[ARFC] Add EURC to Aave V3 Core Instance

Governance
3

Summary

LlamaRisk supports the onboarding of EURC to the Aave V3 Core instance. EURC is a MiCA-compliant, euro-backed stablecoin issued by Circle, with its reserves held in regulated financial institutions within the EEA, audited monthly by Deloitte. Circle’s CCTP is not yet supported for EURC (allows permissionless cross-chain transfers via native burning and minting), meaning that cross-chain transfers depend solely on Circle Mint infrastructure, which remains inaccessible to retail users.

On Ethereum Mainnet, EURC’s DEX liquidity is evenly distributed, which helps mitigate risks associated with large liquidity withdrawals. However, several technical concerns persist. Key among them is the absence of publicly available smart contract audits. Centralized control remains a risk due to using EOAs for admin and owner roles, with no clear indication if these are secured via MPC wallets. The contracts also lack a timelock mechanism. Despite these concerns, the EURC demonstrates an overall low market risk.

Collateral Risk Assessment

1. Asset Fundamental Characteristics

1.1 Asset

EURC is a MiCA-compliant ERC-20 stablecoin, fully backed by euros and redeemable 1:1 via Circle Mint, an institutional-grade on/off-ramp provided by Circle. The euro reserves backing EURC are held at regulated financial institutions within the European Economic Area (EEA) in accordance with MiCA requirements. Monthly attestation reports are prepared following AICPA standards, with Deloitte & Touche LLP serving as Circle’s independent auditor since fiscal year 2022.

As of April 18, 2025, EURC has a circulating supply of approximately 117.4M on Ethereum Mainnet, representing a market capitalization of $133.9M. The token was deployed on May 19, 2022, and does not offer any yield. In addition to Ethereum, EURC is issued across several networks, including Avalanche, Solana, Base, and Stella, with a total circulation of €166.9M.

1.2 Architecture

Circle issues EURC under the same full-reserve model as USDC, maintaining 100% backing through euro-denominated bank accounts to ensure 1:1 redeemability for euros at all times. Circle is the sole issuer of EURC. Currently, Circle’s Cross-Chain Transfer Protocol (CCTP) is not supported for EURC, meaning native cross-chain transfers via minting and burning are unavailable. Instead, blockchain transfers of EURC rely on Circle Mint and its associated APIs.

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Source: EURC Minting/Burning Process via Circle Mint, LlamaRisk.

Circle Mint is a service tailored for businesses and institutional distributors, ideal for high-volume minting and distribution, and involves a rigorous application process. This service is not offered to retail consumers or individuals minting EURC for personal use. Mint and redemption of EURC are carried via wire transfers, SEPA, and other banking networks in over 185 countries. Circle does not charge fees for EURC minting or redemption via bank wires, though network transaction fees may apply for outbound transfers to external addresses. While Circle does not impose direct custody fees for holding EURC in Circle Mint accounts, it retains any interest or return earned on funds held in segregated accounts. Currency conversion fees may apply for wires sent in non-euro currencies.

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Source: EURC Redemption Structure, Circle, April 18, 2025

There are no fixed limits on tokenization, and it is free, while redemptions exceeding €2 million a day may incur fees based on the user’s tier, which is Basic or Standard.

1.3 Tokenomics

The total supply of EURC is not fixed, and only Circle is authorized to issue new tokens. 5,891 unique addresses hold EURC on Ethereum Mainnet.

1.3.1 Token Holder Concentration

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Source: EURC Top 100 Token Holders, Etherscan, April 19, 2025.

The top 5 holders of EURC are:

EURC’s top holder distribution indicates a high concentration among institutional players, likely driven by its rapid supply growth on Ethereum Mainnet and limited DeFi integrations. Despite this expansion, on-chain data suggests relatively low utilization across existing DeFi protocols. Notably, the top 10 holders account for 33.82% of the supply, indicating a relatively low concentration given the token’s early adoption stage.

2. Market Risk

2.1 Liquidity

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Source: EURC/USDC DEX Swap Liquidity, DeFiLlama, April 18, 2025.

Users can swap EURC worth up to $4M (3.5M EURC) for USDC in a transaction within 4.5% slippage.

2.1.1 Liquidity Venue Concentration

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Source: EURC Liquidity Pools on Ethereum, GeckoTerminal, April 19, 2025.

Most EURC liquidity on Ethereum Mainnet is held within the Uniswap V3 EURC/USDC ($1.93M TVL) and Curve agEUR/EURC pools ($1.41M TVL). The two other pools: Uniswap V4 EURC/EURe and Uniswap V3 EURC/WETH have a combined TVL of less than $100K.

2.1.2 DEX LP Concentration

The liquidity of EURC on Ethereum Mainnet DEXs is evenly distributed with no significant concentration among a few users. Below is the breakdown (as of April 19, 2025):

2.2 Volatility

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Source: EURC to EUR Chart, Coingecko, April 19, 2025.

EURC’s price has consistently maintained a tight correlation with the euro, only deviating by more than 0.5% for a prolonged period on three occasions, which is not a significant risk.

2.3 Exchanges

EURC is traded across several CEXs, though its trading activity and liquidity are predominantly concentrated on Coinbase, which accounts for over 95% of the trading volume.

2.4 Growth

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Source: EURC Circulating Supply on Avalanche, Dune, April 19, 2025.

EURC’s circulating supply on Ethereum has reached an all-time high of 120.7M, nearly tripling from 39M in just 108 days since the start of the year, and continues to grow steadily. This growth may be attributed to a weakening dollar against the euro, heightened USD volatility, and increased demand for diversification in stablecoin holdings among institutional players.

3. Technological Risk

The EURC technological risk on Ethereum, including smart contract risk, bug bounty program, and dependency risk, remain unchanged since our EURC Base onboarding review and are excluded here for brevity, as no new contracts have been deployed and the underlying architecture remains identical.

4. Counterparty Risk

4.1 Governance and Regulatory Risk

The regulatory risk has been previously discussed in detail as part of the EURC Base onboarding review. As there have been no material changes, that assessment remains applicable here.

4.2 Access Control Risk

4.2.1 Contract Modification Options

A role-based access control mechanism is used for EURC contracts, and the controlling wallets are as follows:

Controlling Wallet Role Functionality
EOA 1 owner Re-assign any role except for admin.
EOA 2 admin Manage proxy-level functionalities.
EOA 3 pauser Pause the contracts, preventing all transfers, minting, and burning.
EOA 4 blacklister Prevent transfers to/from an address and prevent it from minting/burning.
EOA 5, owner of the masterMinter contract. masterMinter Add/remove minters and increase their minting allowance.
Four permissioned addresses, Minter EOA-1 (primary) minters Create/destroy tokens.
Burn Address rescuer Transfer any ERC-20 token locked in the contract.

The EURC architecture includes two primary contracts:

  • ERC-20 Token: FiatTokenProxy contract serves as a proxy to route function calls to the implementation contract.
  • Implementation: FiatTokenV2_2 contract which implements the core logic for FiatToken functionality.

Here is a list of sensitive functions exposed by these contracts:

  • mint/burn: Authorized entities, referred to as minters, are permitted to mint and burn tokens. These entities are affiliated with Circle and undergo a thorough vetting process before being granted the ability to mint new tokens. masterMinter adds new minters via the configureMinter method, each with a specified minterAllowance configured by Circle. The following are the permissioned minters approved by Circle, with their respective mint limits:
  • pause: The ability to pause or unpause the contract is restricted to the pauser role, which Circle controls. When the contract is paused, all transfers, minting, burning, and adding new minters are disabled. However, operations such as modifying the blacklist, removing minters, changing roles, and performing contract upgrades remain functional.
  • blacklist: Circle can blacklist an address through the blacklister role, and such an address cannot transfer assets in any way.

4.2.2 Timelock Duration and Function

There is no timelock configured on the EURC ERC-20 contract.

4.2.3 Multisig Threshold / Signer identity

The EURC token contract is controlled by owner EOA 1 and admin EOA 2. While these may be MPC wallets, their status could not be independently verified.

Note: This assessment follows the LLR-Aave Framework, a comprehensive methodology for asset onboarding and parameterization in Aave V3. This framework is continuously updated and available here.

Aave V3 Specific Parameters

Presented jointly with @ChaosLabs.

Price feed Recommendation

We recommend using a Chainlink EURC/USD feed once deployed.

Disclaimer

This review was independently prepared by LlamaRisk, a community-led decentralized organization funded in part by the Aave DAO. LlamaRisk is not directly affiliated with the protocol(s) reviewed in this assessment and did not receive any compensation from the protocol(s) or their affiliated entities for this work.

The information provided should not be construed as legal, financial, tax, or professional advice.

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