In a nutshell, how does EOSDT work?
EOSDT allows users to lock volatile EOS cryptocurrency on smart contracts and get price-stable liquidity even at negative APR. Basically it means that users will even get rewards for staking EOS into the system. Generally speaking, EOSDT inherits advantages of BitUSD and MakerDAO model with a lot of improvements on its backend. It is constantly pegged to USD and backed by liquid collateral.
What does EOSDT provide, what other decentralized stablecoins (mainly DAI) can’t offer?
First of all, Equilibrium is a cross-chain DeFi framework. So it enables other liquid digital assets (like EOS, ETH, XTZ and even BTC) to be collateralized on the smart contracts at some point, while other applications are usually limited to their baselayer ecosystem.
Another major differentiator is collateralization requirements. MakerDAO users must overcollateralize their assets at 150% or more, while Equilibrium requires just 130%. This means that EOSDT offers more leverage opportunity to users than DAI.There’s also a substantive difference in the rates that users pay for access to this kind of crypto-finance service. Where MakerDAO takes 5.5% APR, EOSDT meets the same need for just 1%.
You have a stability fund to ensure that users will always get their money back. How was that idea born?
I consider that in the long term, Equilibrium is betting that added transparency and assurance will help further grow what has already become one of the largest single EOS token pools. If the system is triggered, a mechanism will calculate how much additional capital is required to collateralize the system up to 100 percent. This makes sure that every user who has generated EOSDT stablecoin on our framework will get back their funds even if the collateralization of the system will drop below 100 percent.
Considering EOS has often been criticized for not being decentralized, what do you see as your biggest challenge with the endeavour of an EOS based stablecoin?
I think our biggest challenge is educating people outside of the EOS community. As you’ve mentioned there are a lot of debates about a (de)centralisation of EOS. I can understand why some people may be reluctant to move their hard-earned assets to EOS-based stablecoin. So we need to prove that EOSDT is as secure and stable asset as any other similar cryptoasset on a different chain.
The system has a decentralized governance model and we are also transferring ownership of smart contracts to multisig of EOS block producers. In most cases, the community decides what goes and what doesn’t.
Decentralized stablecoins seem like an amazing idea. However when it comes to lending, why would anyone lend and put up more than 100% collateral? What is the biggest use case for the lending process?
The sense of these operations usually comes from what kind of investment views the holder takes on the underlying asset. Imagine that you are big on EOS and don’t want to sell it now as the price doesn’t satisfy. If you need cash in these circumstances (for any reason — buy more assets or pay your home rent) you have a choice: either to sell EOS (and to lose your upside potential) otherwise you can borrow cash through lending mechanisms that require over-collateralization and keep your asset with you. Remember, you always have a choice 🙂
Bad UX and complicated processes are often seen as a major drawback of using decentralized platforms. What does EOSDT do to cater to even crypto-beginners and non-tech people?
All our interfaces are designed to be customer-friendly. We also plan to launch a series of explainer videos in which we will guide our users step by step through all the processes. Besides, you can always get 24/7 support in our Telegram chat https://t.me/equilibrium_eosdt_official
What do you see as a major trend in DeFi this year?
DeFi first emerged as a big trend in 2019, allowing users across the globe an easy and transparent access to borrowing, lending, trading, and investing in a decentralized way. The value locked in DeFi has recently overcome $1b figure, while it was a quarter of the current numbers just a year ago.
I think it’s just take-off and we will see how fast we will surpass the current levels.
From my perspective, cross-chain interoperability will play a crucial role in further growth. Assets with 70% of market cap are still unavailable for major DeFi protocols. Building decentralized connections between blockchains will be one of central topics this year (with respect to high profile launches like Polkadot, dfinity and others).
There should be a diversification of DeFi solutions too. Lending is still the cornerstone of DeFi. However there are other niches with huge potential — insurance and tokenization of assets.
And, last but not least, the regulatory landscape is going to change a lot. Governments become more and more interested in crypto space and DeFi will not pass unseen.
Talking of trends, there is a trend of regulators to implement stricter legislation targeting cryptocurrencies and decentralized platforms. Do you think regulation and decentralization can co-exist? What does EOSDT do to stay regulatory compliant?
From the inception of our project, EOSDT has worked on future proofing its regulatory compliance framework. As we built the Equilibrium framework, which underpins EOSDT, we worked with reputable law firm in the US, and with our Chief Counsel, Josh Goodbody (simultaneously Director of Growth and Institutional Business @ Binance) , to help get this right.
In our view, regulation is inevitable — smart regulation will certainly benefit the growing interest in building decentralised services with peace of mind. To build and scale EOSDT, we knew we had to have regulatory certainty from the outset, and we were successful in this endeavour.
Do you think decentralized stablecoins stand a chance against central bank digital currencies such as the ones announced by the People’s Bank of China or the European Central Bank?
The concept of Central Bank Digital Currency (CBDC) has its pros and cons. CBDCs will benefit from user’s trust and low volatility on one hand — as your usual fiat money does — but at the same time will severely lack in terms of decentralization as they have none. Does every crypto user will willingly forfeit their anonymity and freedom for additional levels of financial security CBDS seems to offer? Not so sure. Decentralized stablecoins will not disappear because of centralized ones as they didn’t disappear because of fiat or bank cards which existed before, the concepts and audiences are just different.
Last but not least, where do you see EOSDT in one year from now?
As I mentioned, we have started off with the EOSIO protocol as it provides low latency and faster transactions. In one year I see EOSDT being a part of vibrant Equilibrium ecosystem that embraces multiple bockchains and allows users to collateralize assets anywhere they want and to get price-stable liquidity on any blockchain they want. The internal cross-chain bridges will allow seamless swapping stablecoin liquidity from one chain to another. This is the bright future where we will hopefully overcome crypto tribalism and will become closer to the world decentralized financial system.
EOSDT is listed on the Bitcoin.com Exchange with BCH, BTC, ETH and USDT-pairs.
To learn more about them, check out their website here.