Don’t look twice, but are things starting to look up for the Europoors?
Our luckless neighbors across the pond have had a rough spell lately — waning geopolitical influence…. no energy… led by a feckless, unrepresentative bureaucracy.
But lately, we can point to some reason for optimism!
Most importantly, Europeans have the World Cup, which is great bread and circuses to forget their earthly woes.
Second, the long nerfed euro, which functions as something like a governance token, is showing signs of life. A few months ago, the continent lifted the concept of “negative interest rates,” better known in the common vernacular as “theft.”
As Europeans start to realize they can earn yield on their token, or even transact with it on weekends, eurocoins are starting to see an uptick of utilization in DeFi.
What’s the deal with all these euros? Here’s our quick guide in reverse order of yield. Everything here is intended to be educational (ie not financial advice):
Neutrino EUR: 45.11%
Don’t be fooled. Neutrino is part of the struggling WAVES family, including the depegging USDN. The high “yield” in this case is due to nonexistent TVL. Not worth the risk to us.
EURT: 10.76%
Are you a fan of Tether FUD? As the first stablecoin, Tether has accumulated among the largest aggregate FUD-hours of any token, despite a good track record at holding very near peg for most of its existence. Even now, fear merchants point to Tether as yet another potential devastating domino which could fall and eradicate DeFi was we know it. Who knows, it may yet happen… you’ve ben warned.
Nonetheless, our view is that the track record of Tether doomsayers is sufficiently poor that we believe they now carry the onus of proof. If you believe a Tether collapse is imminent, we’re probably going to ignore you unless you provide more substantial evidence than previous generations provided.
If you trust in Tether, the Tether Euro pool could be an interesting option. As a v2 pool combining the Euro Tether and 3CRV (USDT/USDC/Dai), it provides 50-50 hedged exposure to dollars and euros.
This means you’re subject to impermanent losses (or gains) as prices fluctuate. If you want to store your wealth in euros, it’s a bit risky. The risk is lessened if you want exposure to both dollars and euros, as you basically end up with a higher quantity of the asset that goes down in value.
The good news is that the pool is presently yielding upwards of 10% rewards. If these rewards stay high and you can max out your boost, then long term holders might find the rewards alone are close to offsetting the worst losses between these coins that historically tend to trade in the same range.
Just like trading stocks, the best way to win using v2 pools is to buy in using the asset you suspect is overvalued, and at some future time you cash out the asset you suspect is overvalued.
Note also, a Euro Tether / 3CRV pool also exists on Polygon with a max tAPR of 5.56%
Euro Pool: 9.51%
Those who don’t want to hedge euros and dollars might look closer at the Euro Pool. This pool only has euros, which means no impermanent loss. You can deposit your euros to this pool if you simply want your euros to maintain consistent value while earning yield.
The 9.51% maxed yield is decent if it holds up. The biggest risk for v1 stablecoin pools are the risk that any underlying asset depegs. Therefore, before you invest, you should be comfortable with the underlying assets. This pool consists of the following three tokens:
cEUR: Celo
Celo’s Euro exists natively on the Celo blockchain. This is a bridged version of their Euro, which therefore holds the additional risk that bridged assets face.
More thoughts on Celo:
agEUR: Angle Protocol
Angle Protocol was well covered by the Crypto Risks Team:
EUROC: Circle
Circle, part of the team behind $USDC, is a heavyweight in the stablecoin space, and also happen to be the very next pool on the list
EUROC 9.18%
Similar to the Euro Tether pool, EUROC is another v2 pool. All the notes about impermanent loss from the Euro Tether pool apply to this pool as well. The biggest difference is that the Euro Tether pool faces whatever depeg risks you associate with Tether, while the Circle pool has whatever depeg risks you associate with Circle.
EUROC has suffered a bit from lack of attention. Among Euro stablecoins, it may well have the lowest utilization.
Fundamentally Circle has proven adept at the inside baseball underlying the stablecoin game. We have relatively less concern about Circle, other than their proclivity to utilize censorship features. NFA!
3EURpool: 8.55%
The 3EURpool is something of a spiritual competitor to the Euro Pool. The Angle Protocol Euro is common to both pools, but otherwise it has a different basket of coins. The 3EURpool one also carries exposure to the Tether Euro discussed above and the Stasis Euro, discussed below.
agEUR/EUROC: 5.48%
This one is sort of interesting — it’s basically a copy of the prior Euro Pool but without the Celo Euro. Yields are about half, but there’s about 4x the TVL so it may be a good choice for those who are seeking to cut out risk.
Of course, this depends how you view risk in Curve pools. A pool with 2 assets instead of 3 assets has one fewer assets that could depeg, but such a depeg would likely be more severe. YMMV.
Stasis Euro:
Two lower yielding pools exist containing the Stasis Euro:
The Stasis Euro is one of the earlier eurocoins. It has the unusual property of being subject to regular market hours — ie no redemptions when banks are closed!
As one of the earlier entrants, it also has the largest amount of TVL. We wonder how much of this is zombie TVL — users who simply locked it and forgot it.
Given the rather meager yields, if we had any money in these pools we’d likely migrate to one of the higher yielding pools. If you were keen to maintain exposure to the Stasis Euro, then 3EURPool provides far better yield. A better option for Stasis Euro diehards would be to bridge to Arbitrum. On Arbitrum, the v2 EURS/USD pool is yielding over 12% boosted rewards, higher than anything else listed here.
Honourable Mentions:
agEUR/ibEUR: 0.43% $ANGLE
The Iron Bank (ib) has several foreign currencies, some of which are used in the Fixed Forex product. This pool here offers just 0.43% yield in the $ANGLE token, but has pretty good TVL, which is often a good indicator LPs consider it to be lower risk.
ibGBP/USDC: 71.33%
OK, we are aware Great Britain left the EU. Nonetheless, it’s close to the European mainland, and Europeans may still be tempted by the high double digit yield.
The important thing to note, other than the fact it’s a v2 pool (impermanent loss), is that the TVL is quite low. When this happens it might mean the pool or its rewards are new, and an influx of TVL may cause rewards to shrink. Or it could mean users have abandoned the pool for some reason, and you may be heading towards a sinking ship.
Here’s the pool’s history of TVL per Llama Airforce.
DCHF/3CRV: 24.9% MON 0.00%↑
Again, we know that Switzerland is not in the EU. Still, it’s close. And this pool looks a bit healthier than the aforementioned ibGBP pool.
Good TVL and still good rewards paid out in Moneta, the organization behind the digital Swiss Franc.
Disclaimers: Additional Euro Pools may exist throughout the Curve ecosystem, we only list the ones that have incentivized rewards at time of publication. Author has a handful of banknotes lying around from prior EU trips totalling <$5, otherwise no exposure to Euros. Further disclaimers!