BEUR is a non-custodial, over-collagenized stablecoin pegged 1:1 to Euro. In contrast with other stablecoins, BEUR is backed by a basket of on-chain digital assets that distributes the collateral risk and allows broader accessibility to DeFi protocols and real-world financial products.
BEUR is designed to be a low-volatility payment coin soft pegged to EUR. Therefore there are several mechanisms embedded into the platform to insure a low price deviation in both directions under normal market conditions.
- Issuance fees: Those fees have an immediate short-term effect on the BEUR monetary policy as the supply is impacted right away. Higher fees make new loans less attractive, decreasing the new generation of BEUR if there is not enough demand to keep up with the supply.
- Redemption mechanism: Arbitrageurs can make instant gains whenever the collateral asset they get in return is worth more than the current value of the redeemed BEUR. Redemptions are triggered automatically by bots facilitating a quick peg recovery.
- Market arbitrage: Bonq has arbitrage bots that run on different exchanges to stabilize the BEUR price. Those bots are open to user participation who want to benefit from arbitrage gains.
- Debt Issuance and Repayment: If the price of BEUR falls below parity by more than the issuance fee, (BEUR < EUR) then users of the platform are incentivized to buy BEUR in order to repay their debt. In the opposite direction, when the price of BEUR goes above parity (BEUR > EUR) by more than the issuance fee, users are incentivized to borrow more in order to purchase assets at a discount.