How do you turn your volatile crypto assets into a stable store of value? How can you leverage your digital holdings for access to a secure, new form of money?
Equilibrium is a framework of smart contracts working in concert to let users generate stablecoins (called EOSDT) that are pegged to the U.S. dollar and backed by their own crypto holdings. The EOSDT stablecoin is a useful store of value with a variety of applications, like hedging against market turmoil, providing fiat-like quotes for currency pairs on decentralized exchanges, and even online payments with merchants that accept cryptocurrency. It allows for more intuitive crypto transactions — one EOSDT always equals one USD.
The Equilibrium framework consists of four smart contracts that operate as follows:
The market data smart contract references cryptocurrency prices from the external mSectionarket through a trustline provided by Oraclize.it.
The Position Smart Contract receives a user’s cryptocurrency and holds it without any human involvement or custody risk.
The Liquidation Smart Contract lets arbitrators and market participants make money by liquidating under-collateralized user positions. This happens automatically when their collateral drops below the critical level of 130%. Arbitrators can claim liquidated collateral or surplus EOSDT at a markdown from current market prices, an associated fee will be payable in NUT tokenSections, which are then burned. This mechanism reduces the total NUT supply, potentially leading to NUT price appreciation due to the critical utility of the NUT asset within the Equilibrium framework.
The Governance Smart Contract lets users who hold NUT submit proposals to change the framework’s parameters on risk and stability. NUT holders can also vote for a list of EOS block producers they want to support with a fracSectiontion of Equlibrium’s total EOS collateral. This feature drives the growth, development, and maturity of the entire EOS ecosystem.
EOS uses a delegated proof-of-stake concept, which grants the community lots of flexibility in making instant high-level decisions, like rollbacks and bug fixes, with a majority accord among designated stakeholders. This approval voting system stakes the top 21 EOS block producers to produce blocks — EOS token holders must stake tokens for three days in order to vote. The top 21 candidates form the block producing core, and the rest become backup block producers, their priority is also determined by the number of votes they get.
Staking an EOS coin is like paying an opportunity cost — you can't unstake it until three days later, and you don’t have any access to it until then. This little cost grants you access to the entire EOS system. If you stake them for bandwidth, it means you can send transactions, and the size of transaction will consume your bandwidth.
Equilibrium uses the EOS blockchain because it is faster than Ethereum, has near-zero transaction fees, and offers great infrastructure for implementing cross-chain solutions. It presently supports the EOS cryptocurrency.