I hope you are all well and are had an excellent week, welcome to CryptoGod-1’s blog on all things crypto. There was some big news in Europe recently as Societe Generale announced the creation of a Euro backed stablecoin on the Ethereum network.
Societe Generale
A major bank in France, Societe Generale are one of Europe's leading financial services groups. They claim to have over 117,000 staff in 66 countries while also being established with over 25 million clients. They boast a €5.6 Billion net income while they aim to protect and manage assets and savings, finance projects, protect clients in their both their day-to-day lives and in their professional activities, ensure secure transactions and offer the best technological solutions available to their clientele.
They were founded on the 4th of May 1864, when Napoleon III signed Societe Generale’s founding decree. The group behind Societe Generale were a group of industrialists and financiers driven by the ideals of progress, and the Bank’s mission has always been "to promote the development of trade and industry in France". Their network of branches grew rapidly throughout the French territory, increasing from 46 to 1,500 branches between 1870 and 1940 as they followed the model of a diversified bank at the cutting edge of financial innovation.
Euro Backed Stablecoin
The announcement that the stablecoin will be for Euro and on the Ethereum network is certainly creating a bullish case, not just for the stablecoin, but also for Ethereum. The news comes in a week where Ethereum has just successfully navigated the Shanghai upgrade and this should be further validation for the thriving network. It also notes how major financial institutions are looking at crypto as a viable space to move into, with Ethereum their preferred network of choice.
While ETH has fallen in price over the recent days, it still saw a recent high of $1,920 as the crypto looks to push back towards its highs of 2021. Of course the entire market required a correction, and there are many who are pushing for the better days to return sooner rather than later. When considering the almost complete first four months of the year, crypto in general has been soaring compared with its downwards spiral of 2022.
The news of a Euro based stablecoin, one which has been long touted and needed in the space to further entice the European market can only be seen as a positive. With almost everything in the crypto space currently backed against the U.S. dollar, having a Euro based stablecoin could help to expand use cases and options for those in Europe without having to also negotiate the fluctuation between Euro / Dollar on top of the volatile crypto market.
Flaws in the Smart Contract
Not everyone is impressed by the news, and many have been quick to point out a number of flaws discovered in the smart contract of the coin. A group of crypto developers have scanned the smart contract of EURCV and noted how the coin would be limited to investors onboarded by Societe Generale group through its existing compliance procedures. A Software engineer, named Cygaar on Twitter, noted how the bank could effectively take and burn all of a users coins through certain functions within the smart contract.
The flaws do not end there, in fact the worst is yet to come. Another Twitter user, named 0xfoobar, noted how the smart contract would require every single ERC20 transfer to first be approved by the centralized registrar in a separate ETH transaction before it can be processed. In other words, it would work like a normal banking transaction where it would need to be approved by the central system before the transfer takes place.
Finally, Origin Protocol developer Scott Mitchell added that to scale to a level where they could process that number of transactions is basically impossible on ETH. It would slow down the entire process and with the varying price in gas fees, could end up being too expensive to function correctly.
From my understanding the process would only be available during banking hours and banking work days, basically taking the freedom away from crypto and making it a regulated process. While it is important to have more players enter the space, having a regulated and basically anti crypto stablecoin like this does not seem like the correct solution. Only time will tell to see how it works out, and there could be a worry that Europe (via the EU) are considering regulations which means users can only onboard and offboard their crypto through a system like this, but that is only speculation on my end).
Have a great day and enjoy your week ahead.
CryptoGod-1.
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