Hey Edge readers,

This week we are shifting focus from dollars and Bitcoin to the euro. The past year has been a turning point for the euro. EUR/USD is having its strongest year since 2017, euro savings rates have finally come alive after a decade of near-zero yields, and euro stablecoins like EURC are carving out space in DeFi. For investors, this raises an important question: how does a stronger euro and the rise of onchain euros change where you might want to park your money?

Stay sharp. 🫡

-The Exponential team

The euro’s next frontier is onchain

Disclaimer: This content should not be taken as financial advice. Always do your own research before making any investment decisions.

The euro has quietly staged one of its strongest comebacks in years, and it’s changing how investors think about holding euros, both in banks and onchain. Over the past twelve months, the currency has swung from weakness to strength, driven less by European outperformance and more by cracks in the dollar’s dominance.

At the start of 2025, the euro traded as low as $1.03, weighed down by Fed tightening and global risk concerns. However, by mid-year the trend reversed sharply, surging to nearly $1.18, outperforming the dollar by 13%+ this year and making it the euro’s strongest run since 2017. This rally hasn’t been fueled by booming growth in Europe, but rather by expectations of Fed rate cuts, concerns over U.S. debt and tariff policy, and relief from falling energy costs. In short, the story of the euro’s resurgence is the story of the dollar’s stumble.

Looking ahead, the consensus outlook leans modestly bullish on the euro. Most analysts expect the euro to hold or gradually extend its gains into 2026. Most forecasts estimate the currency to be around $1.18 in six months and $1.20 in a year, while J.P. Morgan has called for 1.22 by early 2026. The base case is that U.S. rate cuts (to support a cooling economy) will modestly weaken the dollar, while the euro benefits from a more stable rate environment in Europe and reduced tail risks (like improved trade relations and no new Eurozone crises).

But risks cut both ways. A renewed European slowdown or political instability could quickly weigh on sentiment, while stronger U.S. inflation data could force the Fed to stay hawkish, reviving dollar strength. For now, traders expect the euro to remain choppy but resilient.

Earning yield on euros

The return of yield has been another quiet shift for euro holders. After a decade of near-zero rates, banks and fintech platforms now offer positive returns on deposits. Neobanks like N26, Wise, and Klarna pay around 2-2.5% on savings, while traditional banks are slower to adjust, with many still offering 1-2% on savings accounts. Yet with euro area inflation hovering near 2% as of August, real returns remain slim. And with the ECB (European Central Bank) beginning to cut rates, these yields may already be near their peak.

Moving to the onchain ecosystem, euro stablecoins are finally finding their moment. Circle’s Euro Coin (EURC) has emerged as the frontrunner, with supply more than doubling in 2025 to surpass €200M (~$240M). It has benefitted both from Europe’s new MiCA regulations, which cleared compliant players while pushing out competitors like Tether’s EURT, and from a broader push by investors to diversify away from the dollar. EURS, the long-standing Stasis euro token, remains sizable at roughly €124M (~$144M), while decentralized options like Angle’s agEUR have seen their share shrink.

The growth isn’t just in supply but in usage across DeFi. On Aave and Morpho, lending EURC earns around 3.5-4% APY, comfortably above what most banks offer, as utilization has picked up on EURC borrows. Euro stablecoins have also seen its highest trading volumes in recent months, signaling that onchain euro activity and liquidity is improving. Protocols like YO, Tokemak and Stream have recently launched their own tokenized EUR savings accounts that automates yield for end users. Overall, euro stablecoins are still tiny compared to its USD counterparts (just ~0.19% of USD stablecoin market cap), but the momentum and trend is clear.

TL;DR

• yoEUR, the first multichain euro-denominated stablecoin vault, is live!

• Applications are open for the YOligarchy Ambassador Program.

• New incentives for lending WETH & USDC to our Morpho markets.

• yoVaults now available through YieldXYZ API, Axal, and Extra Finance.

🔗 Check out the full article.

In the news 🗞️

• ArbitrumDAO incentivizes DeFi growth with 24M ARB campaign. ArbitrumDAO has launched season one of its $40M DeFi Renaissance Incentive Program (DRIP), distributing up to 24M ARB to boost lending and borrowing activity on the network. The program’s first season focuses on leveraged looping strategies with ETH and stablecoins, with incentives flowing to protocols like Aave, Morpho, Fluid, Euler, Dolomite, and Silo. DRIP spans four seasons with a total of 80M ARB earmarked to drive liquidity, capital efficiency, and innovation across Arbitrum’s DeFi ecosystem.

• Race to issue Hyperliquid USDH stablecoin is heating up. Stripe’s Bridge proposal to issue USDH is facing pushback as MoonPay, Agora, Paxos and Frax submit competing bids to control Hyperliquid’s planned stablecoin. Critics argue Stripe’s ties to its own Tempo blockchain pose conflicts of interest, while rivals promise stronger community alignment. Proposals range from Paxos directing reserve interest to HYPE buybacks to Frax pledging to return all USDH earnings to users.

• Tokenized gold to add DeFi yield for U.S. retirement investors. SmartGold has partnered with Chintai Nexus to let retirement savers tokenize IRA-held gold and deploy it in DeFi protocols like Morpho and Kamino, while keeping tax-deferred status intact. The move transforms gold from a passive safe-haven asset into collateral that can unlock liquidity and earn yield, addressing a long-standing trade-off for IRA investors. With $1.6B in vaulted assets eligible, it marks one of the largest tokenized gold rollouts to date.

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