[ARFC] Add EURC to Avalanche V3 Instance

Governance
3

Summary

LlamaRisk supports the onboarding of EURC to the Aave V3 deployment on Avalanche. We previously reviewed the asset during its onboarding to Base in January 2025, where it has shown strong user demand post-launch. However, key concerns identified during the earlier review, such as the absence of a timelock on contract upgrades, remain unresolved for the Avalanche deployment, too.

This review highlights additional risks, primarily the high concentration of DEX liquidity. Nearly all EURC liquidity on Avalanche is supplied by just two EOAs across the LFJ and Pharaoh pools. This poses a risk of a liquidity crunch should either party withdraw, potentially hindering liquidations and increasing the likelihood of bad debt.

Centralized control via the admin and owner EOAs continues to be a concern, and it could not be verified independently whether MPC wallets are in use. Furthermore, 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. EURC exhibits low overall market risk despite these limitations, supported by strong operational security measures like an active bug bounty program.

1. Asset Risk

EURC is an ERC-20, 100% euro-backed stablecoin compliant with MiCA. It is redeemable at 1:1 for euros through Circle Mint, Circle’s institutional on/off-ramp platform. However, this service is limited to businesses and institutions and unavailable to retail users. The euro reserves backing EURC are held at regulated financial institutions within the European Economic Area (EEA), and monthly attestation reports are published by standards established by the American Institute of Certified Public Accountants (AICPA).

As of April 12, 2025, EURC has a circulating supply of approximately 2.92M on Avalanche, with a market capitalization of $3.3M. The token was launched on February 28, 2023, and is not yield-bearing. Aside from Avalanche, EURC is available on multiple other chains like Ethereum, Solana, Base, and Stella, with a total of €166.9M EURC in circulation.

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

Circle is the sole issuer of EURC. Currently, Circle’s Cross-Chain Transfer Protocol (CCTP) does not support EURC, which means native cross-chain transfers through burning and minting are impossible. As a result, moving EURC across blockchains relies on Circle Mint and its associated APIs.

1.1 Tokenomics

The total supply of EURC is not fixed, and only Circle is authorized to issue new tokens. 3,822 unique addresses hold EURC on Avalanche.

1.1.1 Token Holder Concentration

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Source: EURC Top 100 Token Holders, Snowtrace, April 11, 2025.

The top 5 holders of EURC are:

Most of these addresses are EOAs, meaning a lower share of EURC is locked within the DeFi applications on Avalanche. The top 10 holders collectively own a high concentration of 92.6% of EURC’s supply on Avalanche.

1.2 Access Control

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 prevents it from minting/burning.
EOA 5, owner of the masterMinter contract. masterMinter Add/remove minters and increase their minting allowance.
Permissioned addresses approved by Circle 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_1 contract which implements the core logic for FiatToken functionality.

Circle’s FiatToken contracts follow OpenZeppelin’s Proxy Upgrade Pattern.

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.
  • 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.

1.2.1 Timelock Duration and Function

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

1.2.2 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.

2. Market Risk

2.1 Liquidity

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Source: EURC/USDC DEX Swap Liquidity, DeFiLlama, April 12, 2025.

Users can swap EURC worth up to $1 million (0.86M EURC) for USDC in a transaction within 5% slippage.

2.1.1 Liquidity Venue Concentration

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Source: EURC Liquidity Pools on Avalanche, GeckoTerminal, April 12, 2025.

Most EURC liquidity on Avalanche is held within the LFJ EURC-USDC pool ($530K TVL) and Pharaoh USDC/EURC pool ($440K TVL). All other pools have TVLs in the two-digit range. Only two pools with significant liquidity present a risk, as a sudden drop in liquidity in either of these two pools could make EURC illiquid on Avalanche. It is important to note that most liquidity in both pools is held in USDC. While this is sufficient for facilitating liquidations, it limits the ability to acquire EURC in size on Avalanche.

2.1.2 DEX LP Concentration

EURC LP concentration on Avalanche is very high, with the majority supplied by just two EOAs across the two main pools. This concentration poses a significant risk, as a sudden withdrawal by either entity could trigger a liquidity crunch. Below is the breakdown (as of April 11, 2025):

2.2 Volatility

EURC has generally maintained a tight correlation with the Euro in the Pharaoh USDC/EURC pool. However, on March 20, 2025, its price briefly deviated due to low liquidity in the pool but quickly reverted to the peg.

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 12, 2025.

The EURC circulating supply on Avalanche peaked at 5.2M in February 2025, but it has declined to the current level of 2.9 M.

Aave V3 Specific Parameters

Jointly presented with @ChaosLabs. A conservative supply cap has been proposed, given the high DEX liquidity concentration.

Price feed Recommendation

We recommend Chainlink’s’ EURC/USD feed to price EURC on the Aave Avalanche market. The feed is categorized as Medium Market Risk by Chainlink with a deviation threshold set to 0.3% and a heartbeat of 24h.

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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