Why Equilibrium Operates On The EOS Blockchain

April 07, 2019

The thing about developing for the blockchain is that you have some choices.

Introduced as open source software in 2009, Bitcoin formed the basis and inspiration for a whole new category of technology. Within no time, it spawned numerous other cryptocurrencies operating on similar principles. Bitcoin retains major brand power and is surely the most recognizable name in the blockchain space, but there are other blockchains to choose from.

All blockchains share certain fundamental features, like data immutability and peerless transactions, and different blockchains are better-suited for different tasks. Bitcoin is a proven network for handling borderless payments. Ethereum can run decentralized computer applications while also supporting Bitcoin-like transactions. Ripple is all about fast, cost-efficient payments for the enterprise. And there are still many more to choose from.

Equilibrium runs on the EOSIO technology stack for a number of reasons. It works with highly scalable projects, it supports a community voting mechanism that drives our framework, it will lend essential momentum to the EOS ecosystem, and the EOS blockchain furthermore completely lacks a service like Equilibrium.

Let’s get into the details:

EOS enables cross-chain solutions and supports multiple forms of collateral.

Equilibrium lets users generate stablecoins against EOS collateral for now, but the underlying technology is robust enough to support other coins in the future. Down the road, users will be able to generate stable currency against a wide variety of volatile digital assets, and we’ll consider a portfolio of collateral backing a single loan.

Equilibrium covers a market gap for the EOS blockchain from the start.

The Equilibrium framework lets users generate stablecoins called EOSDT (pegged to the US dollar) in exchange for their collateral.

This is not the first project to unite crypto assets with collateral-backed stablecoins, but it is the first one for use by members of the substantially sized EOS community. Their cryptocurrency holds the fifth-largest market capitalization of all cryptocurrencies, with some $4.6 billion USD of EOS in circulation right now, and it’s the second-largest one that supports smart contracts. But just like any other crypto asset, EOS is subject to price fluctuations. But Equilibrium provides EOS holders with a mechanism to safely store their value in times of market turmoil. With 1 EOSDT always equal to$1 USD, these tokens are free of the volatility that plagues pretty much every cryptocurrency today.

As the only framework of its kind to serve this large community, Equilibrium immediately meets an existing need for this community.

EOSIO is fast and scalable.

The prospect of “crypto USD” was too exciting to get wrong, so the technology holding it up needed to be impeccable. We wanted transactions to stay fast no matter how many users joined the framework, so the EOS blockchain was a natural choice. This software boasts improved authentication, new communication features, and schedule and scheduling between multiple cores.

The EOS blockchain can handle up to 250 transactions per second promising even higher scale, making it nearly ten times as efficient as Ethereum at the moment. It wasn’t a difficult choice.

It will directly affect the EOS ecosystem.

Equilibrium stores collateral in a superfluid manner, meaning those digital assets can be used for more than one thing at a time. So Equilibrium’s collateral serves to back stablecoins while also staking the block producers (BPs) that drive the EOS blockchain at large.

Just as the community uses NUT to vote on any changes to the framework’s parameters, they can also use it to vote on which BPs to stake with a portion of Equilibrium’s stored collateral. Equilibrium supports EOS infrastructure and its own scalability with continuous and dynamic voting for EOS block producers.

We have consciously mitigated the risk of leveraging block producer voting by defining a proper reserve ratio for the system. We do this to demonstrate responsibility and show our respect towards the EOSIO infrastructure.

When Block.One implements its resources exchange, collateral may also be used to earn extra income by lending out EOS against it. The reserve ratio approach outlined above will also apply here. This extra potential income to EOS collateral holders could help level out the proposed 5% yearly inflation in EOS.

It’s one of the blockchains that allows for community governance voting.

The parameters that drive the Equilibrium framework are flexible. Users can submit proposals for changes to these parameters, redetermining when a collateral position should be liquidated, for example. Users can cast their votes on different proposals with Equilibrium-issued Native Utility Token (NUT). An adjustable governance system like this allows for effective decentralized autonomous community management, and EOSIO is one of the blockchains that offers this out of the box.

This crypto framework and the EOS blockchain stand to play meaningful supporting roles for each other. Equilibrium will lend momentum to this underserved crypto ecosystem and bring enhanced liquidity to it.

And as more people flock to Equilibrium in pursuit of EOSDT, EOSIO’s scalability will be a major asset.

So yes, there are choices to be made when you’re developing for the blockchain. But if you look for projects on the basis of what will make a big impact, the extraneous choices start to fade away.

That’s why Equilibrium operates on the EOS blockchain for now — it’s such a natural fit for this project. But this is just the start, and Equilibrium will eventually support many more cryptocurrencies (and at some point even tokenized assets). From there we’ll branch into working with multiple blockchains that support smart contracts.

We’ve maintained a clear vision of how this product should work from day one, and that vision has guided our strategic decisions ever since. That’s why Equilibrium launched on the EOS blockchain — it was an underserved community and the technology was robust enough to drive a useful system.

Our choice was no choice at all.