Equilibrium Integrates With Polygon
Equilibrium is boosting its cross-chain interoperability by integrating with Polygon — the Ethereum sidechain. This is the first of its kind between Polygon and a Polkadot parachain — Equilibrium.
Firstly, Polygon is an Ethereum sidechain that enables developers to build scalable decentralized applications (dApps) that processes cheaper transactions. Some of the top dApps powered by Polygon include Aave, QuickSwap, EasyFi, SportX. Equilibrium’s technical integration with Polygon will grant users of these platforms (and other protocols on Ethereum) access to an all-in-one decentralized exchange where they can earn greater yield, borrow assets with minimal collateralization, and benefit from deep liquidity, plus cheaper and faster cross-chain transactions.
Integrating with Polygon
Polygon is now offering their scalability-focused products to other blockchains to foster cross-chain interoperability, our partnership promises to be an exciting one that will benefit the communities of both networks.
The integration will be done through the Equilibrium bridge that is battle-tested to connect with other EVM-native blockchains. This integration will improve the interoperability and the scalability of transactions between Polkadot and Ethereum while offering a plethora of cross-chain DeFi use cases for participants of both ecosystems. So while transactions are cheap both on Equilibrium and on Polygon, this bridge will power cheaper cross-chain transactions.
Polygon has its own native token called $MATIC which is used for staking (and earning rewards), governance (holders can vote on changes to the network) and performing transactions on Polygon.
Moreover, Its integration with Polygon will introduce the MATIC Polygon native asset to the Polkadot ecosystem and the Equilibrium money market. Users that lock their MATIC tokens on the Polygon blockchain will receive a wrapper asset that they can later move across the Polkadot ecosystem via XCM communications between Polkadot parachains.
Going in the other direction, they will add both EQ and EQD liquidity on the Polygon chain as ERC20 compatible smart contracts.
Interactions with the Polygon ecosystem
Equilibrium will introduce all advantages and innovations of its DeFi 2.0 platform to Polygon users and projects based on top of it. The most notable DApp running on Polygon is Aave. It is one of the leading lending protocols, and Aave holders will be able to use their Aave tokens as collateral to borrow assets on Equilibrium and benefit from our minimal collateralization. Another potential use case is cross-platform order execution when one of protocols experience shortage of particular assets on one of platforms for borrowers.
There are many other protocols running on Polygon, and we’ll update you as we introduce them to the Equilibrium and Polkadot ecosystems. Platforms like Dfyn Network and JellySwap are multi-chain DEXes that allow for cross-chain trading. So this bridge will enable users of these protocols to easily move their assets to Equilibrium and lock them as bailsmen to earn interest from borrowers. Another top protocol powered by Polygon is gTrade. Users will be able to borrow assets on Equilibrium and benefit from the lowest collateralization and trade stocks, forex, and crypto on Gains Trade (gTrade). And lots more!
To better understand these concepts, we’ll go more in-depth into the benefits of this Equilibrium-Polygon bridge using $MATIC as a case study.
Without further ado, let’s explore some of the benefits (DeFi use-cases) this integration has for holders of Polygon-based assets.
DeFi use cases of Polygon on Equilibrium
Borrowing with low collateralization and high leverage
This integration will allow MATIC holders to use their $MATIC as collateral to borrow other assets on Equilibrium. Users will be able to borrow anything from USDT Polka-native stablecoin to ETH or DOT and use them elsewhere in the Ecosystem, including Equilibrium’s DEX.
The good thing is holders can benefit from Equilibrium’s minimal collateralization requirement which is as low as 105% (20x leverage). Also, the Equilibrium money market allows for risk diversification and reduction of interest payable by borrowers with a collateral portfolio containing assets and non-volatile tokens such as stablecoins.
Another way you can reduce risk is having long MATIC and going short using approximately the same amount of ETH — ETH and MATIC are highly correlated.
Staking with high APY
Equilibrium has an awesome liquidity incentive program that allows users to earn elevated APY in EQ tokens for providing liquidity: the more you lend, the more insurance and lending liquidity you provide. And the more liquidity you source to DEX market makers, the higher your APR liquidity farming figures will be, with average numbers of 10 to 20% APY.
Earn on your investment as a bailsman and lender
Equilibrium introduces a safeguarding mechanism in the form of an insurance role where users, called bailsmen, provide liquidity to the insurance pool and insure the system in the event of chaotic situations. Bailsmen lend out assets and secure the system against liquidating borrowers and earn penalty rewards and interest rates in the process.
With this integration, users on the Polygon network can become bailsmen and lock their assets as EQ tokens in Equilibrium’s liquidity pool and earn interest rates payable by borrowers.
Cheaper transaction costs
Lastly, Polygon solves the problem of expensive transaction fees by driving gas fees down to a fraction of a cent. Although Equilibrium transactions are also cheap, this integration will enable you to move stablecoins and other crypto-assets between Equilibrium and Polygon dApps at much cheaper fees (less than a dollar per transaction).
About Equilibrium
Equilibrium is a one-stop DeFi platform on Polkadot that allows for high leverage in trading and borrowing digital assets. It combines a full-fledged money market with an orderbook-based DEX. EQ is the native utility token that is used for communal governance of Equilibrium. xDOT is a liquid and tradeable wrapped DOT that unlocks liquidity of DOT locked in parachain auctions and delivers multiple crowdloan bonuses on Polkadot.
