Equilibrium | Cross-chain money market based on Substrate
Equilibrium is a Substrate-based project for cross-chain DeFi. Equilibrium is allowing to trade, stake, lend or borrow all the main crypto assets including stablecoins. Actually, Equilibrium can simply become Uniswap for stablecoins in the close future since it’s joining the first batch of parachain auctions on Polkadot.
What is Equilibrium and how does it work?
Equilibrium is a cross-chain money market. Cross-chain means that it allows trading and using all the connected blockchains such as Bitcoin, EOS and in the future Ethereum, Binance Smart chain, Cosmos, Tezos, Ripple, Tron and once Equilibrium will have its own parachain slot, also all the tokens from the Polkadot ecosystem.
Curve is one of the most popular Automated market makers (AMMs) on Ethereum. With the integration to Equilibrium, it will bring its values to it, such as low slippage and minimal transaction costs. Such a decentralized liquidity aggregator will enable to anyone become a market maker. People can add the crypto assets to a few different liquidity pools, earn interest for their holdings or farm EQ tokens. So, Curve Finance will bring a Substrate-based runtime version of their AMM to participants of the whole Polkadot ecosystem. Curve plugin will power a stablecoin exchange offering passive income for liquidity providers in a low-slippage environment.
But Equilibrium goes far behind that!. It enables the pooled lending with synthetic asset generation and trading those as well. So, let's once again check what users on the Equilibrium DeFi app can do.
- Borrow — all the main crypto assets, decentralized stablecoins, synthetics assets
- Lend — all the main crypto assets, EQ tokens
- Trade — all the main crypto assets, decentralized stablecoins, synthetics assets, EQ tokens
- Stake — PoS & DPoS crypto assets, EQ tokens
Equilibrium will use its own Ethereum Bridge to connect all the ERC-20 tokens into their DEX.
There are four key user roles. Lender, borrower, trader and a bailsman. Bailsman secures loans in the system — we will talk about bailouts more later on.
Equilibrium has three key features worth mentioning.
Built-in cross-chain DEX
Cross-chain decentralized exchange, which is built-in the Equilibrium, enables trading assets of multiple platforms. In the DEX, there can be used advanced order types and also margin trading.
Programmatic interest rate
By using programmatic interest rates, users got fair interest on their loans based on algorithmic risk assessments. Think of it as the optimization of the interest rate offer that is done automatically.
Bailouts
Equilibrium uses its advanced bailout mechanism for securing loans in advance by providing additional liquidity. Bailouts simply avoid forced auctions and ensure system stability by securing bad loans before adverse markets happen.
How does the bailout mechanism work?
In MakerDAO, the main and well-known member of DeFi ecosystem, if the price of your collateral reaches some level, then your collateralized assets could be liquidated.
With the bailout mechanism in Equilibrium, you can take a short-term loan from the third-party participant called a bailsman to cover the potential losses and add more collateral. The loan can get more funds from a separate pool, from which the bailsmen earn passive income in EQ tokens for doing so. Bailsmen supply Equilibrium with funds necessary for managing those margin calls in advance.
3-layer proactive system solvency protection
Token
Equilibrium has its own native token called EQ. EQ is a utility token that is used for various purposes.
- using liquidated collateral
- bailouts ensuring liquidity
- transaction fees on the Equilibrium Substrate
- paying for Equilibrium’s products
- earning staking rewards
- enables communal governance of Equilibrium
The token covers some important new utilities due to our new products. Since we are offering unprecedented, cross-chain interoperability, a key EQ function is that you can use our token on any other protocol. It can also be used for bailouts, to ensure liquidity. Unlike on other projects, our bailouts avoid forced auctions and ensure system stability by securing bad loans before adverse markets happen. Other innovations include using EQ to vote for validators, who play a key role in the system, and for paying transaction fees.
Liquidity providers earn in EQ. What’s more, we have some unique advantages here — lenders can continue earning on loans even after margin calls.
Parachain lease offering
Phase 1 — token swap
By participating in the Equilibrium’s PLO, you can get the native EQ tokens, that are the core of the Equilibrium system.
Equilibrium’s DOT/EQ token swap starts on April 12, which means the beginning of the first phase of the Parachain Lease Offering (PLO). The swap period is set up for 14 days with a hard cap of 250,000 DOT. By swapping your dot, you can get EQ at the rate of 1 EQ = 0,07 DOT, with a bonus of up to 25%. The lease period is 12 or 24 months.
Here is more information about the ongoing the PLO and also our referral link if you would like to support us by your registration.
Phase 2 — the crowdloan
In the Equilibrium crowdloan, you can stake your DOT tokens to a crowdloan module and earn rewards in the EQ token. This phase will start when parachain auctions go live into Polkadot.
Conclusion
Equilibrium has all DeFi features in one place — lending & borrowing, trading and staking. The key advantage is the cross-chain structure by using Ethereum Bridge and trustless bridges to other blockchains as well as securing the maximal level of interoperability.
The liquidity is not a problem anymore because Equilibrium is attracting institutional clients on multiple platforms such as Curve Finance (on Ethereum).
Enabling of using synthetic asset is a key difference between Equilibrium and other traditional DEXes that leads it to another level of usage.
The amazing bailouts system is ensuring system stability in comparison to the collateral auctions known from Maker or Compound.
With all of that features, once Equilibrium will be Polkadot’s parachain, it will be a huge competitor to the present DeFi players that need to be taken seriously.
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