You will recall from our earlier communication that Equilibrium is working on a grant that we received from Web3 Foundation to pioneer services facilitating other projects’ migration to the Polkadot ecosystem. We are proud to say that we have now completed the second of three milestones for that grant.
The Substrate modular framework allows projects in the Polkadot ecosystem to build their own blockchain with smart contract functionality, customizing them for their own use cases using pallets.
Equilibrium’s financial pallet is an open-source Substrate module that utilizes oracles for external price feeds on featured assets and uses this data for further financial calculations which help users to optimize their asset management. The pallet will benefit anyone building complex DeFi and Fintech solutions using Substrate technology because it offers a lot of functionality out of the box to reduce development efforts.
Milestone II covers returns, volatilities, and correlation calculations. The following functionalities have been achieved in this phase:
- A unified data structure is in place for each asset. In addition to price data, users can now receive other relevant asset information such as returns, volatilities and pairwise correlations with other assets. They can conveniently observe how their asset values change in a given time interval and monitor profitability.
- Historical prices can be added when starting the chain. This is a convenience measure so there is no need to wait until the pallet accumulates price points at desired time intervals. This feature is very useful for traders who use price monitoring to make predictions which guide their trades.
- Functions for volatility and correlation calculations are enabled for whichever existing assets and frequencies the user requests. This feature is essential for effectively planning the use of your assets.
- Two methods for calculating volatility and correlations are in place. One utilizes a standard statistical method, while the other relies on an exponential weighted average approach. The user can choose between the two depending on their needs and the trade intervals which they select.
- The code representing the second set of milestones has been added to Equilibrium’s public GitHub repository.
During the next milestone, we are planning to implement portfolio volatility calculations and Value at Risk calculations. Stay tuned to follow Equilibrium’s latest developments.