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Privacy-focused crypto wallet Cake Wallet has added support for dEURO, a decentralized, overcollateralized euro-pegged stablecoin, offering users a way to earn 10% yield on their crypto holdings, without surrendering custody.
The dEURO stablecoin is backed by deposits of major cryptocurrencies like Bitcoin (BTC), Ethereum (ETH), and Monero (XMR). Users can mint dEURO by locking up more value in crypto than they receive in stablecoins, a process known as overcollateralization, designed to protect against volatility and potential de-pegging events.
According to the dEURO team, automatic liquidations are triggered when a user’s loan-to-value ratio drops below safe levels, reducing systemic risk. Meanwhile, yield is generated through stability fees paid by dEURO minters and pooled into a reserve fund that rewards collateral providers.
“This model lets users unlock euro-denominated liquidity from their crypto without having to sell it,” a dEURO representative told Press News.
An illustration on dEURO’s official site outlines how the minting process works, offering transparency on how collateralized euro tokens are issued in a decentralized manner.
Stablecoin Risks Still Linger
Despite being overcollateralized, dEURO enters a space filled with cautionary tales. Algorithmic and decentralized stablecoins — once touted as a cornerstone of DeFi, have frequently struggled with price stability, most famously during the collapse of Terra’s UST in 2022.
UST, which relied on a mint-and-burn arbitrage system with LUNA, offered high returns through Anchor Protocol. But when demand collapsed, its $1 peg fell to near-zero, triggering a historic wipeout across crypto markets.
Unlike UST, dEURO uses collateral backing instead of algorithmic minting. However, even collateralized stablecoins have faced issues. In 2023, MakerDAO’s DAI briefly lost its peg after USDC, one of its core backing assets, fell below $1 during a banking panic.
“No stablecoin is fully immune to volatility or contagion,” said a DeFi analyst at Press News. “But overcollateralized designs offer a layer of defense missing from purely algorithmic models.”
Cake Wallet’s move signals growing demand for euro-pegged options in a decentralized format, especially among users in the EU and privacy-conscious crypto holders looking to stay outside the banking system.
dEURO joins a small but growing group of decentralized stablecoins competing to become the DAI of Europe, but with tighter guardrails to avoid repeating past mistakes.
