TEMP CHECK: Increase the Borrowing Limit and Remove Isolation Status for EURS stablecoin on Polygon

Summary:

This proposal seeks approval from the AAVE community to increase the borrowing limit of Stasis Euro (EURS) on the Polygon network and to remove its current isolation status. This change aims to enhance the liquidity and utility of EURS within the AAVE ecosystem, thereby providing more opportunities for users and promoting further adoption of EURS on Polygon.

Motivation

Over the years, EURS has demonstrated stable and reliable performance as a fiat-backed stablecoin pegged to the Euro. Its adoption and usage across decentralized finance (DeFi) platforms have grown, showing significant demand and user trust. However, its current borrowing limit and isolation status on AAVE restrict EURS’s full potential to serve a broader user base and limit its functional utility within the platform.

References/Useful links:

Main Links:

STASIS/EURS Background:

EURS is the largest euro-backed digital asset, combining the benefits of the world’s second most-traded currency with the transparency, immutability, and efficiency of distributed ledger technology. Created by stablecoin issuer platform STASIS, EURS mirrors the euro’s value on the blockchain and is supported by assurance mechanisms provided via an ecosystem of liquidity providers, custodians, exchanges, payment platforms, and others. Each token is backed 1:1 by euros held in the company’s reserve accounts (1).

STASIS is a European Web3 fintech company that develops customer-friendly instruments to manage digital currencies and public blockchains for payments and settlements, e-commerce, and DeFi. This platform has a solid track record and vast expertise in technological, financial, and legal fields. Since all EURS are backed with fiat euro, there is no risk for investors and everyday users, who can always exchange their digital assets to fiat and vice versa thanks to the firm’s Sellback Service (2).

EURS stablecoin combines experience, trust, technology, and financial infrastructure to enable business growth, narrowing the gap between the European financial and digital asset markets. EURS is the oldest, largest and legal stablecoin, accessible in 175 countries. Issued since 2018, STASIS EURO has zero conflict of interest and is audited by a top global firm — the BDO. All EURS assets are backed on a 1:1 basis with liquid euro balances or cash, and reserves are held at the Lithuanian Central Bank. With over 6B euros transferred on-chain, EURS supports 7 blockchains.

Since USD-backed stablecoins are heavily dominating the market, Europeans/Asians are regularly forced into undesired dollar exposure with little on-chain hedging options. EURS stablecoin seeks to challenge the U.S. Dollar’s dominance in global financial markets. By 2024, it had become a popular tool for daily transactions, free of risks and volatility inherent in conventional cryptocurrencies. The potential of stablecoins use cases has been recognized in times of crisis, and the demand for EURS is growing steadily in the DeFi field.

Rationale

  1. Increase Borrowing Limit: Raising the borrowing limit for EURS will allow for larger positions, accommodating the needs of users who require higher liquidity for trading, yield farming, or hedging.
  2. Remove the Isolation Status: Currently, EURS is designated as an isolated asset, which means it can only be used as collateral for borrowing the same asset. Removing this restriction will enable EURS to be used as collateral for borrowing other assets, thereby enhancing its utility and integration into the broader AAVE ecosystem.
  3. Risk Assessment: Preliminary risk assessments indicate that EURS maintains robust backing and compliance with relevant financial regulations, suggesting that adjustments to its borrowing parameters are justified. Further analysis and community discussion are encouraged to validate these findings.

Benefits for AAVE

  • Enhanced liquidity: Increasing the borrowing limit and removing isolation status will enhance liquidity, making it easier for users to execute larger transactions and strategies.
  • Increased adoption: EURS’s improved utility could lead to increased adoption, benefiting the AAVE ecosystem by attracting a larger and more diverse user base.
  • Risk diversification: Allowing EURS to be used for a broader set of borrowing options helps diversify the risk profile of the assets on the AAVE platform.

Next Steps

  1. Receive the comprehensive feedback from the AAVE community on this proposal through discussions and Governance Forum.
  2. Conduct an on-chain voting of the proposed changes and ensure alignment with AAVE users expectation.
  3. Upon approval, coordinate with the AAVE development team for the technical implementation of the changes in the smart contracts.

Community and Communication:

STASIS is active on Telegram, Twitter, LinkedIn, and Discord server. The project team also maintains a YouTube account (3). STASIS and EURS are often mentioned in global press media (4). Gregory Klumov, the founder and CEO of the STASIS EURS project, is the project’s main spokesperson (5), often sharing his views on crypto. The STASIS website includes a mailing address in lsle of Man, and a contact e-mail (6).

Conclusion:

This proposal aims to adapt the EURS offerings on the AAVE platform to meet the evolving needs of the community while ensuring stability and security within the ecosystem. The proposed adjustments to the borrowing limits and isolation status of EURS on Polygon are designed to enhance its functionality and support broader financial activities on the platform.

Next Steps

  • Open discussion in the forum for community feedback.
  • Adjust the proposal based on community input and expert analysis.
  • Proceed to a Snapshot vote if the discussion indicates general community support.

Product videos

Team’s expertise video

Project Review

STASIS Wallet Introduction

STASIS Wallet

References

  1. Transparency and reserve verification

  2. https://webapp.scb.io/service/

  3. Social media accounts

  1. STASIS/ EURS in PRESS
  1. https://www.linkedin.com/in/gregoryklumov/
  1. STSS Limited (lsle of Man) Reg number. 015541V, 2nd Floor, Quay House, South Quay, Douglas, IM1 5AR, lsle of Man; CO@STASIS.NET.

Regards,

STASIS project team

1 Like

Hi and thank you for your proposal.
Please add TEMP CHECK to the title at the beginning, same as other TEMP CHECKS.

A few questions:

  • The current market is quite small and still only 70% of the possible bucket have been filled.
    So what would be the reason to hold EURS over any other stablecoin? Are there yield incentives?
  • If the DAO decides to remove isolation mode and increases the parameters, is Stasis thinking about incentives to promote that asset?
2 Likes

Thank you, noted! Regarding your question:

  1. EURS is the most transparent stablecoin on the market with 4 verification, 1:1 backed, with perfect track record during company’s history. A decent option for asset roster diversification. We cater to savvy users who value transparency in the space. As for the yield incentives, EURS enjoys a broad ecosystem in DeFi where users might get yields on their stablecoins — EURS ecosystem

  2. Yes, should the DAO decide to adjust the parameters, Stasis is ready to think about introducing incentives aimed at promoting the asset. Our approach will capitalize on our extensive TradFi client base, enhancing the appeal and accessibility of the asset to traditional markets.

2 Likes

I think it’s a good idea to consider increasing the borrowing limit of eurs on AAVE’s network and removing its isolation status. Stasis has put forth a comprehensive case and the potential advantages for both the stablecoin and our ecosystem are clear. It will be intriguing to observe the community’s reaction, I think the benefits will be objective, such as enhanced liquidity and increased adoption. For me it’s a yes.

1 Like

We researched EURS back in March 2023. In our prior investigation, we highlighted several key risks and concerns. We appreciate the opportunity to revisit our findings and provide an updated perspective:

  • Regulatory Compliance: An examination of the MFSA (Malta Financial Services Authority) Financial Services Register confirms that STSS (MALTA) LIMITED is duly authorized and that its Whitepaper received approval on June 12, 2023. Under the Maltese Virtual Financial Assets (VFA) Act, “any person wishing to issue a VFA to the public in or from within Malta is required to draw up a whitepaper which includes the information listed in the First Schedule of the VFA Act and register said whitepaper with the MFSA”. As it currently stands, EURS has been issued in adherence to the VFA regulatory framework. However, we would appreciate further insights from Stasis regarding the eventual classification of EURS as e-money tokens under the EU-wide Markets in Crypto-Assets Regulation (MiCAR) and their plans to secure the appropriate licensing status under the mentioned legal act.

  • Corporate Structure: It has come to our attention that STSS Limited, based in the Isle of Man, remains listed as the owner of the https://stasis.net/ website, whereas STSS (MALTA) LIMITED holds the VFA authorization in Malta. This discrepancy raises questions about potential risks associated with regulatory oversight and accountability. We would appreciate a detailed explanation concerning the corporate architecture, the interrelationships between these entities, and the specific regulatory status applicable to each. Additionally, we are interested in learning about any enhancements made to Stasis’s corporate structure and governance to mitigate risks related to the use of third-party service providers, such as improved transparency, clear lines of responsibility, and robust contingency plans.

  • Asset Backing Composition: In March 2023, significant changes were made to Stasis’ bond portfolio; however, no information has been disclosed on realized mark-to-market losses. Could you please provide details on the current composition of the assets backing EURS, and any plans for further adjustments to the collateral strategy?

  • Transparency and Communication: In our previous interactions with Stasis, responses to our queries were limited. We hope that Stasis is now more open to addressing the transparency concerns highlighted in our report. Specifically, we would appreciate regular, detailed updates on the points mentioned above, as well as any other material changes to EURS operations or governance.

Addressing these issues is important for Stasis to be considered for the suggested parameter changes, given the existence of other euro stablecoins that operate with sufficient regulatory clarity. In observing the regulatory approaches of other stablecoin initiatives within the European Union, many opt to become regulated as Electronic Money Institutions (EMI). In light of this prevalent trend, we are interested in understanding your strategic vision for conducting your operations under particular regulatory framework.

We kindly ask Stasis to provide more information on how these aspects have evolved since our initial research, as this will help inform our assessment and recommendations going forward.

2 Likes

Hello, Llama Risk team. Thank you for your continued interest and the opportunity to address the concerns raised in your recent inquiry. We value transparency and are committed to maintaining an open dialogue with our community, projects, and stakeholders.

Please see the Medium article from last year. We encourage everyone to check it before reading this text further.

STASIS EURO Demystified. A Detailed Response to EURS Risk… | by Krypto Walker | STASIS Blog | Medium

Moreover, we made a public statement regarding the backing earlier in 2023:

https://cointelegraph.com/press-releases/stasis-the-leading-non-usd-stablecoin-moves-collateral-backing-its-products-to-100-liquid-euro-balances

Below, please find detailed responses aligned with your specific queries:

1. We have formally expressed our commitment to obtaining licensing under MiCA regulations. All relevant regulatory bodies have been duly notified of our intentions, and the necessary application for an EMT license has been submitted. We will continue our operations as usual during this transitional period.

2. STSS Limited is the parent company of STSS (Malta) Limited, the issuer of EURS. This information is available in the public ledger of MBR. STSS Limited, a software development company, provides services to the issuer and operates as the Group’s cost center.

STASIS was a trendsetter in transparency and corporate governance for stablecoin setups. STSS (Malta) Limited is the only stablecoin issuer that provides comprehensive daily statements on EURS reserves, including account details, asset types, and counterparty financial institutions. Additionally, the company was the first and is still the only one to engage a top-five global accounting firm to conduct a full audit (not just verification of management statements) and introduce transparency standards that surpass mere attestations.

STSS (Malta) Limited, an MFSA-regulated company, serves as an SPV and engages solely in the issuance of the EURS stablecoin. The primary reason for this structure setup in 2017 was the lack of adequate stablecoin regulation at the time. Therefore, we established a corporate structure that provides a ring-fence around the EURS issuer to eliminate the risk of third-party service provider claims and potential shareholder risks.

With the upcoming Regulation 2023/1114 (‘MiCA’), we will comply with all transparency and corporate governance requirements under this framework.

3. We have sustained no market losses, and 100% of the EURS holdings are in cash, as verified by daily financial statements available on our website and affirmed by the most recent BDO report issued in April 2024 (Transparency and reserve verification). Any future plan for further adjustments will be made in accordance with regulatory developments. We are fully prepared to maintain reserves in compliance with both MiCA and EBA guidelines.

4. We steadfastly uphold our commitment to transparency, despite the fact that neither the current E-money Directive nor the forthcoming MiCA mandate daily disclosure of reserves status, and despite that no stablecoin issuers currently publish full audits of their companies. While other e-money institutions may cite that they are not required to provide public attestation of safeguarded assets, we consider transparency a cornerstone of our operations and provide detailed reserve statements, aswell as conduct regular full audits.

Our company will persist in maintaining the high transparency standards we have established, beyond those anticipated under the forthcoming MiCA regulation.

We look forward to your feedback and to arranging the necessary arrangements to proceed with more detailed discussions.

Best regards,

STASIS Team