Cake Wallet has introduced dEURO, a decentralized euro-pegged stablecoin unique for its backing by popular cryptocurrencies Bitcoin (BTC), Ether (ETH), and Monero (XMR). This design ensures the total value of collateral exceeds the issued stablecoins, creating an overcollateralized buffer.
To protect against de-pegging risks resulting from swift drops in collateral value, the system enforces automatic liquidation protocols for positions becoming undercollateralized, mitigating destabilizing effects on the broader dEURO market.
Notably, dEURO offers users a source of yield. Holders earn approximately 10% derived from stability fees paid by individuals minting new dEURO. Crucially, unlike many platforms, users generating this yield do not need to relinquish custody or control of their stablecoin holdings.
Cake Wallet presents dEURO’s overcollateralized and fee-funded yield model as a fundamental contrast to algorithmically stabilized coins like the defunct TerraUSD (UST), which relied on volatile arbitrage mechanisms and unsustainable high-yield promises.
Despite the proactive risk management features, Cake Wallet acknowledges that dEURO, like decentralized predecessors such as DAI, remains vulnerable to potential de-pegging driven by extreme volatility in its native cryptocurrency collateral assets and the inherent risk of large-scale liquidation events.