Introducing the Electronic Dollar (eUSD)

On February 24th 2023, the Electronic Dollar (eUSD), a decentralized 1:1 asset-backed stablecoin built with Reserve Protocol, officially launched on the Ethereum and MobileCoin blockchains.

In the wake of the FTX implosion, the need for proof of reserves has never been greater. Pegged to the US Dollar, eUSD is backed 1:1 by a diversified basket of yield-bearing, trusted stablecoin derivatives utilizing Compound and Aave (aUSDC, cUSDC, aUSDT, cUSDT). eUSD is decentralized, community-governed, and censorship-resistant.

Let’s take a closer look at the unique features of eUSD.

What makes eUSD stand out from other stablecoins?

eUSD has been launched on both the Ethereum and MobileCoin L1 blockchains, and it is designed to offer greater safety and reliability than alternatives.

Let’s start generally — eUSD embodies the following characteristics across all blockchains:

Proof of reserves on-chain 24/7 (auditable and transparent)
Backed 1:1 by a diversified basket of yield-bearing trusted stablecoins (aUSDC, cUSDC, aUSDT, cUSDT)
Censorship-resistance by utilizing “receipt tokens” derived from the most successful and proven DeFi protocols Aave and Compound
Over-collateralized and governed by the community in a fully decentralized way

On the MobileCoin blockchain eUSD enables borderless, private-payments at sub-penny fees, enabled by the following features for all its users:

Self custody — your keys, your money
Fully private using end-to-end zero-knowledge encryption
Employs a KYC/AML-permissioned bridge to support regulatory compliance
Optimized for mobile devices, settlement in less than 5 seconds at a flat $0.0025 per transaction in eUSD, no matter the transaction size

On Ethereum, eUSD is a censorship-resistant stablecoin for DAO treasuries and deep DeFi liquidity. Reserve intends to use its top 10 Convex voting power to direct yield farming incentives to eUSD pools on Curve Finance, driving deep on-chain liquidity. DeFi yield farmers and DAO treasuries alike can benefit and yield by providing liquidity on holdings which are fully decentralized, censorship-resistant, and most of all, stable.

Collateral composition of eUSD

Stablecoins or other asset-backed tokens created on the Reserve Protocol, are called RTokens and can be backed by any arbitrary set of ERC20 tokens.

eUSD’s collateral basket consists of a diversified basket of yield-bearing, trusted stablecoin derivatives (25% aUSDC, 25% cUSDC, 25% aUSDT, 25% cUSDT) which provides censorship resistance, stable asset-backing, and a source of yield.

Given the emphasis on safety and reliability, eUSD directs all yield to the RSR stakers, who earn a portion in exchange for participating in governance and providing overcollateralization (first-loss capital).

Transacting eUSD on the MobileCoin network

In order for eUSD to enable a new form of private digital cash that is regulatory friendly, eUSD is minted on Ethereum and utilizes a KYC’d permissioned bridge over to the MobileCoin network.

Bridge security is crucial, which is why it is not automated nor does it make use of any hot keys. Instead, Reserve and MobileCoin will be working with KYC’d and approved liquidity provider institutions that will mint or buy the eUSD RToken on Ethereum, deposit it to the bridge contract (a Gnosis Safe multisig), and initiate a wrapping request with its key. After doing so, Reserve will verify the deposit and finalize minting the required amount of eUSD on the MobileCoin blockchain by co-signing a mint transaction with the Liquidity Provider.

MobileCoin chose to partner with Reserve to operate the bridge given our Ethereum network and regulatory expertise already utilized in the Latin America RPay business. All liquidity providers must pass a rigorous KYC process.

Furthermore, the Reserve project is interested in allowing people to transact efficiently while maintaining self-custody of their funds, and the MobileCoin ecosystem unlocks this experience on a global scale.

To be clear, eUSD and the eUSD bridge cannot be used as a mixer. This is due to the fact that:

Buying and selling eUSD on a wallet app such as MOBY or a centralized exchange can only occur with individuals/entities that have KYC’d
Wrapped eUSD on MobileCoin is not available on decentralized exchanges that do not require KYC.

Check out eUSD’s asset-backing today on Register.app or start sending borderless, private money in the MOBY app!

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