Equilibrium, a Polkadot-based DeFi project previously known for its EOS presence, is partnering with Curve Finance to bring the latter’s automated market maker platform, Curve, to the Polkadot (DOT) ecosystem, according to an announcement issued on Monday.
The plan involves integrating a Substrate-based version of Curve on Equilibrium’s Polkadot parachain and is supported by the Web3 Foundation’s Open Grant Program.
As previously reported by Cointelegraph, Substrate — Polkadot’s blockchain building framework — is already showing significant protocol-level interoperability especially in the version 2 launched back in August 2020.
Upon full integration, the Curve plugin will allow for a stablecoin exchange platform where users can trade DOT-based “coins” or tokenized cryptos like wrapped Bitcoin (WBTC) and Ren Bitcoin (renBTC).
Despite the initial liquidity limitation, Curve’s market-making algorithms will reportedly be able to minimize slippage risks usually associated with trading tokenized versions of the same coin.
Commenting on the risks of opportunistic arbitraging, Equilibrium CEO Alex Melikhov told Cointelegraph that the protocol will combine Curve's efficient token swap mechanics with Equilibrium's incentivized liquidity farming, adding:
"Users will receive up to 20% rewards in EQ tokens on their liquidity holdings inside AMM pools. AMM pools in turn have "pool tokens'' representing shares of liquidity which are redeemable against the pool, and the price of pool tokens is adjusted according to the current imbalance, making liquidity manipulations substantially more resource intensive."
Concerning fees, Melikhov revealed that the protocol is set up to keep transaction costs at a minimum.
For Curve Finance CEO Michael Egorov, the planned integration on Equilibrium’s Polkadot parachain is another pointer to the expanding appetite for stablecoin liquidity across different blockchains.
The Curve integration is in keeping with Equilibrium’s plan to run a full-spectrum interoperable DeFi environment as stated during its Polkadot parachain announcement back in August 2020.
According to Melikhov, Polkadot is staking a significant claim in the emerging cross-chain DeFi arena, adding: "Most DeFi operates in Ethereum right now, so Equilibrium with Curve protocol, bridged to Ethereum, and Polkadot’s unique architecture, becomes one of the foremost projects in the space of cross-chain value transfers."