Electronic Dollar (eUSD) is a decentralized stablecoin designed to maintain a 1:1 peg with the U.S. dollar. It is built on the Reserve Protocol and operates as a multi-chain asset on Ethereum, Base, Arbitrum, and MobileCoin. The stablecoin is asset-backed by a basket of other digital assets held on-chain. Key features of eUSD include its decentralized governance structure, censorship-resistant design, and a system of overcollateralization provided by the Reserve Rights (RSR) token. ^{[1] [2]}​

Overview

Electronic Dollar (eUSD) was developed as a decentralized alternative to centrally-issued stablecoins. As a product of the Reserve Protocol, it is an implementation of a "Decentralized Token Folio" (DTF), also known as an "RToken." The Reserve Protocol is a permissionless platform that allows anyone to create asset-backed, yield-bearing, and governed digital currencies. eUSD is specifically categorized as a "Yield DTF," meaning its collateral is deployed in decentralized finance (DeFi) protocols to generate yield. ^{[3] [4]}​

The core design of eUSD aims to address potential censorship and single points of failure present in other stablecoins. Its operations, including issuance (minting) and redemption, are managed by smart contracts rather than a central entity. Governance over the stablecoin's parameters, such as the composition of its collateral basket, is controlled by the holders of the Reserve Protocol's utility token, Reserve Rights (RSR). This framework is intended to create a stable currency that can be held and used permissionlessly. ^[2]​

The value of eUSD is maintained through a combination of full on-chain collateralization and an overcollateralization insurance mechanism. Each eUSD token is backed 1:1 by a basket of assets, primarily consisting of other established stablecoins. The protocol's stability is further reinforced by staked RSR tokens, which serve as first-loss capital in the event of a default in one of the underlying collateral assets. This dual-token system (eUSD and RSR) is central to its economic model, where RSR stakers earn a portion of the revenue generated by the collateral in exchange for providing security to eUSD holders. ^{[5] [3]}​

History

The Reserve Protocol, the underlying technology for eUSD, was co-founded by Nevin Freeman (CEO), Matt Elder (CTO), and Miguel Morel. The development of the protocol and its associated interfaces has been led by ABC Labs. ^{[6] [4]}​

Reserve Protocol officially announced the launch of Electronic Dollar (eUSD) on November 8, 2022, introducing it as the first RToken on the platform. The stablecoin went live on the Ethereum mainnet on January 10, 2023. ^{[6] [2]}​

Following its initial launch, eUSD expanded its presence to other blockchains to provide users with lower transaction fees and faster performance. It became available on the Base blockchain on August 11, 2023, and later launched on the Arbitrum network on October 11, 2023. An integration with the privacy-focused MobileCoin network was also established to facilitate private and efficient mobile payments. ^{[6] [7]}​

On May 22, 2024, the cryptocurrency exchange BitMart announced the listing of eUSD, enabling deposits and trading for the eUSD/USDT pair. This added to its availability on various decentralized exchanges like Curve Finance and Aerodrome. ^{[1] [2]}​

Mechanism of Operation

The functionality of eUSD is based on the framework provided by the Reserve Protocol. This framework allows for the creation of asset-backed tokens with customizable parameters and governance structures.

Reserve Protocol Framework

The Reserve Protocol is a permissionless platform for creating on-chain, asset-backed tokens called Decentralized Token Folios (DTFs). These DTFs are analogous to traditional Exchange-Traded Funds (ETFs) but are composed of crypto assets and managed by on-chain smart contracts. Anyone can deploy a new DTF by interacting with the protocol's factory contracts. ^{[3] [4]}​

There are two primary types of DTFs:

• Yield DTFs: Designed for stablecoins and yield-generating strategies. These DTFs autonomously manage the yield generated by their collateral assets, harvesting and distributing earnings according to rules set by governance. They include a layer of overcollateralization provided by staked RSR. eUSD is a Yield DTF.
• Index DTFs: Optimized for creating diversified indexes of multiple tokens. They have a more lightweight structure to efficiently manage broad market baskets with minimal overhead. ^[4]

Collateralization and Yield Generation

eUSD is fully backed 1:1 by a basket of other tokenized assets held in smart contracts. The composition of this basket is dynamic and can be altered through governance proposals voted on by RSR stakers. Initially, the collateral consisted of a mix of fiat-backed stablecoins such as USDC, TUSD, and USDP. Over time, the basket has evolved to primarily include yield-bearing "receipt tokens" from established DeFi lending protocols. ^{[2] [6]}​

As of late 2025, the collateral portfolio includes assets such as:

• cUSDCv3 (Compound v3 USDC)
• cDAIv3 (Compound v3 DAI)
• sFRAX (Staked Frax)
• aUSDC (Aave v2 USDC) ^{[8] [1]}

These collateral assets are deposited into lending protocols like Aave and Compound, where they generate yield. This yield serves as the primary source of revenue for the protocol. A portion of this revenue is distributed to RSR stakers as a reward for providing insurance, while the remainder can be directed to other uses as determined by governance. ^[2]​

Peg Stability and Arbitrage

The 1:1 peg to the U.S. dollar is maintained through an open-market arbitrage mechanism facilitated by the protocol's minting and redemption functions. ^[5]​

• Minting: Users can create new eUSD by depositing $1 worth of the required collateral assets from the basket into the Reserve Protocol's smart contract.
• Redeeming: Users can burn eUSD to receive a proportional share of the underlying collateral assets, valued at $1 per eUSD.

This process creates arbitrage opportunities that keep the market price of eUSD close to its peg:

• If eUSD trades above 1 worth of collateral and sell it on the market for a profit. This increases the supply of eUSD, applying downward pressure on its price.
• If eUSD trades below 1 worth of a collateral, securing a profit. This reduces the supply of eUSD, applying upward pressure on its price. ^[5]

Overcollateralization and Insurance

​eUSD is overcollateralized by the Reserve Rights (RSR) token. RSR holders can stake their tokens on eUSD to provide a layer of insurance, acting as "first-loss capital." In the event that a collateral asset within eUSD's backing defaults or de-pegs, the staked RSR would be automatically sold by the protocol to recapitalize eUSD, thereby making its holders whole and maintaining the peg. In exchange for taking on this risk, RSR stakers earn a portion of the yield generated by eUSD's collateral basket. This aligns the incentives of RSR stakers with the long-term stability and security of eUSD. ^{[3] [2]}​

Governance

The Electronic Dollar is governed in a decentralized manner by the holders of the Reserve Rights (RSR) token. This contrasts with centrally issued stablecoins, where a single company controls all decisions. RSR holders who stake their tokens can vote on all configuration changes for eUSD. ^[2]​

Governance proposals can cover a wide range of parameters, including:

• Adding or removing collateral assets from the backing basket.
• Adjusting the weights of different collateral assets.
• Changing revenue distribution models.
• Modifying risk parameters and other system settings.

Voting takes place on-chain and can be accessed through platforms like Tally and the Reserve Protocol's native interface, the Reserve Register. ^[9]​

To protect against malicious governance attacks, the protocol includes emergency safeguards. These include a 2-of-3 multisig controlled by ABC Labs and a governance timelock, which have pauser/freezer roles. These safeties allow for the veto or temporary pause of governance actions in an emergency. ^[3]​

A quote from the introductory blog post highlights the project's philosophy on decentralization:

"eUSD is decentralized, meaning no single entity can control it or halt its operation. It is community-governed, with Reserve Rights (RSR) stakers voting on all changes to its configuration. And it is censorship-resistant, providing a stable currency that can be held and used by anyone, anywhere." ^[2]

Adoption and Ecosystem

eUSD has been integrated across multiple blockchain networks and DeFi applications. As a multi-chain asset, its use cases vary depending on the specific features of each network. ^[1]​

Multi-Chain Presence

• Ethereum: As an ERC-20 token, eUSD is primarily used within the DeFi ecosystem for yield generation, liquidity provision, and as a stable store of value. ^[7]
• Base and Arbitrum: The deployments on these Layer 2 networks offer users lower transaction fees and faster settlement times compared to the Ethereum mainnet. ^[2]
• MobileCoin: The integration with MobileCoin focuses on private, fast, and low-cost digital payments optimized for mobile devices. Transactions on MobileCoin utilize end-to-end zero-knowledge encryption and have a flat fee, paid in eUSD. ^[7]

The official smart contract addresses for eUSD on its primary networks are:

• Ethereum: 0xA0d69E286B938e21CBf7E51D71F6A4c8918f482F
• Base: 0x580425b8650453337e541ce140285a8523f5b8ec
• Arbitrum: 0x44272f25a9590623a3e5aa3758b29f0e1d898517 ^[2]

Applications and Integrations

eUSD has been integrated into various applications for payments and DeFi. Mobile applications such as UglyCash and Sentz utilize eUSD for sending, spending, and saving. In the DeFi space, eUSD is used in protocols like Morpho, where users can borrow eUSD against other stablecoin collateral on the Base network to engage in leveraged stablecoin farming strategies. ^{[3] [9]}​