Use Cases

Liquidity and Deposits

Before any use cases are actually made available to Equilibrium users, there has to be some liquidity inside the parachain. There are two ways to get liquidity inside Equilibrium:

Users who have EQ tokens vested may claim these tokens and use them as collateral or bailout liquidity. There's no borrowing or lending of EQ tokens for now.
Users who want to be borrowers/lenders/bailsmen in the Equilibrium ecosystem can bring other crypto assets into our parachain via different Polkadot bridges.

Borrowing

You may borrow assets in Equilibrium in a collateralized fashion. There are no per-asset debt "positions," and Equilibrium treats your assets and liabilities as a complete portfolio.

If the value of your assets exceeds the value of your liabilities, you're safe as a borrower and are not subject to liquidation. Liquidation is a simple balance purge where all of your assets and liabilities are transferred to bailsmen pool.

The interest you pay depends on your portfolio risk and the portfolio collateralization levels we talked about in the Interest Rate Model section. Interest is payable in EQ tokens, and when you don't have a sufficient EQ token balance, the system will automatically sell your collateral to pay interest fees, so make sure you always have enough EQ liquidity to avoid unnecessary exchanging.

Lending

You may lend assets in Equilibrium and earn interest for doing so. The beauty of lending assets via Equilibrium comes from the fact that lenders transfer the liquidation risk to the bailsmen. When borrowers default, lenders get their assets back from the bailsman pool, while bailsman get liquidated collateral in return.

Bailing out

Bailsmen provide liquidity in advance to cover for borrower liquidations. When borrowers default on their loans, their collateral and debt get distributed among bailsmen on a pro-rata basis. The only way bailsmen are able to get negative balances (liabilities) is through borrower liquidation. Furthermore, no bailsman can stop being a bailsman unless he covers all of the liabilities he has been entitled too.

Baislmen are the keepers of the system. They make sure it stays solvent all the time, and receive interest rewards for bearing liquidation risks. 80% of the interest rate that the system collects from borrowers goes to the bailsmen. The other 20% accumulates inside treasury and is used as a third line of defense in case the bailsmen themselves become undercapitalized.

Margin trading

Our interoperable DeFi platform allows for leveraged trades on margin up to 100%.

Equilibrium EQ

Historical Data for Equilibrium