Closed Beta was about reviewing the work we’d accomplished so far in building Equilibrium. We were equally excited as you were to test the Equilibrium application, play around, and push it to the limits. Our team created different accounts to analyze our app functionality in various use cases.
We compared our findings to the expectations outlined in our How-to-Maximize Portfolio in Closed Beta Series.
Here’s our first review in the new series — Insurance. We were curious to know how users leveraged information from our insurance article.
Functionality and Key Mechanics
Like lenders, insurers offer liquidity, but as upfront bailouts used to recapitalize defaulted loans in critical margin calls, providing a safety net that keeps Equilibrium afloat and enables collateral reduction.
The following steps define insurance functionality:
- Insurers earn rewards for securing the risk of liquidation in the system.
- Rewards are in EQ tokens and are payable by borrowers.
- Reward distribution is periodic, with the help of off-chain workers.
- Bailsmen earn rewards split pro-rata insurer liquidity (assets — liabilities as a share of the entire insurance pool). All insurance receives the same APR%.
With the above expectation in mind, we created a dummy account and staked 4000 USDC into the insurance pool, earning EQ rewards for it.
Our functionality test was successful, and the insurance use case performed as we expected. On a 4000 USDC deposit, we received approximately 1800 EQ in interest during beta testing.
APR Fluctuations
Our daily interest averaged 10.47%, with a peak of 16.66% and a low of 7.03%.
We tested various assets to observe their effects on insurance interest rates. The spikes recorded were from heavy stablecoin borrowing, which drove the APR% higher. Our earnings stabilized around the 10% figure and remained within the region (10%) for the rest of the beta testing period.
Another interesting observation we recorded was the block reward frequency. We received our interest payout every 30–50 blocks or approximately 6–10 minutes. These figures will change in the future as we introduce queue-based distribution mechanics with insurers.
Comparison with Other Pools
Here’s the breakdown of user activity in various Equilibrium pools available during beta:
Cumulatively, insurers received an impressive 972K EQs during the Closed Beta duration! The insurance pool, which had lower rewards vs. borrowing or lending (hence the high deposits in the borrower/lender pool), attracted interest from users: 486 beta participants made deposits into the insurance pool worth $5M+.
Recall, bailsmen can earn in two ways:
- Borrowers pay bailsmen variable interest based on their (borrowers) risk profile.
- From borrower position liquidation, where bailsmen earn from the borrower’s collateral and the 5% borrower liquidation penalty
From the performance comparison, we also observe the symbiotic relationship in Equilibrium. Borrowers directly fund insurer interests, while bailsmen provide reprieve against capital inefficiencies. We were excited to watch these elements complementing their services.
Top Earners
Bailsmen’s earnings from beta testing were encouraging. The top ten earners received 12k+ EQ rewards. Below is a chart highlighting the performance of the leading 100 insurance earners.
Cumulatively, they earned astonishing 972K EQs during the duration of beta! The pool, even rewarding lower than potential margin trading, attracted lots of interest from users: 486 beta participants made deposits into the insurance pool for the total amount of more than $5M.
Our Closed Beta insurance experience yielded informative results, which we’ll use to refine our product. Stay tuned for the upcoming use case reviews!
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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