Polkadot is breaking records. In its plans to become the world’s fasted blockchain, Polkadot recorded its highest level of development activity in the current long and painful bear market. And I don’t want you to miss the boat on one of the best projects in Polkadot’s ecosystem.

This project made a lot of noise in March 2022 when it won the 12th Polkadot parachain auction. I am excited about it now because the Full Platform Launch of this one-stop DeFi solution is just around the corner. That project is Equilibrium. And in this article, I’m going to show you what it does, how it works, how it has some of the best user experience (UX) of anything in Polkadot, and why it has a very high growth potential.

What is Equilibrium?

Equilibrium is the winner of the 12th parachain slot on Polkadot. They got 4300 contributors to pledge 1 million DOT. Now Equilibrium has its hands in a few things. They are:

  • A DEX.
  • A lending protocol.
  • A liquid staking platform.
  • Stablecoin issuer.

equilibrium review

Source: Equilibrium

So you can see, they have a lot on their plate. As a Polkadot ecosystem project, interoperability is one of their key themes. What I like about what Equilibrium does, is they’ve taken these 4 areas and made at least 1 significant improvement to them all.

Equilibrium’s DEX Improvement

With their DEX, they support cross-chain interoperability in a way many DEXes don’t. Also, they support lots of collateral types. dYdX only supports USDC. With Equilibrium, you can use the collateral you already have including DOT ecosystem, BTC, and ETH.

And as a bonus for small traders, they have some of the lowest margin requirements for trading a perpetual contract in the industry – just 5%.

Lending Improvement

With the lending protocol, the improvement here is to lower the collateral requirements. Lots of crypto collateral sits wasted and inefficient. That’s due to huge over-collateralization requirements. You need 125% or 133% to borrow at AAVE and Compound. At Equilibrium, it’s only 105%. This is much more efficient. Venus Protocol goes as high as 2 to 1 or 200% with most markets at 166%.

They keep collateral rates low through their Insurance Pool, which you can see from the Earn screen, here. Interest rates are more efficient too. The algorithm sets it based on risk.

Liquid Staking Improvement

Here, Equilibrium understands many of you have pledged your DOT to the projects you prefer. So they are launching liquid staking with their own xDOT. xDOT now gives you a liquid component on your staked DOT and markets (AMM or DEX) to use to trade or earn along with your DOT staking rewards.

Stablecoin Improvement

Stablecoins on DOT so far haven’t done that well. Acala’s aUSD had a hack/exploit causing it to depeg in August. It got as low at .009 c before climbing its way back. Now, it’s at ~704c. Major improvement but still depegged almost 3 full months later.

EQD is a multi-collateral stablecoin in the MakerDAO model of overcollateralizing crypto to back the coin. Because they take many assets including entire portfolios to back the minting of EQD, the algorithm does a constant risk assessment and adjusts interest rates accordingly. This means that collateral requirements will vary based on the collateral portfolio impact on the entire EQD system. 

Some statistical analysis follows with adjusted interest rates for borrowers. They use the stable as collateral as well as adjust the collateral requirements. This is a major difference between EQD & fixed deposits of ETH and USDC for DAI. ETH requirements are 150% for this, sometimes more. EQD’s are much lower due to diverse sources for collateral.

What’s your experience been like on Polkadot parachains so far? Do you have a favorite? Let us know in the comments below.

First, you have to connect your wallet. The 2 most popular in the DOT ecosystem are the js wallet and Talisman. Equilibrium supports both. The wallet, seen here, shows you your available balances to use on Equilibrium so that’s a good place to start.

How does Equilibrium work?

Now let’s see how Earn works. Here we did 2 transactions:

  • First, we click on “Earn” and decide to stake some of our USDT. You see the process is simple.
  • You select USDT and the amount from the Lending Pool, which in this case is 1000 USDT. Then, confirm in our Talisman Wallet and now we are earning.

Then you see the transaction details and hash and click back on Lending Pool to see that our saving USDT is now live.

Now in our 2nd example, we Earn starting at the Market tab by looking at the Market Maker. Here we click on DOT so we can earn on that. You see it takes us back to the Earn screen. This time we are staking 100 DOT. We go through the transaction confirmation again and view that our DOT staking is live. Now let’s look at minting the crypto-collateralized stablecoin EQD:

1) We start by clicking on Mint EQD on the left side panel.

2) You pick the asset you want to use to collateralize the new EQD you are minting. Remember, that’s the big advantage of DAI which forces you to use ETH or USDT. Here any available and compatible asset is your option to mint a stablecoin. I like the flexibility it brings.

3) You can see we used 10,000 EQD to mint more EQD (like if we were borrowing for a leveraged trade). I like this message it tells us. It says the low 120% margin there’s a chance we could get a margin called for this so we might want to borrow less. That’s a nice UX feature and a good note for users to keep in mind as they mint and borrow.

More About Equilibrium

It shows the Equilibrium team is trying to look out for its users and not just maximize transaction fees. So I decided to take their advice and only pledge 5000 EQD instead and go through that transaction to mint. And while I don’t show you the completion of this one, it’s the same. You confirm the transaction and then you will see your loan balance in your Wallet in the “Borrow & Trade” section.

As you are seeing, it’s easy to use. It’s super user-friendly and the UI and UX on here are really strong. Now, let’s Borrow. Remember, you need 120% collateral. Here is the Borrow & Trade screen. Click on “Deposit” so you have coins for collateral. In this case, we are adding 500 USDT. So, after you’ve made your Deposit and approved the transaction in your wallet, then you can borrow.

You have 16 options on the Borrow Screen in the Beta test we are showing you. Upon full launch, you will be able to access:

  • Native Equilibrium Tokens: EQ, EQD, xDOT (from liquid staking)
  • Ecosystem: DOT, GLMR, ASTR, USDT (yes it’s native on Polkadot now)
  • Ethereum: USDC, ETH, WBTC

So, you have lots of choices at one of the lowest collateral ratios in the industry. With that combo, you could set up a couple of nice trades for yourself. Or just use it to buy more of your favorite project and pay back in a stablecoin to lower your risk.

If you want to learn more, then you will definitely want to get on Equilibrium’s whitelist for their 2nd EQ Offering. The cap is 300,000 DOT for this round and there’s even a referral program so that if you get your friends to sign up you earn bonuses in EQ. You can earn up to an additional 20% EQ from your allocation based on how early you take part in the offering and if you refer any friends you get an additional 5% from each invited friend’s contribution. Check it out today. The sale is coming soon.

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The information discussed by Altcoin Buzz is not financial advice. This is for educational, entertainment, and informational purposes only. Any information or strategies are thoughts and opinions relevant to the accepted levels of risk tolerance of the writer/reviewers and their risk tolerance may be different than yours. We are not responsible for any losses that you may incur as a result of any investments directly or indirectly related to the information provided. Bitcoin and other cryptocurrencies are high-risk investments so please do your due diligence. This article has been sponsored by Equilibrium. Copyright Altcoin Buzz Pte Ltd.


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