The idea to create a EuroDAI is on the roadmap for a long time. Currently, the € token market is dominated by EURS and sEUR from Synthetix with a $40M market cap for each. There are a Curve pool and Uniswap pairs. Celo is soon launching its cEUR. Things are moving.
A part of the opportunity is that it’s super hard to create a fiat-backed EUR stablecoin as the Eurozone is under negative interest rates.
Being a EUR-based citizen myself, I struggle to keep assets and have lost a fair amount of money last year because of $ depreciation. I don’t think EURS or sEUR are the best solutions.
I can see 4 path to achieve this target:
- Create a DAI-EuroDAI vault: Doesn’t seem capital efficient
- Create a DAI-EuroDAI PSM: Seems hard to avoid creating an arbitrage opportunity (or it leads to a high spread, meaning EuroDAI will fluctuate a lot)
- Integrate EuroDAI inside the current Maker Protocol: Seems super complicated
- Duplicate a Maker Protocol based on the € currency instead of $
I will focus on the last one bit please present other solutions or discuss the others.
At a macro level, it would something like the diagram below. Currently, the MKR token holders govern the DAI protocol. We would just add a copy of the DAI Protocol, still governed by MKR The code would be almost the same with the same Oracle system (but EUR feeds). the Surplus Buffer of the EuroDAI protocol would be expressed in EuroDAI and not in DAI. There would be a separated rate proposal group.
The minor difference is that there would be no flapper or flopper in the EuroDAI system at the beginning (beta phase). This way, the system is obviously a bit more risky but this avoid any negative impact from this system to the rest of the Maker Ecosystem. When more proven, flopper/flapper can be added.
EuroDAI stabilization can be achieved either using a EURS PSM and/or a DAI PSM/Vault.
The advantage of this approach is that it allows a clear separation of work and avoid putting another task to the SC Core Unit. There probably one year of work at best to get the thing running and to achieve a bit of traction. I think this decentralized approach makes sense and allows us to move at the speed of DeFi.
If this discussion leads to something we can move to a declaration of intend.