Cross-chain decentralized finance lending protocol Equilibrium is set to bring its U.S.-dollar-pegged stablecoin to Moonbeam, a Polkadot project building an Ethereum-like blockchain.
DeFi projects building on Moonbeam will be able to use Equilibrium’s stablecoin as if it were native to the blockchain. This includes decentralized exchanges, single-purpose lending protocols and other DeFi building blocks.
Moonbeam can be described as the “Ethereum on Polkadot” project. It uses the same smart contract environment seen in Ethereum, featuring an Ethereum Virtual Machine and using the same convention for accounts and wallets. As a consequence, Moonbeam supports Solidity smart contracts and allows developers and users to port their projects and wallets with minimal changes.
At the same time, Moonbeam is a parachain, Polkadot’s equivalent of a shard. This allows other parachains to connect to Moonbeam with minimal effort, thanks to cross-parachain communication enabled by Polkadot’s relay chain — essentially, its equivalent of the Ethereum 2.0 Beacon Chain.
This connection will be used by Equilibrium to bring its token to the Ethereum-enabled environment. The expectation is that Ethereum-based DeFi protocols will bring their projects to Moonbeam, thus directly connecting Equilibrium to the wider DeFi ecosystem. One such possible integration is SushiSwap, which is exploring the possibility of creating a sister protocol on Moonbeam. Alex Melikhov, CEO of Equilibrium, commented to Cointelegraph about the integration:
“We feel that there is significant value in showcasing collaboration between specialized parachains where the sum can be greater than the parts for both parties.”
Equilibrium is a cross-chain money market protocol, allowing deposits of collateral to create a decentralized stablecoin — similar to MakerDAO. While originally built on EOS, Equilibrium moved the core of its protocol to Polkadot over the summer. In addition to making use of Polkadot’s interoperability features, Equilibrium places heavy emphasis on its mechanism of liquidation bailsmen. Unlike other similar protocols, liquidations are managed by a permanent class of liquidity providers who receive a portion of the platform’s revenue. This provides a baseline of rewards irrespective of the amount of debt liquidated, which becomes simply an additional source of income.
The launch will occur after Polkadot’s anticipated parachain auctions, expected to occur in early 2021. Melikhov said that their plans are reliant on both Moonbeam and Equilibrium receiving parachain slots, which is not a certainty. Nonetheless, he believes there is enough room for all major projects currently building on Polkadot to receive a parachain.