The Equilibria White Paper
Full Paper: Equilibria White Paper
Cryptocurrencies are extremely volatile in value; existing stablecoins are either centralized, public, or unscalable.
The Equilibria dollar will be a private and decentralized stablecoin. The only trust required is in its protocol – which is open sourced-code. Protocol mainnet will launch by early 2020, soon making Equilibria dollars available for use by cryptocurrency traders and early adopters.
Once the mainnet protocol is proven robust, the Equilibria team will create strategic partnerships that increase the availability and usability of Equilibria to investors, businesses, and the general public.
Bitcoin and other novel forms of peer-to-peer electronic cash now allow for online payments without the need for trusted third-party intermediaries. However, the unrestricted nature of these technologies has resulted in speculative trading markets and wildly unstable cryptocurrency values. This volatility has created a growing interest in ‘stablecoins’: a cryptocurrency that is monetarily pegged to an asset that has a better storage of value.
The most common method of building a stablecoin today is through direct asset backing and trusted third parties. The stablecoin Tether (USDT) is backed 1:1 by US dollars held in bank accounts, but this requires not only trust of the company Tether Limited, but their partner banks and the countries in which those banks reside. Such trust requirements for Tether and similar asset-backed stablecoins, combined with a lack of regulatory oversight, make them unsuitable for everyday transactions or long-term value storage.
In contrast, decentralized stablecoins are ambitious attempts to build a stable store of value via novel methods that do not require third party trust or 1:1 fiat backing. The most successful of these to date is Maker, a protocol that uses collateralized debt positions of contracts locked in Ethereum and other offchain assets to mint a stablecoin pegged to the US dollar: Dai. Because the collateral backing Dai is off-chain, a complex variety of feedback and incentivization mechanisms are used to maintain Dai’s stable value. The long-term stability of Dai requires flawless execution of these unwieldy mechanisms and depends on the continued health of its backing assets
Introducing Equilibria – The dollar, decentralized.
Equilibria harnesses market forces and an on-chain asset to issue USDE, a private and redeemable stablecoin whose supply automatically scales with demand. The only trust required is in the protocol itself – not banks or other cryptocurrencies.
Introduction to the Equilibria Protocol
The goal of Equilibria is to create a private, decentralized, and scalable digital currency with stable US dollar value.
Equilibria is a decentralized issuance and redemption ecosystem for creating the US dollar-pegged stablecoin ‘USDE’ supported by an elastic on-chain asset ‘XEQ.’ Both coins and the supporting market transaction data will be written into the same blockchain – currently traded as Equilibria (XEQ) – a hybrid proof of work/stake cryptocurrency based on Monero.
Issuance and redemption works in two directions. The permanent destruction of XEQ to create US dollar-pegged USDE according to market rates, and the permanent destruction of USDE to restore a US dollar value of XEQ at future market value.
Stable Value: Equilibria (XEQ) holders can issue USDE – a contract redeemable for $1 of XEQ.
Decentralized: User-run oracle node network writes market data into the XEQ blockchain and uses it to compute USDE issuance and redemption rates.
Private: Every transaction you make is private and secure via ring signatures and stealth addresses.
Open Source: Equilibria is a community project with public code. Anyone can contribute ideas.
The Equilibria Protocol has three core functions:
1. To determine a robust, accurate, decentralized, and difficult to manipulate issuance and redemption exchange rate for conversions to and from XEQ and USDE.
2. To assure that this issuance and redemption process, combined with normal mining and oracle node payouts, cannot result in hyperinflation and collapse of the XEQ ⇌ USDE ecosystem.
3. To perform correct, fair, and permanent issuance and redemption accounting for XEQ ⇌ USDE conversions.
This is accomplished by the individual subsystems:
Ribbon: The automated system for monitoring exchange trading and volume data, writing it into the XEQ blockchain, and aggregating it as an exchange rate for issuance and redemption to and from XEQ ⇌ USDE. Oracle
Nodes: Dedicated, decentralized, community-run servers that query exchanges for Ribbon data, write it into the XEQ blockchain, approve issuance and redemption functions, and help monitor transactions along with proof of work mining in exchange for node holders earning part of the XEQ block reward. The reward payout goes 50% to the miners and 50% to oracle nodes. To run an oracle node, operators must stake a set amount of XEQ for a set period of time.
Emissions: Current emissions will be reduced prior to stablecoin mainnet until they reach a post-launch target of 8 new XEQ emitted per-block paired with faster 2 minute block times. This is combined across mining / staking / issuance and redemption emissions up until 84 million coins, after which only fees will pay miners and oracle node holders.
Reserve Fee Redistribution: To discourage XEQ supply inflation from issuance or redemption, higher fees are charged during periods of price volatility. These excess fees are written into the block header as a ‘reserve’ for use as future payments to miners and node holders in place of new emissions. This creates a feedback loop that dampens inflationary events.
Issuance and Redemption: Works in two directions. The permanent destruction of XEQ to create US dollar-pegged USDE according to market rates, and the permanent destruction of USDE to restore a US dollar value of XEQ at future market value.
Introduction to the Equilibria Growth Strategy
Since market liquidity is necessary for the health of USDE issuance and redemption, early protocol growth is more critical for Equilibria’s long-term success than for most new cryptocurrencies.
Equilibria will grow its presence using a mix of digital marketing and business development strategies to grow the use and adoption of USDE. This will be accomplished via a mix of community development, content marketing, and strategic partnerships focused on the following elements:
1. Core principles
2. Features for adoption by traders and investors
3. Features for adoption by businesses
Q3 2019 – Development
A large amount of development has already occurred in 2019. We will soon release a full testnet version of USDE accomplishing what is detailed in this paper. Next, we will upgrade our mining algorithm to be FPGA and ASIC resistant; this algorithm fork will result in an overall reduction in XEQ emissions and oracle node staking requirement.
Q4 2019 – Extensive Testing
Q4 will begin with extensive testing of the Equilibria Protocol. While the development team is working on improving the protocol, the marketing team will focus on bringing more awareness of Equilibria to trading communities.
Late 2019 or early 2020 – USDE on Mainnet
USDE should be live around the end of 2019, paired with an additional 50% reduction in XEQ emissions and oracle node staking requirement. As we approach mainnet, we will be able to publish a more elaborate roadmap on post-mainnet releases and developments.
Harrison Hesslink – Founder and Lead Developer
Harrison is the founder of the Equilibria ecosystem as well as its core contributor.
Thomas D. Parker – Business Development & Marketing
Thomas grows the adoption and awareness of Equilibria via business development and digital marketing.
Tyler Hulett, PhD – Data Science & Brand Management
Dr. Hulett heads brand design while contributing to algorithm concept development.
Cryptochangements – Developer
Cryptocurrency enthusiast and leading open-source blockchain developer
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