Equilibrium: Generation of Asset-Backed EOSDT stablecoins
What Is Equilibrium?
Equilibrium is an advanced framework made up of smart contracts that have the ability to generate cryptocurrencies backed by stablecoins, and pegged to the US dollar and the crypto holdings of the user. The Equilibrium framework has a wide variety of applications such as depositing and withdrawing collateral, generation of stablecoins, moving their positions, and closing.
The digital asset developed by Equilibrium is known as EOSDT. EOSDT is the first decentralized stablecoin available via EOS, which is faster, has lower transaction fees, and features a robust infrastructure compared to Ethereum. The EOSDT stablecoin is circulated with a collateralization model, which utilizes the owner’s liquid digital assets.
This model ensures that the value of one EOSDT always remains equal to $1 USD. Owners of EOSDT can use it to protect themselves from market fluctuations, acquire fiat-like quotes for currency pairs on decentralized exchanges, and make online payments to stores that accept cryptocurrency payments.
How does EOSDT work?
All digital assets compatible with the Equilibrium framework can be used to generate EOSDT stablecoins on the self-service gateway that boasts of an intuitive user interface. The gateway requires the users to provide their liquid digital assets as collateral in order to generate the stablecoins.
Currently, EOS is the only accepted collateral but plans are underway to support more digital assets. Once the user deposits the collateral in an active position, they can decide how much EOSDT they would like the framework to generate.
The collateral deposited by the user backs the generated stablecoins and the user can recover the collateral by paying back an amount equal to EOSDT plus any fees that might be accrued. All the active positions on the Equilibrium framework are over-collateralized, whereby the value of the collateral always exceeds the value of the stablecoins generated.
The Native Utility Token (NUT), whose main purpose is to operate and develop the entire ecosystem, powers the Equilibrium Framework. Furthermore, members can utilize NUT to pay administrative fees, access liquidated collateral at discounted prices, and ensure decentralized governance on the Equilibrium framework.
Advantages of the Equilibrium framework
To ensure that the price of one EOSDT is equal to $1 USD, the Equilibrium Framework is pegged to the US dollar. In addition, the collateral paid by the users is valued and the ratio of collateral to the total EOSDT supply is constantly monitored to ensure it meets the minimum threshold.
Low Transaction Fees
There are only two types of fees paid on Equilibrium: the Admin fee and Equilibrium fee. The accrued admin fees in form of NUT Tokens are paid when a position holder pays down a position that requires them to pay an amount equal to the EOSDT generated. The Equilibrium fee is paid when a user carries out a market action against a stablecoin position.
Equilibrium implements various mitigation mechanisms such as a simulation system that is constantly monitoring the general behavior of the ecosystem, and smart contract policies that protect the users. The mechanisms protect users from smart contract bugs, pricing errors, malicious attacks, and failures of centralized infrastructures.
Equilibrium utilizes and complies with the best and widely accepted industry standards for cryptocurrency-backed stablecoins.