"It's the new wave of DeFi", "The project that was missing in Europe"... There is no shortage of superlatives about Angle, the decentralized stablecoin protocol imagined a few years ago by a certain... Pablo Veyrat, who graduated from the Ecole Polytechnique in 2020 and went on to the prestigious American university of Stanford.
"The Best Young Talent award is a great recognition for what we do, I hope it will give more exposure to a project that is still in its infancy," testifies the 26-year-old entrepreneur. "We still have a lot of hunger and a lot of things to show".
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As opposed to centralized stablecoins, decentralized ones like the one issued by Angle, the agEUR, have several advantages. First of all, they are less sensitive to censorship since no centralized entity controls them. Then their underlying assets can be quite diverse. "They can be created from more varied assets, which makes it possible to develop many more applications around and in particular return", indicates the entrepreneur on which bet the famous American venture capital fund Andreessen Horowitz.
A project based on the euro
The way it works is reminiscent of MakerDAO, one of the largest decentralized finance projects and issuer of the DAI dollar stablecoin. We are quite close to Maker," says Pablo Veyrat, "except that we are focused on the euro and think we have found the solution to make its mechanism more efficient.
On Maker, every DAI created is backed by a 150% crypto equivalent guarantee. This is necessary to ensure that the stablecoin keeps its indexation against the dollar in case of price volatility. Problem: it's inefficient in terms of capital raised.
Angle's idea is to allow anyone to create an agEUR by placing only the equivalent amount as collateral. To absorb volatility, a market place internal to the protocol (the Core Module) issues futures contracts in which traders position themselves with leverage. "This allows Angle to constantly maintain a reserve value equivalent to that of the agEUR in circulation," explains Pablo Veyrat.
For the time being, it is mostly dollar stablecoins that make up Angle's reserve (mostly USDCs). Eventually, the reserve could be used to acquire more traditional assets -such as sovereign bonds or ETFs- to provide returns to agEUR holders.
Is it enough to replace Maker? No, of course not.
Maker has more than $7 billion under management while Angle has "only" $55 million. Nevertheless, the French-origin protocol has some serious assets to pull its weight and shape the next generation of decentralized stablecoins.
"To improve adoption, we will have to offer better products than what is currently built around the dollar," insists Pablo Veyrat. "I am thinking in particular of savings and investment solutions, with rates 2-3% higher than the market, which could attract institutional players."
Eventually, corporate bonds could also be deposited in Angle in exchange for the creation of new agEUR. "Then we would have a real-life use case for DeFi, which currently amounts to a closed circle that doesn't serve much purpose," he continues.
The big question around Angle remains the question of regulation. "This type of project is still under the radar, but it is not impossible that the authorities will one day look into it", says a specialized lawyer.
On Pablo Veyrat's side, the strategy is to move forward with a clear face. "We want to create an infrastructure that meets the needs of traditional finance, we focus on protocol compliance."