their limitations. The core functionalities of the protocol draw from the familiar design of legacy systems and also enables the transparency associated with decentralization.
According to the information released, the EURxb protocol provides the right amount of compliance, which in essence makes it an appropriate option for institutional investors. The objective is to bring regulated bonds to the blockchain and still maintain the highest standard set by regulators. Therefore, it only accepts ISIN registered securities.
Besides, it ensures that the process involved in tokenization conforms with the debt management principle which states that the value of tokenized assets should not exceed 75% of the total valuation of their underlying securities. The announcement also revealed that the pilot program for the project featured green bonds issued by MIRIS AS, a Norway-based sustainable real estate developer.
Founded in 2003, MIRIS AS is reportedly an established player in the Norwegian sustainable environment and energy sector. And it has undergone strict compliance procedures to ascertain that its bonds are legitimate and regulated.
EURxb Advanced Issuance StructureTo create the EURO-dominated stablecoin, the protocol allows bond issuers to tokenize cash or the cash equivalence of securities. Notably, this process involves the over-collateralization of securities to mint ERC721 tokenized assets valued below 75% of the locked collateral. With this non-fungible token framework, it is possible to track the details of each token and extract vital information about the security it represents.
Following the creation of tokenized securities, the protocol went further to mint tokenized bonds, called EURxb Bond Tokens or EBND. This process entailed locking 75% of the tokenized assets earlier generated in smart contracts. Thereafter, it collateralized the bond tokens to generate the interest-generating EURxb fungible stablecoin such that each bond token valued at 1,000,000 EUR represents 1,000,000 EURxb. Hence, EURxb is backed by regulated bonds and seemingly has the ideal infrastructure to evade known risks associated with other DeFi tokens.
More importantly, EURxb holders will receive 7% fixed interest per annum by just holding the token in their wallets. This is as a result of the 7% annual yield generated by the underlying bonds used to collateralize the EURxb token. As an added benefit, the product distributes its governance token, XBE, to holders who provide liquidity to EURxb’s Uniswap and Balancer pools.
Apart from the fixed annual yield that this product offers users, it also exposes them to the DeFi market. As such, holders can use EURxb to farm yields on DeFi pools or simply use it to purchase other DeFi-based investment instruments. Besides, the stablecoin presents an escape from the often-volatile DeFi terrain. Users can store their funds using EURxb to ascertain that flash crashes do not dilute the valuation of their portfolio.
DeFi And CeFi Combine to Great EffectEURxb is the latest in a long line of solutions looking to bring DeFi to the mainstream audience. The goal is to eliminate the barriers to access DeFi by adopting conventional methods and regulated portals. This movement has sparked a growing demand for centralized exchange-based DeFi solutions and even created a new set of advanced functionalities that enable the trading of real-world assets on the blockchain.
That said, EURxb’s solution has developed an innovative DeFi iteration that looks to build on the legacy issuance process of bonds. Rather than completely overhauling the conventional method of issuing bonds, this architecture delivers a hybrid solution where DeFi and regulation seem to thrive.
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Source: Cryptocurrency - investing.com
