When it comes to market prices, much of the world thinks in terms of the US dollar and cryptocurrency is no exception. In fact, the top stablecoins by market capitalization are all pegged to the dollar, with Tether (USDT) occupying the top spot–a post it has held since it was launched, being the world’s very first stablecoin.
What a lot of people are not aware of however, is that Tether also issues stablecoins in other fiat denominations, most notably for the world’s second largest fiat currency–the Euro–which is the common currency shared by 19 European nations.
Euro Tether (EURT) is an ERC-20 token that works in the same way as its American cousin. To maintain its 1:1 exchange rate with the Euro, Tether maintains reserve assets as collateral, equivalent to the amount of stablecoins in circulation. At the present, Tether’s reserve assets are comprised of cash and other cash equivalents such as US Treasuries. Tether also maintains a transparency page on its official website to assure investors on the current state of its reserves.
Why use stablecoins?
Unlike most other cryptocurrencies, stablecoins are designed to withstand volatility, This makes stablecoins ideal for trading, making it convenient to convert tokens into stable assets without having to cash them out into fiat currencies. They are also used as a store of value especially during prolonged market downtrends.
Furthermore, stablecoins are more ideal for purchases instead of using Bitcoin (BTC) or other cryptocurrencies whose price may fluctuate soon thereafter, translating into a loss either for the buyer or the merchant.
Why use Euro-denominated stablecoins?
Despite the dominance of the US dollar, some financial analysts are pointing to a rising demand for Euro-backed stablecoins, citing that as much as 40% of SWIFT transactions are paid in Euro and 20% for FX Global reserves. The emergence of a widely-used Euro stablecoin is speculated to make the European market more open and streamlined towards crypto and decentralized finance (DeFi) in the coming years.
The circulating supply of EURT is at 40 million with a market capitalization of $40.9 million as of July 2022. The supply of EURT is always equivalent to the present demand, as new EURT tokens are only minted with an equivalent amount of Euro deposited to Tether.
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