Cake Wallet added the decentralized stablecoin dEURO to its offerings, expanding its stable euro-denominated digital assets for users. The decentralized stablecoin is overcollateralized by other digital assets, including Bitcoin, Ether and Monero. This means that to mint the dEURO stablecoins, users must first deposit other cryptocurrencies as collateral. Overcollateralizing, or depositing cryptocurrency worth more than the value of the asset being borrowed, acts as a shield against de-pegging events. The dEURO offering also features automatic liquidations, which occur when loan-to-value ratios drop below a certain threshold. Cake Wallet says users can earn 10% yield from crypto holdings backing the stablecoin, without giving up custody of their funds. The yield is generated from stability fees paid by depositors minting the stablecoin and deposited into an equity reserve pool. This helps maintain the stability of the stablecoin and adds liquidity to the user’s crypto holdings, allowing them to generate a euro-pegged token without selling their crypto. Decentralized and algorithmic stablecoins are promising use cases consistent with the early cypherpunk ethos of the crypto community.
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