Recapitulation of Equilibrium AMA event held at AMA LOVERS CLUB

Venue: https://t.me/amaloversclub
Date: Tuesday, 27th October, 2020
Time: 14:00 UTC

The Equilibrium team was represented by Mr. Alex, CEO Equilibrium. He judiciously shared with us detailed knowledge and information about the project.

1st Segment: INTRODUCTION

Q1 : Can you please introduce yourself and your background, also if you have team members you can also introduce them

Ans : I’m Alex, the CEO at Equilibrium, the leading cross-chain DeFi project. I came to crypto in 2016 when we co-founded Changelly. Currently, it’s one of the largest instant crypto exchanges on the market.

Since 2017 my team of experienced developers and financial engineers has been developing DApps on various blockchains, including Ethereum, EOS, and Polkadot

In 2018 we have kicked off the development of the EOS-based part of Equilibrium. We launched the first decentralized stablecoin on EOS called EOSDT in April 2019

For now it's both the most liquid stablecoin and the biggest DeFi project on EOS with over $13 M of total locked value on our smart contracts, and over 900 open user positions.

Now we are developing a logical extension of our project on Polkadot to obtain true cross-chain interoperability

Q2 : Can you introduce Equilibrium project, what critical problems does it solve that existing solutions are not solving and what’s your Comparative advantages over other DeFi solutions

Ans : For sure. Equilibrium is the first interoperable money market that combines all significant DeFi use cases in one easy-to-use interface. It allows users to stake and earn, lend, borrow, raise liquidity in synthetic assets and decentralized stablecoins — all in one place

We see several obvious DeFi industry hurdles that we are also addressing at Equilibrium. They include:

1. Market fragmentation. Before us, users needed to use several apps on different protocols.

2. Lack of interoperability. We are designing Equilibrium to enable cross-chain asset transfers and the use of different assets in lending, combining them in collateral baskets.

3. Inefficient bad debt liquidations. We are introducing a bailout mechanism that will prevent situations like “Black Thursday” - MakerDAO’s experience in March this year - by ensuring bailout liquidity in advance.

4. Liquidity issues. Equilibrium maximizes cross-chain, non-custodial liquidity by using multiple assets from different protocols.

Three key things set Equilibrium apart from other lending projects:

Unique Risk algorithm. This 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 adjusts system solvency and allows borrowers to choose a balance between risk and collateralization.

And bailouts provide proactive solutions to bad debt.

When the monitoring algorithm indicates that liquidity is low, the system automatically incentivizes “Bailsmen” to provide more liquidity by earning more. This means debt is liquidated proactively, avoiding forced auctions, and irrespective of adverse markets, thus solving the problem that MakerDao experienced in March this year.

Q3 : Can you briefly describe the Top milestones you have achieved and your target milestones with timelines. Also share your roadmap

Ans : Well, we are currently participating in the Substrate Builders Program and are very committed to our development on Polkadot. We also have recently received a Web3 Foundation Grant to further develop our DeFi pallet.

You can learn more here https://cointelegraph.com/news/equilibrium-receives-web3-grant-to-develop-its-universal-defi-module

Recently we successfully completed our NUT/ EQ token swap and raised more than $5.5 million. During the token swap, users were able to swap NUT (our EOS-based utility token) to EQ, our new cross-chain utility token, and get a good bonus. Also, feel free to check more details in the article.

We have launched our testnet. The EQ token distribution technology (vesting, claims according to our tokenomics model) is already available at https://testnet.equilibrium.io/
Soon in November, users will be able to try out “virtual” portfolios, generate stablecoins, transfer them, pay fees, earn interest on safeguarding the system. In preparation for Mainnet and our parachain roll-out, we have assembled a group of validators experienced in the Kusama and Polkadot technologies (Staking4all, P2P.org, Staker.space, W3F, Simply VC, Stateless.money, Justontime.io, and others).

We are planning to launch our Mainnet soon in November - December alongside with our products that will also be launched into production soon.

At the same time, we are planning to participate in a parachain leasing auction via an ‘Initial Parachain Offering’.

DOT token holders will be able to stake their DOTs in our name for a parachain slot and receive EQ tokens in exchange. This will be a risk-free trade-off - they will be able to submit EQ and get their DOT back at the end of the parachain leasing period (if they wish).

We will also be launching liquidity farming that will reward users for active use of Equilibrium’s products in EQ tokens. This mechanics is similar to the COMP token distribution.

Additionally, we are in talks with multiple partners regarding our further business cooperation. These include liquidity providers, trading companies, wallets etc. We are also talking to major exchanges regarding EQ token listings.

This is a pretty comprehensive list of what’s we are up to at the moment.

2nd Segment: TWITTER QUESTIONS

Q1 : On #Equilibrium loans, how do you manage the interest rate? On borrowing, how stable is the collateral rate? How can I as a novice member get a loan?

Ans : As I mentioned before, we have a programmatic interest rate. The flexible interest rate adjusts system solvency and allows borrowers to choose a balance between risk and collateralization.

Interest rates are calculated per borrower portfolio, they are directly proportional to the portfolio risk and inversely proportional to the LTV ratio.

The process of getting a loan looks like this:

1. bring in collateral via one of Equilibrium’s bridges
2. take out a loan
3. either transfer it to someone or withdraw it to another chain.

Points 2 and 3 work in conjunction thanks to our double entry bookkeeping and ability to process "complicated" transfers.

You may also use EQ tokens you got from the token swap or on the parachain offering auction as your collateral for borrowing.

Q2 : Making partnership with Quantstamp , what facilities is equilibrium getting and providing to the investors? And Quantstamp has wide experience,is your project more suitable with it?

Ans : Equilibrium is the first Polkadot-based project that will be professionally audited. Quantstamp will audit Equilibrium’s core components, including the code which governs its underlying business-logic on balances, its risk and price modules, and its “bailout” mechanics. Quantstamp’s audit is of key importance to ensure the quality of Equilibrium’s performance. For sure, Quantstamp is particularly well suited to this audit since it has a focus on DeFi.

From the point of view of investors’ interests & the good of the community as a whole, there are three main advantages in our cooperation with Quantstamp:

When you are building on Substrate you are customizing a blockchain runtime as a whole - i.e. if a bug affects part of the logic on the Substrate, the blockchain as a whole can come to a standstill. So their audit means that our substrate as a whole will be secured.

1) This benefits the further integrity & development of our project, giving it a solid foundation (good for investors),
2) Other projects can this also benefit from the added value of using e.g. our financial pallet to simplify their own programming
3) The audit also serves as valuable experience for further development on Polkadot. Audits like these become automated in the long-term, after enough experience has been collected

For all of these reasons, Equilibrium is a valuable mandate for any auditing company to start its work on Polkadot.

Q3 : Charterers ensure liquidity at Equilibrium by providing liquidity to rescue funds in advance, but what guarantee of security does Equilibrium give them that their capital will be safe in the hands of users?

Ans : Again, I mentioned our unique risk algorithm. This 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. If a user is in default, their loan is offered to bailsmen who can get up to 40%of the interest rate for taking on the loan. The system balancing offered by our risk management does not use forced auctions, so these cannot become a threat in adverse markets. Instead, overall liquidity is balanced in the system on a continual basis, by incentivising bailsmen to take on debt for a high profit.

Q4 : Equilibrium is a totally on-chain liquidity management framework, how does this framework benefit the users who use it, and how are the funds secured?

Ans : Equilibrium is super scalable and secure thanks to the underlying technology - Polkadot. Also, it accesses all protocols bridged with Polkadot to unlock full DeFi potential.

The unique 3-layer protection mechanism maintains system solvency. We are introducing the unique mechanism of bailouts. They ensure liquidity in advance to sustainably secure loans in the system.

So we can be confident that the system will be sustainable even in case of market turmoil (like in March this year). Because there is no need to auction off bad debt.

There are many opportunities to get benefits. For example, you can stake crypto assets and get passive income via pooled lending. As a borrower, you can borrow crypto, and generate synthetic assets or decentralized stablecoins — all with automatically defined APR.
Bailsmen can take on risk by securing loans in the system with their assets, benefiting from up to 40% of interest rates.
Liquidity Farming is another way to earn in the context of cross-chain asset use. 10% of EQ tokens (12M) are allocated for this mechanism as rewards, relative to liquidity size.

Q5 : Can users of other blockchains connect to Equilibrium through Polkadots systems?

Ans : Yes, using Polkadot’s substrate technology to create our own blockchain, we will extend our DeFi product line to a one-stop cross-chain money market.
It is designed to end market segmentation and will let users conveniently fill all their DeFi needs in one place — uniting decentralized liquidity pools, enabling cross-chain lending with built-in synthetic assets, and advanced price discovery and bailout mechanics to ensure maximum liquidity. Users will be able to trade and manage their assets across multiple blockchain protocols without new logins.

3rd Segment: LIVE QUESTIONS

Q1 : How many $NUT communities have? can I become a $NUT Ambassador?

Ans : We have several social media platforms for news and updates announcements (NUT updates are included):

Telegram: https://t.me/equilibrium_eosdt_official
Twitter: https://twitter.com/EquilibriumDeFi
Medium: https://medium.com/equilibrium-eosdt

The first part of the ambassador program is over. But we will launch the second one shortly.
Feel free to join the ambassador chat / follow our updates here: https://t.me/eq_ambassadors

Q2 : As we’ve seen some events like $NUT / $EQ Swap from which equilibrium has raised like $5.5 million.This is a huge success for you and the Equilibrium Community. Are there any new upcoming events to look out for the Community??

Ans : Yes, as I mentioned, we are planning our IPO (this means “Initial Parachain Offering”) soon - it will be in Q4 or Q1. This is part of Polkadot’s requirements - the Substrate on which we are building. All projects building on the Substrate will be connected by parachains, and can thus fully participate in the ecosystem. These parachains are leased and you have to pay for the lease. We will participate in an auction and invite you to bid for us. Let me add what I wrote above as a reminder:

DOT token holders will be able to stake their DOTs in our name for a parachain slot and receive EQ tokens in exchange. This will be a risk-free trade-off - they will be able to submit EQ and get their DOT back at the end of the parachain leasing period (if they wish).

Look out for updates on this event so that you can participate.

Q3 : Can you list 1 or 3 killer features that make it stand out from its competitors ?? What competitive advantage does your platform have that make you feel the most confident ???

Ans : Since several people have asked this question in one way or another, let me repeat what I already said.

1) Unique Risk algorithm
This 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.

2) Programmatic interest rate
The flexible interest rate adjusts system solvency and allows borrowers to choose a balance between risk and collateralization.

3) Bailouts provide proactive solutions to bad debt
When the monitoring algorithm indicates that liquidity is low, the system automatically incentivizes “Bailsmen” to provide more liquidity by earning more. This means debt is liquidated proactively, avoiding forced auctions, and irrespective of adverse markets, thus solving the problem that MakerDao experienced in March this year.

The point is that no other project has this, and without reliable risk management to ensure sustainable liquidity, you have problems like MakerDAO did. We prevent those kinds of surprises and that is why our liquidity is secure and valuable.

Q4 : Equilibrium has 2 $NUT tokens and $EQ tokens, so, What’s the difference between $NUT and $EQ tokens? Why should you create a new token other than $NUT? What are the use cases of both in ecosystem Equilibrium?

Ans :

NUT is the utility token that we have been using in the first part of our project, our PoC on EOS - and its functionalities are thus limited to EOS and the scope of that project.
Our new token, EQ, will serve as the utility token for the entire, expanded project on Polkadot, and be connected to assets on major blockchains, like ETH, DOT, BTC, COSMOS, XTZ.

Let me add a slide here which shows you the difference well:

Q5 : Why did Equilibrium choose Quantstamp to audit the core components of your system? What makes this company so well suited to this task? Exactly which elements of your platform will be audited?

Ans : I think the main point here is that the quality of our products can be ensured thanks to this audit. Let me stress what I said earlier: Quantstamp will audit Equilibrium’s core components, including the code which governs its underlying business-logic on balances, its risk and price modules, and its “bailout” mechanics.
Quantstamp is particularly well suited to the task since it has a focus on DeFi. It has helped Maker respond to the Black Thursday incident this year and audited numerous DeFi projects.
Altogether, their audit will help make our products securer and more valuable.

CONCLUSION

Please do you have any Final Words for community, also do good to share every useful links to Equilibrium with us

Thanks for the great AMA, your interest and engagement, and also the good questions! Please feel free to join our communities and actively participate in our events and the development of our ecosystem. You can connect with us here:

Follow Equilibrium on the following platforms:
 ... Website: https://equilibrium.io
 ... Twitter: https://twitter.com/EquilibriumDeFi
 ... Telegram: https://t.me/equilibrium_eosdt_official
 ... Medium: https://medium.com/equilibrium-eosdt
 ... Github: https://github.com/equilibrium-eosdt/equilibrium-substrate-chain

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