What is Anchored Euro (AEUR)?

Introduction

The Euro is the second-largest reserve currency and the second-most traded currency in the world after the United States dollar, accounting for a daily average volume of nearly US$1.1 trillion.

AEUR is a Euro-backed stablecoin and payment token issued by Anchored Coins AG that provides users access to a stable asset for on-chain transactions.

This article delves into the Anchored Coins Euro project, how it works, and its relationship with the Euro.

What is Anchored Euro?

Source: Anchored Coins

AEUR is a Euro-collateralized stablecoin issued by Anchored Coins AG which claims that for one token in circulation, they have one euro in reserve, maintained by an appointed reserve bank and independently audited by Prescient Assurance LLC, USA.

Users buying AEUR directly from Anchored Coins go through Know Your Customer (KYC) and Anti-Money Laundering (AML) checks similar to those carried out on centralized exchanges. These processes involve collecting users’ personal information, including a copy of their government-issued identification document.

Once in circulation, anyone can send and receive stablecoins. Although Anchored Coins have the power to freeze funds on addresses, as instructed by law enforcement to aid investigations or recover stolen funds.

Note: The ticker symbol “AEUR” was also used by a defunct stablecoin owned by Ardorgate.

AEUR Tokenomics

Source: Anchored Coins

The AEUR is a stablecoin with 66,709,604.60 tokens in circulation at a market cap of $72,498,515 as of this writing. Each token confers a 1:1 redemption claim against Anchored Coins, backed by EUR held in an appointed reserve bank.

Brief History

Founded in 2022, Anchored Coins, formerly known as Damoon Technologies is a Swiss digital asset company founded by seasoned entrepreneurs with extensive experience in financial services. This dynamic group boasts a proven track record of cultivating market leaders within the digital assets industry. Led by Calvin Cheng, a prominent Singaporean investor and the former Chairman of ReTech Technology Co, a publicly listed EdTech firm on the Australia Stock Exchange (ASX).

Anchored Coins was granted membership in Switzerland’s Financial Services Standard Association, or VQF, in early 2023. The VQF is officially recognized by FINMA (The Swiss Financial Market Supervisory Authority). The AEUR stablecoin launched in December 2023.

Anchored Coins AG also owns ACHF, a Swiss Franc-backed stablecoin.

Partnerships

Anchored Coins has partnered with DCS Card Centre, a financial institution licensed to issue credit cards or charge cards in Singapore. DCS Card Centre will accept AEUR as a form of collateral placement for credit limits on its cards.

Advantages of Anchored Euro

Borderless Transactions

AEUR can simplify domestic and international transactions making them quicker, cheaper, and more efficient than traditional systems.

Compliance

AEUR is fully compliant with the laws of Switzerland, as the issuing company is a member of the Swiss self-regulatory organization VQF (Verein zur Qualitätssicherung von Finanzdienstleistungen) and recognized by FINMA.

Diversification

The stablecoin market is heavily dominated by the United States dollar-backed stablecoins. Diversifying into a euro-backed stablecoin can enable investors to hedge against unfavorable economic disruptions that might impact the dollar.

Disadvantages of Anchored Euro

Centralization

AEUR is anchored to the Euro, a fiat currency, and is backed by a centralized financial institution, making it more vulnerable to security risks, harsh regulations, and unfavorable economic policies.

Restrictions

According to its whitepaper, the use of AEUR is prohibited in some countries such as The United States of America, Belarus, Burundi, Burma (Myanmar), Democratic People’s Republic Of Korea (DPRK), Guinea, Guinea Bissau, Haiti, Iran. Ensure you check the whitepaper for the full list of prohibited countries.

Lack of Transparency

Users will need to accept the issuer’s claim in good faith, even if they don’t always have sufficient funds in reserve.

How Does Anchored Euro Work?

Source: Coin98

AEUR operates as a fiat-backed stablecoin, designed to mirror the value of the Euro. Anchored Coins, the issuer, guarantees the stability of AEUR by maintaining a reserve of liquid assets held in Flow Bank SA. FlowBank SA is a fully licensed online bank based in Switzerland offering multi-asset trading, a financial investment application platform as well as consulting services.

The AEUR is issued natively on Ethereum and BNB Smart Chain, which follow the ERC-20 and BEP-20 token standards, respectively. These blockchains employ consensus mechanisms such as Proof of Stake (PoS) or Proof of Staked Authority (PoSA) to confirm transactions, ensuring immutability and transparency.

The Anchored Euro Smart Contract

On the Ethereum and BNB Smart Chain, the stablecoins are coded in the form of smart contracts, providing them with trustless and seamless settlement capabilities. AEUR smart contracts are audited by PeckShield, an independent and reputable smart contract auditor.

Anchored Coins plans to issue the stablecoins natively on additional blockchains, to increase their accessibility to developers and end-users, provided the blockchains meet the specific criteria such as technical diligence, market adoption, and risk evaluation.

The Smart Contract deployed by Anchored Coins controls the following technical functionalities:

• Minting: The process of creating new tokens.
• Burning: The process of destroying tokens by sending them to a burn or eater address. Anchored Euro is technically only able to destroy tokens in its possession.
• Pause/unpause: ‘Pause’ prevents all transfers of tokens until the ‘unpause’ function is called. Anchored proposes to deploy this function in exceptional circumstances only as reasonably determined in Anchored’s discretion (e.g., in case of a court order or a hard fork).
• Freeze/unfreeze: ‘Freeze’ prevents the transfers of tokens held on a specific address until the ‘unfreeze’ function is called. Anchored proposes to deploy this function if compelled by a court, a regulator, or other governmental authority of competent jurisdiction over Anchored Coins, or in accordance with laws or regulations applicable to Anchored Coins to freeze or unfreeze tokens.

Industry Product Comparison

For a better understanding of the operation of Anchored Euro (AEUR), let’s look at related projects offering similar services.

EURS (STASIS EURO)

Source: CoinMarketCap

EURS is also a euro-backed stablecoin available on Ethereum, Polygon, Algorand, XDC, XRP and Stellar. Owned by Stasis, a European fintech company that designs user-oriented Web3 tools allowing institutional and retail clients to handle digital currencies and public blockchains with elegant simplicity.

EURS arrived in the stablecoin market in 2018 and has grown to a market cap of $135,151,377, with over 124 million EURS tokens issued.

The EURS’ current edge over the AEUR is its compatibility with multiple blockchains and issuance of more tokens.

EURC (EURO CIRCLE)

Source: Circle

The Euro Circle (EURC) is a euro-backed stablecoin available on Avalanche, Ethereum, Solana, and Stellar. EURC is issued by Circle under a full-reserve model. i.e. the full amount of each customer’s demand deposits is always available for immediate withdrawal. The EURC is 100% backed by Euros held in euro-denominated banking accounts so it’s always redeemable 1:1 for Euros. EURC has issued over 51 million EURC tokens, with a market cap of $56 million.

Anchored Euro has a larger reserve in comparison, although EURC is available on more blockchains.

cEUR (CELO EURO)

Source: CoinMarketCap

The Celo Euro (cEUR) is a stablecoin pegged to the value of the Euro, built on the Celo blockchain by Mento Protocol, to provide a stable asset to users of the Celo blockchain and bridge that connects Celo to other chains.

The cEUR reserve is backed by a combined system of algorithms and a portfolio of cryptocurrencies (Celo’s native asset CELO, other digital assets, and other stablecoins) to expand and contract the supply cEUR. It has issued 11,128,148 CEUR tokens, with a market cap of $12,073,058.

Anchored Euro has a larger reserve and is relatively more stable than the Celo Euro which is backed by cryptocurrencies and algorithms.

Is AEUR a Good Investment?

Generally, stablecoins are not considered investment products, however, the AEUR can be used as a store of value as the issuers guarantee that users can redeem their funds via their reserve bank in the unlikely case of bankruptcy. Potential investors must also factor in the economic policies of the European Union that could affect the price of the Euro (€).

Investing in AEUR like any other cryptocurrency, carries certain risks, including the volatility of the cryptocurrency market and potential regulatory changes. Investors should always do their own research and assess their risk tolerance before investing in any cryptocurrency.

How to Own AEUR

You can own AEUR token by purchasing through either a centralized or decentralized crypto exchange. As of the time of writing, AEUR is yet to be listed on Gate.io. The issuing company also provides direct minting of tokens which are available to professional investors via its website, provided they comply with Know-your-customer, anti-money laundering, and counter-terrorist financing laws.

It is important to note that there might be transaction fees incurred when utilizing AEUR, which are subject to the terms and conditions specified by the underlying blockchain and the trading platforms used.