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Assets and Balances
This section describes how user assets, or rather portfolios of assets, are organised within Equilibrium.
Assets in Equilibrium
"Asset" is a generic term describing some cryptocurrency. Assets can be thought of as tokens inside the Polkadot ecosystem, at least to the extent that they also have some supply, as well as logic governing changes to this supply. Users can obtain assets on their account balance in one of the following ways:
- Deposit: bring assets like BTC, ETH, and ERC-20 tokens into other blockchains by way of purpose-built bridges.
- Claim: claim EQ tokens distributed during the token swap.
- Receive: someone transfers assets to user's account.
Equilibrium's assets are fundamentally different from Polkadot’s assets and currency in that we do not define mint / burn / transfer operations for them. An asset module is purely a storage of assets parameters. We have different asset types within the system:
- Native: EQ for Equilibrium, GENS for genshiro - this is our native asset. Native assets can not be borrowed (might change in the future).
- Physical: Any asset that is bridgeable into our parachain - KSM or DOT based assets via XCM, other blockchain based assets (BTC, ETH, BNB, e.t.c.) via the bridge.
- Synthetic: Synthetic assets e.g. perpetuals contract on SPX index
- LP tokens: Liquidity Pool Tokens from Curve and Yield AMMs.
User Balances
Equilibrium uses the substrate balances module to store and modify user account balances. There are several key features that distinguish Equilibrium balances module from the standard balances pallet, which we describe further in this section.
First of all, we have a master account in Equilibrium, which acts like a wallet and a starting entry point to our blockchain products (think Polygon for example), then each master account may have separate sub-accounts with following types:
Sub-account type
Description
Borrower
Borrower sub-accounts are used for borrowing and trading and may have both positive balances (collateral) and negative balances (debt)
Lender
Lender sub-accounts are cash-only and do not allow for debt or borrowing. Lender sub-accounts are used to lend out crypto assets and earn interest fees.
Bailsman
Users must meet a minimum liquidity requirement in order to register as a bailsman. Bailsman may have a negative balances (debt or liabilities) in cases when borrowers default.
Each user sub-account may hold different asset portfolios. Borrower and Bailsman sub-accounts may also have liabilities (debt), which are represented with negative balances in that corresponding asset — negative balances represent borrowed assets. Consider the following totally viable example of an account balance configuration in Equilibrium:
Asset
Positive Balance
Negative Balance
BTC
1.51 BTC
($ 20,000.00)
0.00 BTC
($ 0.00)
ETH
0.00 ETH
($ 0.00)
10.00 ETH
($ 4,000.00)
USD
0.00 USD
($ 0.00)
6,500.00 USD
($ 6,500.00)
The table above shows an account with BTC in assets having USD and ETH borrowed against it. Judging by the balance values, the collateralization is slightly less than 200% here.
Accounts with liabilities are subject to margin requirements, meaning that the total value of their assets should always stay above the total value of their liabilities, otherwise they get liquidated. In theory, Equilibrium's risk and pricing model allows for margin requirement of 0% (collateral value = debt value), but due to block time and price oracle limitations in practice, we risk having untimely market data in the event of abrupt market decline. That's why we limit the critical margin to 5%, allowing 5% wiggle room for possible delays.
No account can hold positive and negative balances in the same asset simultaneously. To see a positive balance in a particular asset, the user must get rid of the negative balance first, and vice versa.
While users generate debt tokens or debt assets directly to their blockchain addresses in traditional DeFi, borrowing in Equilibrium is always a transfer of value to another account. This approach lets us simplify an exchange logic. Consider a leveraged asset buy example:
Classical DeFi approach
Equilibrium approach
- 1.Deposit some asset.
- 2.Flash borrow an additional asset.
- 3.Use the asset as collateral to generate stablecoins.
- 4.Go to a DEX and buy an additional asset with those stablecoins.
- 5.Return the flash loan.
- 1.Deposit an asset.
- 2.Exchange USD (gain a negative balance in USD) for positive balance in an asset that acts as collateral.
Last modified 2mo ago
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