Exploring EQ Token Utilities: Why It’s a Long-Term Hold

Exploring EQ Token Utilities: Why It’s a Long-Term Hold

Equilibrium’s mission remains to make DeFi even more incredible by continuously enhancing user experience, ending liquidity fragmentation, and offering exceptional services. Essential to the Equilibrium experience is the native EQ token, which fuels transactions among other Equilibrium activities. EQ tokens after Equilibrium’s planned updates will also provide access to other coins, hence services, in the Polkadot ecosystem and beyond.

Accumulating EQ tokens is a strategic approach for users with a long-term vision of Equilibrium use cases and its potential to enhance the DeFi experience. EQ tokens provide several crucial functions:

  • Bailout and collateral liquidity — LPs earn yield by locking EQ in Equilibrium’s liquidity pools.
  • Platform currency — Users pay transaction fees for operations on Equilibrium’s Substrate and product fees in EQ.
  • Governance — EQ holders have a say in system changes and EQ-weighted voting.

With EQ tokens, users gain the above advantages for convenience and profitability within Equilibrium. These merits also form the basis for owning and keeping EQ tokens. Consider EQ token utility in the following examples.

Utility in the Equilibrium Ecosystem

Transacting using Equilibrium attracts three payments: transaction, DEX, and interest fees.

For efficient operations within Equilibrium, users require an adequate amount of EQ tokens to earn, borrow, and trade at max efficiency. Statistical data from the Closed Beta highlighting borrowing, DEX trading, and lending suggest that EQ demand will increase significantly once the Equilibrium app is live for the public. Acquiring EQ tokens after the release will not be challenging; however, users will pay higher rates due to demand.

Another Closed Beta highlight is the eagerness of users to leverage the opportunities in Equilibrium. With an average of ~300 daily users, there is potential for high daily EQ demand amongst users to settle transaction fees. Cumulative trading in the two weeks surpassed $75M, another indicator for EQ utility once the Equilibrium app releases for public use. Users intending to trade or utilize other Equilibrium services will benefit from an adequate EQ reserve.

Users earning from staking EQ in the insurance pool is another EQ token advantage. When users insure the Equilibrium system, they take on liquidated positions (both collateral and debt) and receive penalties (5% ATM) and interest rewards. Staking into the insurance pool will earn users more EQs at a minimum of ~ 2% APR (higher borrower demand will lead to increased interest with figures reaching as high as 100% APR at times of extreme market volatility and elevated user demand). And the most exciting part, probably, is that these returns are real yields embodying a sustainable model — a rarity you see among modern protocols keen on rewarding users with out-of-touch farming rewards, creating significant pressure on their native assets.

Upcoming EQ Token Exchange Listing

Plans are underway to list the EQ token in the Equilibrium DEX and have EQ traded against EQD. The move creates avenues for diversifying the Equilibrium user base while providing Equilibrium users access to assets beyond the Equilibrium chain. With a 1:1 peg to USD, EQD is a gateway to USDT and USDC, which open more trading opportunities for Equilibrium traders.

Equilibrium is on the verge of securing EQ token slots in various AMMs across the Polkadot ecosystem. EQ token’s presence in other AMMs and CEXs will facilitate a broader market reach, giving more cryptocurrency users access to EQ tokens. EQ token holders also have the advantage of trading EQ for EQD on the Equilibrium DEX, which facilitates EQD’s availability across Polkadot and beyond.

Another benefit from EQ token listing is up to 50% trading earnings for users engaging in market-making activities.

Collateral Support for EQ tokens

The beauty of the Equilibrium protocol is that, unlike single collateral vaults, it supports multiple assets as collateral and treats them as portfolios. By diversifying this portfolio, users effectively reduce the interest rate on their borrowing.

The native EQ token is among the assets Equilibrium supports as collateral. EQ holders who desire to take loans from Equilibrium have EQ tokens to their advantage, and EQ tokens back up any loans a user takes on the Equilibrium platform. This is a multiple utility win-win situation both for the users and ultimately for the Equilibrium protocol in the long run. By locking your EQ tokens into collateral and taking out loans, you can use those loans to further the expansion of the EQD stablecoin, for example, and earn rewards in the process by staking EQD stablecoins either into AMMs or lending them out to market makers to generate juicy profits and share them with you. At the same time, locking EQ tokens leads to limited sell pressure on the asset, benefitting all of the holders simultaneously: why sell something which can be used to grow the protocol substantially and potentially give you the much desired X-es?

Checks and Balance

Equilibrium places safeguards around the EQ token to mitigate any immature token abandonment. During the intended live launch, Equilibrium plans to use a conservative collateral ratio of around 400% to 500% (Equilibrium will adjust the figures based on community governance). The move will disallow disingenuous users from gaming the Equilibrium system or opting out of the EQ allocation.

EQ tokens also impart influence to EQ token holders through vote-locking. Users make governance decisions, such as community-driven proposals to make amendments to the system. EQ token holders become decision-makers and help steer Equilibrium in a community-centric direction.

Hold EQ Tokens for Maximum Benefits

There are numerous EQ use cases for users to profit. From staking in insurance to accessing markets beyond the Polkadot ecosystem. As Equilibrium grows and the imminent release of the final Equilibrium app version, users will soon reap the benefits of owning EQ tokens.

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.

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