Polkadot’s two parachutes will communicate to create a unified DeFi environment.
The DeFi Equilibrium Cross-Chain Loan (EQ) protocol is ready to bring its stable USD-linked currency to Moonbeam, a project of Polkadot (DOT) building a blockchain similar to Ethereum.
DeFi projects that are based in Moonbeam will be able to use Equilibrium’s stable currency as if it were native to the blockchain. This includes decentralised exchanges, single-purpose lending protocols and other basic components of DeFi.
This project wants to recreate Ethereum in Polkadot
Moonbeam can be described as the “Ethereum on Polkadot” project. It uses the same intelligent contract environment seen in Ethereum, features an Ethereum virtual machine and uses the same convention for accounts and wallets. As a result, Moonbeam supports Solidity’s intelligent contracts and allows developers and users to transfer their projects and wallets with minimal changes.
At the same time, Moonbeam is a parachute, Polkadot’s equivalent of a shard. This allows other parachute chains to connect to Moonbeam with minimum effort, thanks to the communication between parachute chains enabled by Polkadot’s broadcast chain, essentially its equivalent to the Ethereum 2.0 beacon chain.
Polkadot launched a test network for the communication protocols between shards
Equilibrium will use this connection to bring your token into the Ethereum-enabled environment. The expectation is that Ethereum-based DeFi protocols will bring your projects to Moonbeam, thus directly connecting Equilibrium to the broader DeFi ecosystem. One such possible integration is SushiSwap, which is exploring the possibility of creating a sister protocol in Moonbeam. Alex Melikhov, CEO of Equilibrium, told Cointelegraph about the integration:
“We believe that there is significant value in showing collaboration between specialist parachutes where the sum can be greater than the parts for both parties.
EOS-based DeFi project set up in Polkadot
Equilibrium is a money market protocol between chains, which allows guarantee deposits to create a stable, decentralised currency, similar to MakerDAO. Although originally based on EOS, Equilibrium moved the core of its protocol to Polkadot in the summer of 2020. In addition to making use of Polkadot’s interoperability functions, Equilibrium places great emphasis on its bailsmen settlement mechanism. Unlike other similar protocols, settlements are managed by a permanent class of liquidity providers that receive a share of the platform’s revenues. This provides a baseline of rewards regardless of the amount of debt settled, which simply becomes an additional source of revenue.
The launch will take place after Polkadot’s early parachute auctions, which are expected to take place in early 2021. Melikhov said his plans depend on both Moonbeam and Equilibrium receiving parachute slots, which is not a certainty. However, he believes there is enough space for all the major projects currently being built in Polkadot to receive a parachute.
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