How To Maximize Portfolio In Closed Beta. Case 3: The Ultimate Stablecoin

Equilibrium
Equilibrium
Published in
3 min readSep 7, 2022

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This is the third lesson on how to increase your earnings potential in our Closed Beta earning series. Earlier, we showed you how to grow your portfolio by staking your assets and lending and/or insuring the system.

In this part, we will be showing you the benefits and use cases of EQD (Equilibrium’s USDT variant).

Last Updated on June 1st, 2023
EQD was originally designed to accept EQ as collateral. This was later changed and thus EQD can not be minted using EQ as collateral.
Here is the list of assets currently accepted as collateral:
DOT, eqDOT, USDT, xDOT, cDOT, GLMR, ASTR, INTR, IBTC, ETH, USDC, PARA, GLMR

About EQD

EQD is Equilibrium’s native stablecoin pegged 1:1 to USD and backed by a portfolio of crypto-assets as collateral. It enters circulation once someone locks collateral to mint a new portion of EQD. You can always be 100% sure that every stablecoin is backed by liquid digital collateral in excess.

EQD is improving on other collateral-backed stablecoins as it’s designed to deliver better collateral efficiency, on-chain pricing of interest rates, and control over the risk of the entire system.

These features make EQD more robust and flexible than most other collateral-backed stablecoins.

The benefits of EQD include:

  1. There are no arbitrary governance-set interest rates. Interest rates are determined by the borrower’s portfolio, borrower debt, overall system liquidity, market dynamics, and risks.
  2. There are no arbitrarily set LTV requirements. With this, every position remains solvent at a 105% collateralization ratio.
  3. EQD may be minted against a portfolio of collateral assets.
  4. EQD is a native quote currency to Equilibrium DEX, all accounting is performed natively in EQD.
  5. XCM-compatibility allows EQD to be easily used ecosystem-wide in DotSama.

EQD Use Case

EQD stablecoin is a major currency in the Equilibrium DEX that allows for trading with leverage.

By design, there are three sides in the system: lenders can supply liquidity using their EQD to earn interest, borrowers supply collateral to borrow or trade on margin, and insurers supply liquidity and guard the system’s solvency while earning interest from borrowers.

How Much Will it Help with Portfolio Growth?

To put this into perspective:

Borrower deposits 1 BTC as collateral:

Borrower buys 5 BTC @ 20,000 USD, his portfolio will now look like this:

Notice the 100K EQD debt which came from buying 5 BTC @ 20K EQD price.

Leverage is a perfect tool to amplify your potential gains in trading. However, it comes at the cost of risk amplification. You can lose your entire collateral (or margin) really fast if the price of BTC moves against you.

Napkin Math:

With this use case there lies the greatest possibility of increasing your portfolio value: you can long or short assets on DEX and try to earn leveraged returns! With the BTC example above, if the BTC price rose 10% from the 20K entry point of yours, your effective gain would be 5*10% = 50% = 10K EQD on your initial margin of 1 BTC (20K EQD).

Conclusion

Our Closed Beta launch is a golden opportunity to explore Equilibrium’s core functionalities (and win fantastic prizes) before we go live. We have restricted this phase to only 500 participants and spots are filling up real fast as registration ends on 10th September. So hurry!

About Equilibrium

Equilibrium is a one-stop DeFi platform on Polkadot that allows for high leverage in trading and borrowing digital assets. It combines a full-fledged money market with an orderbook-based DEX. EQ is the native utility token that is used for communal governance of Equilibrium. xDOT is a liquid and tradeable wrapped DOT that unlocks liquidity of DOT locked in parachain auctions and delivers multiple crowdloan bonuses on Polkadot.

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Equilibrium
Equilibrium

One-stop platform to earn, borrow, trade at max efficiency