Tokenomics
Equilibrium will have a native token called EQ. EQ token serves several functions within Equilibrium’s DeFi ecosystem:
Key features:
- Staking opportunities: EQ holders receive rewards on their tokens staked in governance, lending, and market making pools
- Bailout and collateral liquidity: EQ tokens can be locked in bailout pools to secure loans and earn yield or used as collateral to take out loans
- Platform currency: Users pay transaction fees for transacting on Equilibrium parachain and product fees in EQ
- Governance: token EQ holders have a say in system changes
Resources in a blockchain network are limited. That includes for storage and computation. Transaction fees prevent individual users from consuming too many resources. Equilibrium uses Polkadot’s weight-based fee model.
Fees on the Equilibrium Substrate chain are calculated based on three parameters:
- A per-byte fee (also known as the "length fee")
- A weight fee
- A tip (optional)
The length fee is the product of a constant per-byte fee and the size of the transaction in bytes.
Weights are a fixed number designed to manage the time it takes to validate a block. Each transaction has a base weight that accounts for the overhead of inclusion (e.g. signature verification) as well as a dispatch weight that accounts for the time to execute the transaction. The total weight is multiplied by a per-weight fee to calculate the transaction's weight fee.
Tips are an optional transaction fee that users can add to give a transaction higher priority.
Together, these three fees constitute the inclusion fee. This fee is deducted from the sender's account prior to transaction execution. A portion of the fee will go to the block producer and the remainder will go to the Treasury. At Equilibrium's genesis, this will be set to 80% and 20%, respectively.
Equilibrium DEX will charge trading fees. We are looking at fees presumably starting in the 0.03% - 0.06% range and then falling based on trade volume, so there will be a commission tier tied to average trading volumes per a specified period of time. The DEX is currently in the making, so actual numbers will be available after we perform some extensive unit and stress testing.
The biggest challenge here is to figure out how to avoid transaction costs when placing an order, while at the same time discouraging network spamming by multiple orders. Equilibrium is developing a blended solution of unsigned transaction validation mechanisms and hard-set limits on tradable quantities of instruments.
Interest fees within Equilibrium are determined within the risk and interest rate modules and are based on each individual borrower’s portfolio of assets and the amount of debt/ liabilities this portfolio bears.
In short: the risk model increases borrower rates when bailsmen liquidity compared to collateral liquidity deteriorates and/ or entire system collateral becomes riskier, and vice versa: The risk model decreases borrower rates when liquidity from bailsmen picks up and/ or the entire system collateral becomes less risky.
The governance for Equilibrium will be driven by an on-chain process and will make use of the Democracy and Council pallets similar to how Kusama and the Polkadot chains are governed. The overall intent of these modules is to allow the majority of tokens on the network to determine the outcomes of key decisions around the network. These decisions come in the form of stake-weighted voting on proposed referenda and get enacted by an autonomous enactment system that ensures that user’s decisions are binding.
Some of the main components of this governance model include:
- Council — A group of elected individuals who have special voting rights within the system. Council members are expected to propose referenda for voting and have an ability to veto publicly-sourced referenda. There are rolling elections for council members where EQ token holders will vote on new or existing council members.
- Referendum — A proposal for a change to the Equilibrium system including values for key parameters, code upgrades, or changes to the governance system itself.
- Voting — Referenda will be voted on by EQ token holders on a stake-weighted basis. Referenda which pass are subject to delayed enactment such that people that disagree with the direction of the decision have time to exit the network.
- 1.Initially, while developing, testing and finalising our core logic, Equilibrium will run on PoA consensus with a centralised sudo approach used for applying changes to the network.
- 2.After Equilibrium onboards as a parachain and delivers its line of products, we will introduce a governing council which will make Equilibrium-related decisions and changes to be visible on-chain. Changes to the protocol will still be managed via a SUDO. Council members will be elected from nominees on a basis, similar to what Polkadot does but with Equilibrium-specific parameters.
- 3.At final stage, when system proves to be stable, we will enable recurring council elections, public and council proposed referenda, tallying, adaptive quorum biasing. We will publish the detailed list of system parameters the governance will be able to monitor and change.
Last modified 1yr ago