3A Lending Protocol
  • 👋Welcome to 3A
    • Quick Start
  • PROTOCOL DOCUMENTATION
    • Lending
      • Vaults
        • Issuance Fee
      • Stability Pool
      • Liquidation
        • Stability Pool Liquidations
        • Dutch Auction
        • Community Liquidations
      • Redemptions
    • EURO3 Coin
      • EURO3 Price Stability
      • WatchDog Bot
    • A3A Token
      • A3A Staking and Cashbacks
      • A3A Rewards
    • 3A Ecosystem Incentives
    • Premium Services
      • Vault Optimization Bot
  • TECHNICAL DOCUMENTATION
    • User Interface
    • Smart Contracts
      • Linea Mainnet Contracts
      • Polygon Mainnet Contracts
      • RedBelly Testnet Contracts
      • API
      • Interacting with contracts
        • Creating a vault
        • Adding and removing collateral
        • Borrowing and Repaying
    • Audit Report
      • Hypernative
    • Bug Bounties
  • WHITELISTING CRITERIA
    • Overview
    • Mandatory Requirements
    • Risk Methodology
      • Fundamental Risk Score
      • Technical Risk Score
      • Market Risk Score
    • Risk Sensitive Parameters
    • Whitelisted Tokens
  • COMMUNITY REWARDS
    • Centurion
    • Referral System
  • GOVERNANCE
    • 3A DAO
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  • COMMUNICATION
    • Contact Us
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  • USER GUIDE
    • Frequently Asked Questions
    • DeFi Glossary
  • BRAND ASSETS
    • Logo Package
    • Color Palette
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  1. PROTOCOL DOCUMENTATION
  2. EURO3 Coin

EURO3 Price Stability

Low volatility around the peg

EURO3 is designed to be a low-volatility payment coin soft-pegged to the Euro. There are several mechanisms embedded into the platform to ensure a low price deviation in both directions under normal market conditions.

  • Issuance fees: Those fees have an immediate short-term effect on the EURO3 monetary policy as the supply is impacted right away. Higher fees make new loans less attractive, decreasing the new generation of EURO3 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 EURO3. Redemptions are triggered automatically by bots facilitating a quick peg recovery.

  • Market arbitrage: Arbitrage bots run on exchanges to stabilize the EURO3 price.

  • Debt Issuance and Repayment: If the price of EURO3 falls below parity by more than the issuance fee, (EURO3 < Euro) then users of the platform are incentivized to buy EURO3 in order to repay their debt. In the opposite direction, when the price of EURO3 goes above parity (EURO3 > Euro) by more than the issuance fee, users are incentivized to borrow more in order to purchase assets at a discount.

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Last updated 1 year ago