Stablecoins are cryptocurrencies that afford users the low-fee transactions of cryptocurrencies while enjoying the stability that characterizes fiat currencies such as the US Dollar. However, the challenge has been maintaining price stability and decentralization.
At EDCON 2023, the Ethereum Reserve Dollar (ERD) team introduced their decentralized lending protocol, Ethereum Reserve Dollar (ERD), and its native stablecoin USDE, pegged to the USD. The platform allows anyone to borrow USDE using liquid staking derivatives (LSDs) and blue-chip DeFi tokens as collateral.
With a minimum collateralization ratio of 110%, ERD can attain decentralization, capital efficiency, and price stability. Even though the demand for fully decentralized stablecoins is increasing, no stablecoin has been able to meet these conditions.
The best efforts to create stablecoins that are decentralized and capital efficient have led to significant price fluctuations, causing depegging and collapse. This led to a compromise to achieve price stability at the expense of decentralization since price stability is a crucial requirement for any stablecoin’s survival and expansion.
Ethereum Reserve Dollar, a fully decentralized protocol, provides a safer solution to the market’s dominant centralized and semi-centralized stablecoins. Its robust liquidation mechanism enables users to borrow USDE in a way that allows immediate liquidation and eliminates the need for liquidators to prepare USDE or engage in a complex auction process.
“Looking back at the collapses of so many failed stablecoins, and the depegging of USDT in 2022 and USDC in 2023, the industry is still searching for a truly decentralized, capital-efficient, and robust solution,” said Steve Hopkins, ERD’s CMO. “ERD is this and so much more; it’s a solution designed to become a truly decentralized reserve asset on the Ethereum network. We believe ERD offers a significant step forward in blockchain and DeFi technology. We’re thrilled to share it with the world.”
In addition, ERD will serve as a governance token and introduce widely distributed decentralized assets on the ETH network, addressing limitations observed in similar protocols, such as those of the Liquidity Protocol.
The team will launch its testnet on June 12, 2023, to allow the public to experience the platform’s unique features and benefits firsthand. Early adopters will also get the opportunity to benefit from the project’s growth.