In [my previous post](https://peakd.com/hive/@sorin.cristescu/new-features-for-hive-hive), I started with presenting how Hive distributes newly minted tokens in order to introduce the DHF, which is the built-in DAO to fund further blockchain development.

I ended by proposing what I believe should be a prioritary feature to introduce: a **Hive-Backed Euro (HBE)** alongside the HBD.

Now this could be a good idea or a bad idea, **depending how it's implemented**.

But first, **the objectives**. 

1. Offering ["a chance to arbitrage between HBD and HBE"](https://peakd.com/hive/@gadrian/re-sorincristescu-rtm9rx) is not among the objectives I had in mind. As a matter of fact, I tend to think the code should including an "arbitrage bot", that should mop up the most glaring arbitrage opportunities. But because we all like to play and speculate, yeah, sure, why not?
 
2. Being "easier to follow by europeans" and the symbolism of "appearing less US centric" - yes, why not, but **very far from what I consider the core objectives**.

To me, the core objective is to **make Hive a platform on which small businesses in Europe could receives payments from customers**. 

## The power of an actual cryptocurrency
Remember [my post from long ago about paying for beer in luxembourg with SBD](https://ecency.com/cryptocurrency/@sorin.cristescu/historic-evening-first-beer-paid-with-sb-2018-07-13-18-54-42)? One of the reasons the project didn't take off is that the merchant had to shoulder the currency exchange ('FX') risk. His barrels of beer were billed in **euro** and his margins were slender. With **payment in USD** (SBD at the time), **a 3% variation in the EUR/DOL** rate (plus additional friction in the crypto-fiat gateways) and he had to **forgo his margin**, or basically **"work for nothing"**. 

Let's not forget: with the Hive blockchain, we have payment rails which are fast and free (and consume very little RC and storage space). Yet they are underutilized because of volatility. In order to integrate with the fiat economy, you need a stable "medium of exchange", an actual currency, whose value with respect to a basket of goods and services is as stable as possible.

## How would a HBE be implemented?

1. It would start in the interfaces, where users can already choose between being paid "100% HP" or "50% HP and 50% HBD". The interfaces could add a third option "50% HP and 50% HBE" (I know I would choose that option, I guess most people in the Eurozone will do the same as soon as they become aware)

2. At the backend, a robust EUR/DOL oracle needs to be connected. That is not too difficult, anyone can get a very accurate EUR/DOL rate for free from a zillion of reputable sources.

![](https://images.ecency.com/DQmXzVk1UvTih6NAhKtCVHFwyFCJCvNCFL8nBBSkdyo3rWe/image.png)

When the virtual op to pay for an article executes, if the author choice has been to be paid in HBE, the oracle rate is used to mint HBE instead of HBD at the spot EUR/DOL rate. Internally, that oracle can be used at each block (or less often) to compute a global "debt" rate for the haircut rule. Conversions to and from HBE will be possible with the internal EUR/DOL oracle informing the calculation by providing the HBE/HBD ratio. 

3. Users would be able to choose to convert HIVE to HBE (using the HBD rate provided by witnesses multiplied by the much more stable EUR/DOL rate provided by Google or Reuters or the FT or basically any data provider on Earth for free). And similarly HBE could be converted to HIVE by using (internally) the oracle to transform HBE to HBD at the same moment that the HBD/HIVE ratio provided by witnesses is taken.  

4. The most important part is to have a "HBE stabilizer" for users of HBE to be able to sell their HBE instantly on the internal market at a rate as close as possible to 1 eur in Hive. A eurozone business accepting payment in HBE would automate that: as soon as a HBE payment is received, it sells HBE on the internal market (hence **an AMM with ample liquidity** is needed), transfers the resulting HIVE to Binance, sells HIVE to USDT and USDT to EUR (which it accumulates there for use in bulk, possibly through a Binance credit card). While Hive has no transaction fees, all the steps involving Binance introduce friction and transaction fees but these can be dealt with if they end up being less than what VISA and Mastercard charge in fees.

@gadrian writes _"You no longer have one debt token, you have two of them: HBD and HBE"_. Several things come to mind here:
- "So what?" - companies do not have only ONE debt instrument. They issue long term and short term debt at different rates, with different maturities and covenants ... it's just maths that can be coded, there's no wizardry involved.
- As said before, the EUR/DOL rate is probably the cheapest and most reliable piece of financial information one can get. Integrating an internal oracle that uses that info is neither difficult (I believe) nor particularly risky. Then you don't have "two debt tokens" but, for all practical purposes, ONE debt token (because the internal oracle pegs the HBE to HBD easily).

He also writes _"HBD has in fact nothing in common with USD apart from the soft peg to it."_ Hell, yeah ! **That is HUGE!** Because of that soft peg, **TerraUSD attracted tens of effing BILLIONS of inward investment to Luna!!!**

Yes it was a scam and it imploded, but we know HBD is not and has much better mechanisms which protect it from imploding.

Please, read that again: **Luna went from basically nothing to tens of billions of market cap on the back of the _soft peg_ between TerraUSD and USD** and not much more! Well, also some aggressive and deceptive (and fraudulent) marketing ... The demand for a true currency, whose value with respect to a basket of goods and services remains stable, and which avoids the traditional bank payment rails is ENORMOUS.

Also, there needs be no _"change to the tokenomics"_. For all practical purposes, the HBE would be internally converted to HBD. There has to be a buffer for variations, like in a **"currency board"**, a ["strictly rule-based institution"](https://www.jstor.org/stable/j.ctv9hj9kw.10?seq=1) (hence codable in a smart contract) but there are many books and articles on the topic and implementing a currency board is not rocket science:

See for instance [the World Bank](https://documents1.worldbank.org/curated/en/178741468266109391/pdf/multi-page.pdf), [the IMF](https://www.imf.org/external/pubs/ft/wp/wp9808.pdf), the [Review of European Economic Policy](https://www.intereconomics.eu/pdf-download/year/2002/number/2/article/currency-board-dollarisation-or-flexible-exchange-rates-for-emerging-economies-reflections-on-argent.html), [the OECD](https://www.oecd.org/dev/pgd/1816438.pdf), even [NATO has sponsored research](https://www.nato.int/acad/fellow/97-99/pavlov.pdf) on this topic! 

@gadrian ends his comment with _"I wonder if a different solution might be easier to implement"_ 

Sure. But what for? My fault, I didn't state the objective clearly. It's not about "seeing the amounts in euro" (which Ecency already allows). It's about **using Hive for B2C payments in the Eurozone**. A small business can choose to accept instant payments on Hive if they are ultimately cheaper, faster and less reversible than credit card payments. 

A Eurozone small business pays its suppliers in euros. It can't accept payment for its products in dollars because of the unacceptable currency exchange risk this introduces. It wants to be paid in euros as well. For this, you need a "euro-stablecoin". The HUGE advantage of implementing such a cryptocurrency on Hive is the **absence of transaction fees**.