To become the first dedicated flash lending platform is an undertaking that would be insurmountable without consistent efforts to innovate and find solutions to an entirely new set of challenges. Innovation can, therefore, be seen as part of our project’s DNA, right from the very beginning. Some of the leading designs that we are most proud of are:
A new dynamic economic model for the liquidity providers and borrowers. In a market defined by rapidly evolving trends and overnight evolutions, the incentives driving the behavior of creditors (liquidity providers) and debtors (flash loan borrowers) must be able to evolve and adapt quickly. As such, the flash lending fees and the yield for the LPs have a few unique characteristics:
Flash lending fees are dynamic, varying between 0% and 1%. This range can be altered in real-time through decentralized governance. From the fees, 90% will go as an incentive to the LPs, and 10% will go to the Equalizer Treasury to finance the maintenance and future development. This distribution can also be altered through decentralized voting, from a maximum of 50%-50% to a minimum of 99%-1%.
There are special incentives for long-term liquidity providers. The cryptocurrency ecosystem has three types of trends - bull markets (when the general trend is growth and the demand is optimistic), bear markets (when the general trend is a contraction and there is a negative sentiment in the market) and sideways markets, where there is no clear up or downtrend.
But besides the general direction, the stability of a market is also determined by volatility, which sometimes occurs when the primary market forces shift. Usually, in high volatility periods, the DeFi industry suffers, as LPs withdraw their liquidity to counteract negative trends or capitalize on opportunities. To level and smoothen out liquidity over more extended periods, Equalizer is introducing a special reward amplifier scheme dependent on the duration of the staking cycle - the longer the LP stakes, the higher the reward amplifier goes; the system will reset to simple yield if an LP wishes to remove the funds.
Custom-tailored, multi-chain, L2 infrastructure. Most competitors in the DeFi space are represented by protocols deployed on the Ethereum network, delivering services ranging from collateralized loans to liquidity farming and many more. In contrast, Equalizer was created as a specialized flash loan platform, which allows for a higher focus on the unique functionality that its infrastructure must provide:
Speed. Flash loans got their name because of the speed of the whole operation, which corresponds to the time it takes to process a single transaction on the Ethereum Blockchain. To be able to thrive in their use cases, such as arbitrage, users have to be even faster to prevent frontrunning and to be able to keep up with dedicated arbitrage bots. It is a market in which each millisecond counts, and our objective is to give our users a competitive edge by performing high-speed transactions in parallel.
Scalability. As Ethereum is moving to the L2 Sharding model, We intend to explore the feasibility of introducing Flash Loans in L2, to take advantage of the possibilities available in each shard and also to test cross-shard operational capabilities.
Versatility. While it creates opportunities previously impossible in the centralized finance ecosystems, DeFi is still a relatively rigid ecosystem since it depends mostly on a single token model (ERC-20), a single infrastructure (Ethereum), and a limited range of tokens on most DEXes. Equalizer seeks to unlock and maximize the ability of several unexplored tokens and even multiple infrastructures. First, we design our platform to be compatible with any Ethereum Virtual Machine-based blockchain (such as Binance Chain, Tron, Ethereum Classic, etc.) and will accept any listing of ERC-20 tokens, as long as the community provides the necessary liquidity requirements. Moving forward, we aim to develop flash loan applications that will be compatible with any infrastructure that supports smart contracts, such as Tezos, Algorand, etc, creating a solution that spans and connects multiple chains, exploring and tapping into the potential of cross-chain opportunities.
Advance decentralized governance model. One of the versatility requirements is acephaly; a single point of decision is a weakness in an ecosystem shaped by fast-moving, complex forces that have to be accounted for. By tapping into the wisdom of the crowd, Equalizer uses quasi-instantaneous token voting mechanics to stay on top of the latest market evolutions, with the instantaneous feedback of the community being able to fine-tune and steer the project like a living, breathing organism.