[RFC] Promote EURT to Collateral Tier

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Title: Promote EURT to Collateral Tier
Author: Seini
Related Discussions: N/A
Submission Date: 06.12.2022

Simple Summary
This is an RFC to temperature-check the idea of Euro Tether (EURT) as a collateral asset.

Abstact
EURT is the new stablecoin created by Tether to meet the demand for a Euro stablecoin.
Huobi who integrate it into his platform will not be the last to do so, which is why I think EURT has a bright future in the next few months, years.
Then the USD has reached a peak and some big fish will play on the rise of the euro which could accelerate the adoption of EURT stablecoin.
Not having enough hindsight on this and the risks that such a young stablecoin could have with so little supply, I come to you for your opinion on the subject.

Motivation
Being a young stablecoin, I see an opportunity for Euler to be the first lending and borrowing platform to accept it at a collateral level.
If the stablecoin experiences strong adoption, we will have the advantage of the first mover.

Specification & Implementation
Being issued by the same entity as USDT, I believe it is subject to the same regulations and therefore the same security as USDT.
That is why I propose to promote it to collateral tier and enable cross borrowing with the same parameters as USDT:

  • Collateral Factor: 0.9
  • Reserve Factor: 0.05
  • Borrow Factor: 0.94

For the interest rate model:

  • Base IR: 0%
  • Kink IR: 7%
  • Max IR: 200%
  • Kink : 0.80%

Not having enough liquidity on uniswap, I suggest to use chainlink price feeds for security reasons.

Voting
The options are as follows:

YES - Promote EURT to collateral Tier.
NO - Do not promote EURT to collateral Tier.

2

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I fear that the liquidity might not be sufficient to successfully liquidate on-chain (even if it can be arbed to Tether themselves) and adds an avoidable risk. I am unsure if EURT is ready to be a collateral asset at this point.

4 Likes
3

I hadn’t thought of that ahah, seen like that it does seem compromised.

4

Btw, the total traded volume in the last 24 hours (both DEX and CEX) is just $574,288

5

There is still 250m of supply and that it could have been deposited to borrow something else.

1 Like
6

TBH, EURT rates 6 (not worth considering as collateral) in some areas of our risk methodology.
The lack of liquidity, lack of integration and absence of integration with the broader Defi ecosystem is a high turn-off. After all, We need people willing to put this token as collateral.

7

Feels like the liquidity isn’t sufficient and I don’t think there’s enough use cases. Why borrow against EURT when you can use USDC or USDT, which is a lot more used?

8

Despite the liquidity isn’t enough, I can see adding any non-USD fiat currency as an opportunity of creating Forex competitor.

9

There is agEUR having a cross tier already https://app.euler.finance/market/0x1a7e4e63778b4f12a199c062f3efdd288afcbce8, probably it would be logical to continue with it (if u are talking about having non-USD as collateral)

10

But it is not yet widespread.