Hello,
This is a proposal to mint EURA using 533,962 EURC the protocol has in its EURA treasury multisig.
Context
The balance sheets of EURA and USDA are independent. As part of the launch of USDA, excess treasury from EURA backing was moved in a dedicated 4/6 multisig to effectively separate the backing of the 2 stablecoins.
For EURA, the multisig is deployed here.
Recently, the end of the STIP incentives combined with the drastic reduction in the ANGLE incentives for EURA holders have lead to a reduction in the total supply of EURA. In particular, EURA were burnt for EURC, which lead the exposure to EURC in the backing to decrease to 7.35%.
While there is still some substantial capacity to burn EURA for EURC, EURC is also poorly arb-ed on the seconary market, which leads EURA to sometimes trade below 1€ even when it’s perfectly collateralized by EUR assets, and enjoys an important equity buffer.
Also, while Transmuter could effectively sell some tokenized securities to rebalance its exposures to EURC and go back to the desired 30% threshold, we suggest here to increase the EURC exposure by simply minting some EURA with EURC the protocol controls in other places.
This would increase the size of the buffer for people to exit with their EURA
Note that in any case, anyone may still burn EURA for some of the tokenized securities held in the backing. And at the same time, there should be demand to mint some EURA with the higher stEUR yield
Proposal
The proposal is to mint EURA with 533,962 EURC held by EURA Treasury multisig and deposit the minted EURA on the Treasury multisig.
Implementation
The Treasury multisig will just use Odos to take advantage of the best prices on the mark
The advantage here is that the management policy for the treasury behind EURA will become the same as the global policy for the protocol. At the same time, it’ll increase the EURA total supply!