Equilibrium — Telegram QUIZ & AMA — November 19
By: Gains Associates
Tags: Eos, Gainsama, Defi, Polkadot, Cryptocurrency

Product

Q — Alex Raffin from GAINS: What’s your role at Equilibrium and what is the project about in a few simple sentences?

A — Alex Melikhov from Equilibrium: I’m the CEO at Equilibrium and I’m in charge of the overall strategy. Also, I’m factually a product owner and responsible for product management in this sense.

Equilibrium is a one-stop-shop for DeFi users. You may think of Equilibrium as a place where you can utilize all DeFi primitives you got used to on Ethereum but in a cross-chain and risk-less manner.

Use cases include pooled lending, decentralized stablecoin, and synthetic asset generation, plus trading. It might sound like Compound, MakerDAO, Synthetix, and dY/dX combined. It is built on Polkadot and inherits advantages of its out-of-the-box cross-chain interoperability.

Q — Twitter user @Poyrazyesill: Can you list some killer features that make you stand out from your competitors? What competitive advantage does your platform have that makes you feel the most confident?

A — Alex Melikhov from Equilibrium: Here are three key things that set Equilibrium apart from other lending platforms:

Unique on-chain risk management system: It monitors overall system liquidity in real-time, across blockchains, starting from individual users’ portfolios that combine multiple assets, and aggregating them to follow overall system solvency. Thus maximal liquidity can be achieved, and also monitored and maintained.

Programmatic interest rate: The flexible interest rate that fluctuates depending on system solvency and allows borrowers to choose a balance between risk and collateralization. So if the borrower sets a higher level of collateralization, he can expect lower interest on the loan.

Bailouts provide proactive protection to bad debt: Bailsmen provide liquidity in advance to secure loans in the system. There are no forced actions required in a moment of a market crash compared to the auctioning model of liquidations. Bear in mind all challenges that MakerDAO faced with their auctions and eventual losses of over 6.5M USD on March 12. In our case, bad debt is simply transferred to the bailout pool in case of liquidation instead of selling off in a distressed market.

We have an insurance policy on top of that.

Q — Alex Raffin from GAINS: How much can we make using your platform?

A — Alex Melikhov from Equilibrium: Great question. As I said, interest is fluctuating depending on the system's solvency. In the case of low liquidity, the interest rate might be quite high. Say 8–10% APR or even higher. We anticipate an interest rate of 4–6% on average plus liquidity farming rewards of course.

Q — Alex Raffin from GAINS: That’s great compared to the real world but low compared to insane (unsustainable) numbers people might have seen. How are you going to convince people that got used to these crazy numbers and are now saying: “meh” to your 10% APR?

A — Alex Melikhov from Equilibrium: Of course. We are not building another food chain and expect our product line to work great in the long run. Look at AAVE or Compound —the APR they are offering is floating around 3–4%. We are offering the liquidity farming program on top of that. And for liquidity providers, the opportunity to earn not only on lending but also on bailouts is great and allows to earn an additional (quite high) yield.

Q — Alex Raffin from GAINS: How’s DeFi on EOS?

A — Alex Melikhov from Equilibrium: Doing okay and getting more traction. I hope Block.one will be putting more effort into community education about EOS.

So now, we are developing a logical extension of our project on Polkadot to obtain true cross-chain interoperability and to turn Equilibrium into a full-functional DeFi one-stop-shop. We are quite far with the development since we’ve been building this since February.

Q — Alex Raffin from GAINS: What is the token use case? How did you make sure it captures the value of the ecosystem you’re building?

A — Alex Melikhov from Equilibrium: We have introduced a new utility token called EQ which will have a bunch of utility in our product line. Maybe the most important one is an opportunity to use it as bailout liquidity to earn yield and collateral to take out loans.

Its supply is 120M and it’s initially based on our substrate that will eventually become a Polkadot parachain. We ran a token generation event recently. Those who participated in our NUT/EQ token swap in September can now access their allocations. We are expecting Uniswap pool and listings on exchanges after we launch ETH bridge in production. So there will be an opportunity to acquire tokens from the market.

Q — Twitter user @OkanBoysan29: Can you please explain the difference between bailouts and auctions in Equilibrium network?

A — Alex Melikhov from Equilibrium: The bailout mechanism ensures system stability and protects your loans.

Forced auction disadvantages:

Catastrophic in adverse markets & in case of technology issues

Instability in searching for buyers for bad debt

Equilibrium offers an alternative to forced auctions by solving bad debt by bailsmen in advance before it comes to a stressed market.

Q — Telegram user Isaaco: Do you plan to launch an incentivized Liquidity Program to reward Liquidity Providers? Where can we buy EQ tokens? Can you share with us progress made regarding exchange listing?

A — Alex Melikhov from Equilibrium: We are launching a liquidity farming program that will allow liquidity providers to earn rewards in EQ tokens for liquidity provision. It will be one of a few ways to distribute EQ tokens.

The only ways to get EQ tokens are to:

Participate in the Initial Parachain Offering (stake DOTs for our Polkadot parachain) Farm EQs via liquidity provision

We are negotiating listings with the largest exchanges now. Also, we expect to launch a Uniswap pool after we roll out the ETH bridge.

Q — Telegram user Thanh: Will the EQ Token have a “burn” mechanism to increase the rarity and value of $EQ?

A — Alex Melikhov from Equilibrium: EQ has an inflationary model behind it. Annual inflation will be 2.5% and this is common to most of the native tokens of PoS blockchains. We are looking at BSC closely.

Q — Telegram user Max Newer: Can you tell us more about using Synthetic assets on your platform?

A — Alex Melikhov from Equilibrium: We are expecting to launch a suite of assets that will be tracking the prices of some other assets and commodities. They will be further traded on our cross-chain DEX. Their main advantage is that they will be utilizing our core tech: unique risk management system, programmatic interest rate, and bailout mechanics.