Most stablecoins are typically pegged to the US dollar. However, what about those living in the EU and wanting to use cryptocurrency that provides the benefits of fiat? We should also remember those preferring to keep their savings in euros rather than dollars. Probably, that is what Tether, the most capitalized stablecoin's issuer, thought while making a decision to create a USDt analog called EURt. Let's learn about how stablecoin works and whether you should buy it.
What is EURt
Tether EURt is a euro-pegged stablecoin launched by Tether Operations Limited in 2014. Its team has launched four more stablecoins so far: USDt (pegged to the US dollar), CNHt (tied to the Chinese yuan), XAUt (backed by gold), and MXNt (based on the Mexican peso).
Stablecoins are a solution to the high volatility of classic cryptocurrencies, which can rise or fall by 2%, 10%, or even 40% just in a day. Thus, those digital assets are inconvenient to use in everyday life. Imagine having the choice between buying a chocolate bar with Bitcoins or stablecoins. You would most likely pick the second option as stablecoins provide a stable value that does not fluctuate every minute.
As of the end of October 2023, 36.3 million EURt are in circulation. In contrast, the circulation of USDt is 23 times more — 84.1 billion.
Why do you need EURT
Euro stablecoin serves three purposes:
1. Daily payment tool. EURt is supported by the Bitfinex Pay payment system. So, you can easily use it to pay for lunch at McDonald's.
2. Storing savings. You can use EURt to save the value of highly volatile fiat and cryptocurrencies. This convenient euro-pegged stablecoin secures the value of euro, the world's second reserve currency.
3. Gateway to crypto. The most popular trading pairs on crypto exchanges usually consist of stablecoin/classical crypto (Bitcoin or Ethereum), so EURT can be used to enter the market.
To buy EURt, users turn to popular crypto exchanges, such as OKX, CoinW, and Binance. However, the easiest way is provided by the licensed European exchanger itez.com. The platform has an intuitive interface, allowing users to purchase EURt with a regular bank card in dollars, euros, or other fiat currencies.
Storing EURt necessitates a crypto wallet. Previously, we published an explainer to learn more about safe crypto storage. We have also prepared a step-by-step guide on creating a MetaMask wallet for EURt. Please note that EURT has two standards: ERC-20 and OMNI. If your wallet supports ERC-20, OMNI coins are of no use (you will simply lose them in an attempt to transfer).
How does Tether euro-stablecoin work
The stablecoin exchange rate is pegged to the euro—one EURt always costs €1. This is maintained by collateral reserves. If we have €36.3 million of EURt in the market, it means that the company acquired €36.3 million of collateral assets. Every 3–4 months, Tether publishes reserve audits, which are carried out by professional third-party auditors.
EURt had no serious depeg cases. The highest price of €1.02,was seen on June 11, 2022. The cheapest value of €0.97 was recorded on June 27, 2022. Nothing specific happened those days, so, it may be assumed that the coin had been simply overbought and oversold.
EURt is presented on two networks: Ethereum and OMNI. There are four differences between them:
1. Launch date: EURt OMNI appeared first, EURt ERC-20 came later.
2. Transfer fee: an OMNI transfer costs approximately $0.03; an Ethereum one is about $0.6.
3. Transaction speed: OMNI provides 10 000 transactions per second; Ethereum provides about 30 transactions per second.
4. Popularity: OMNI is rare, while EURt ERC-20 is highly demanded.
It turns out that OMNI is cheaper and faster than Ethereum. However, EURt ERC-20 is more demanded for selling or exchanging as Ethereum is more popular than OMNI.
Two ways are available to receive EURt. The first and most difficult is to submit an application to Tether, which includes the verification process and an investment for the company to initiate the token issuance. If you want to cash out coins, Tether burns them and returns your money.
The second option is to purchase a Euro stablecoin through an exchange. This scheme is simpler and faster than direct issuing through Tether. Moreover, if the purchase amount is small, verification is not required. You can buy EURt with a bank card using fiat on itez.com. We provide users with a large selection of fiat payment tools, low fees, and high transaction speeds. You can skip verification while buying up to 300 euros per month.
What is the EURt backed by
As we have already mentioned, EURt is tied to the euro exchange rate. This does not mean that Tether reserves consist only of fiat currency; there are tools that provide value and generate profit.
Spreading reserves across multiple assets (or diversification) reduces risk. If one of the collateral assets becomes cheaper, others will be able to smooth out the negative effect.
This is what the EURT collateral basket looks like:
85.05%: cash, cash equivalents (investments that can be easily converted into cash), and other short-term deposits. 75% are US Treasury bills — this is a security the US government uses to borrow from the market;
6.36%: secured loans, which are issued against collateral;
3.78%: precious metals;
2.73%: other investments (unspecified);
1.94%: Bitcoins;
0.13%: corporate bonds, which are securities that companies not associated with Tether issue to attract funds.
Tether does not advertise where its reserves are stored. It is known that the company kept part of its reserves in Cantor Fitzgerald, Capital Union, and Ansbacher. Lack of transparency raises questions among the crypto community. Tether responds with plans to display the amount of reserves in real time.
Is it worth buying Tether EURt
Tether’s euro-pegged stablecoin has proven its effectiveness, demonstrating no depegs. Tether’s stablecoins, including the market cap leader USDt, have also preserved their parity.
The stablecoin’s issuer has also proven that it can be trusted — the company has been predicted to collapse many times. Despite the doubts, Tether and its stablecoins continue to operate and benefit people.
EURt can be a safe tool to be used on an everyday basis and as value storage. You can buy it with fiat at the most favorable rate using the licensed exchanger, itez. The platform provides an anonymous purchases of up to 300 euros per month.
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This article is not an investment recommendation. The financial transactions mentioned in the article are not a guide to action. Itez is not responsible for possible risks. The user should independently conduct an analysis on the basis of which it will be possible to draw conclusions and make decisions about making any operations with cryptocurrency.
