Ethereum Reserve Dollar (ERD), the decentralized lending protocol, launched its USDE stablecoin protocol today following nearly one year of development. ERD is a lending platform that allows users to borrow USDE, a USD-pegged stablecoin native to the platform, using liquid staking derivatives (LSDs) and blue-chip DeFi tokens as collateral. The protocol maintains a minimum collateralization ratio of 110%, striking a balance between decentralization, capital efficiency, and price stability.
In the fast-paced world of blockchain and cryptocurrencies, the demand for fully decentralized stablecoins is growing. The challenge has been to simultaneously achieve capital efficiency, price stability, and decentralization, a combination that has proven difficult to achieve.
Numerous attempts have been made to create stablecoins that are both decentralized and capital efficient. However, these efforts often led to significant price fluctuations, causing depegging and collapse. The industry has thus been left with a choice between capital efficiency and decentralization, with price stability being a fundamental requirement for any stablecoin's adoption.
Ethereum Reserve Dollar is designed to address these challenges. The ERD protocol is fully decentralized, providing a safer solution to the dominant centralized and semi-centralized stablecoins in the market. It leverages instant redemptions to maintain price parity and secures loans with a Stability Pool containing USDE, which allows for immediate liquidation and bypasses the need for liquidators to prepare liquidity or engage in a complex auction process.
The ERD team also uses the principles of modern financial theory to create a more resilient stablecoin. Upon initial launch, the ERD protocol supports LSDs as collateral. However, the project will be the first lending protocol to introduce collateral support for a basket of top DeFi altcoins in its upgrade coming in the first quarter of 2024. This addition aims to transform $USDE into an index-backed stablecoin that mirrors the market dynamics of the greater DeFi ecosystem, thereby leveraging diversification to reduce exposure to single collateral price volatility.
Notably, the ERD team is delaying the launch of a governance token to initially focus on sustainable protocol development and expansion. This is a stark contrast from standard industry practices, which have been known to launch early-stage fundraising campaigns centered around governance tokens at the cost of long-term ecosystem health.
“The industry is still searching for a viable solution to the need for a stable store of value on-chain that upholds the core tenet of blockchain technology – decentralization,” 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.”
Following a successful launch of its decentralized lending protocol, the ERD team will launch a two-week mining campaign on 7 December 2023. Miners, Stability Pool depositors, and active community members will compete for points, which will be recorded and considered at a later date.
For more information about the ERD protocol and the upcoming event schedule, follow the project on Twitter at @Ethereum_ERD. Experience the decentralized lending platform built for the uncertainties of tomorrow at https://app.erd.xyz.
About Ethereum Reserve Dollar:
ERD is a decentralized lending protocol that enables users to borrow in USDE, a stablecoin pegged to the US dollar, using specified LSDs and blue-chip DeFi tokens as collateral. It offers a minimum collateralization ratio of 110% and secures loans with a stable pool containing USDE and other Ethereum-based assets.
ERD aims to address the dominance of centralized stablecoins and offer a truly decentralized, capital-efficient alternative. The benefits of ERD include low variable interest rates, high capital efficiency, direct redemptions, and decentralization. Its goal is to become a truly decentralized reserve asset on the Ethereum network.
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