eUSD is a stablecoin pegged to the US Dollar, backed by an excess of ETH collateral, and issued in a decentralized and unbiased manner. It is issued by Lybra Protocol, a decentralized platform designed to introduce stability to the cryptocurrency space. ^[1]

Overview

eUSD is a censorship-resistant, fair, and transparent stablecoin built on the Lybra Finance protocol. Using only ETH and stETH as collateral with an excess collateral ratio of 150% to maintain safety and decentralization, eUSD generates stable interest powered by LSD (Liquid Staking Derivatives). eUSD is yield-bearing, with an APY (Annual Percentage Yield) of approximately 8%, unlike USDT, USDC, LUSD and DAI. ^[2]

eUSD Technology

eUSD stability is maintained through a combination of over-collateralization, liquidation mechanisms, and arbitrage opportunities. These factors work together to ensure that the value of eUSD remains close to its 1 USD peg.

Each 1 eUSD is backed by at least $1.5 worth of stETH as collateral. Overcollateralization helps maintain stability by ensuring that the value of the underlying collateral is greater than the value of the eUSD issued. Arbitrage opportunities arise when the eUSD price deviates from its 1 USD peg. Users can take advantage of these price discrepancies to make a profit and help restore the eUSD price to its intended value. If the eUSD price exceeds 1 USD, users can mint new eUSD by depositing ETH as collateral and then sell the newly minted eUSD on a DEX. As more eUSD is sold, the market supply increases, pushing the price back down to 1 USD.

How eUSD Generates Interest

Deposited ETH is automatically converted to stETH through the Lybra Protocol. (stETH is an ERC-20 token representing ETH staked with Lido) One stETH can always be exchanged for one ETH, and due to the LSD (Liquidity Staking Derivatives) process, stETH will continue to grow over time. ^[4]

Increased income from stETH is converted to eUSD based on the USD value of ETH at that time A certain percentage of the increased income is shared proportionally among LBR (native token of the Lybra Protocol) holders. The remaining income is distributed to eUSD holders, with a base APY of approximately 8%. ^[4]

Lybra Protocol

The Lybra Protocol, launched on April 24, 2023, is a decentralized protocol designed to bring stability to cryptocurrency. Built on LSD (Liquid Staking Derivatives), the protocol initially leverages Lido Finance-issued ETH proof-of-stake and stETH as its primary components, with plans to support additional LSD assets in the future. ^[1][5]

Lybra facilitates the minting of eUSD by allowing users to borrow against their deposited ETH and stETH. ^[1]

Lybra Protocol allows users to earn regular stable income by holding minted (borrowed) eUSD. When users deposit ETH or stETH and mint eUSD against them, they receive a stable income in stETH of approximately 5%, which is converted to eUSD through the protocol and distributed to them. ^[5]

Lybra Stability Fund utilizes the excess eUSD that accumulates from the Advanced Vesting Bounty and the dLP Bounty to maintain the eUSD peg. By depositing ETH into the Lybra Protocol, the deposited ETH can be used as collateral to mint/borrow eUSD at a healthy mint ratio for use in DeFi at any time. ^[3]