Equalizer Exchange is the latest Fantom project to capitalize on the DeFi ecosystem. Dozens of Fantom decentralized applications (dApps) have already begun recognizing its innovations that reward liquidity providers and project teams. Equalizer has forked the code from Solidly and applied its own equalizing effect making it the project to watch for the next bull run.
In this protocol overview, we’ll cover the background that inspired Equalizer’s inception, what sets the project apart from its competitors, and what services it has to offer.
Andre Cronje and Solidly
Equalizer was inspired by Andre Cronje’s Solidly project, which launched in early 2022 on Fantom. Cronje’s idea was to create an automated market maker (AMM) with a flywheel-type mechanism for rewarding liquidity providers.
Solidly brought together the best aspects of variable and stable AMM design and utilized a vote escrow model popularized by Curve (also referred to as the VE model) while using a financial non-fungible token (NFT) for the voting mechanism.
The vote escrow model (VE model) allows token holders to select a lock-up period for their tokens. The longer you elect to lock up your tokens, the more weight your tokens may get in governance voting, earning staking rewards, and voting on emissions for the following epoch.
This design led to what is now referred to as the Solidly Wars, in which parties competed to direct where emissions would be deployed. Projects would issue ‘bribes’ to users to incentivize votes for their liquidity pool.
The bribing system sought to solve a dilemma faced by project teams. In order to stimulate liquidity, many projects had to emit their own token to provide an attractive APR rate. In doing so, protocols were diluting token holders, providing sell pressure on the price, and inflating the circulating supply. The bribing system allowed projects to offer rewards for liquidity providers without the need for token emissions.
Those that locked their tokens through the VE model were able to maintain additional income streams as protocols vied for their vote. With this in mind, Solidly was created with an inbuilt bribing system into the user interface (UI).
While the idea remains unique and innovative, the smart contracts for Solidly were immutable, with bugs prevalent in the software from day one.
The ‘Solidly perpetual model’ was designed by the Equalizer team and draws inspiration from the financial modeling system of Cronje’s Solidly project. This perpetual model is the first of its kind and aims to create an equalized effect across the rewards for token holders and the incentive for LP providers.
Equalizer does this by rewarding liquidity providers with a valuable token in the form of EQUAL. The fee structure ensures that the utility and reward for holding and locking EQUAL is high enough to support the required liquidity to facilitate low slippage trading.
What is Equalizer?
Equalizer is an AMM that uses the traditional liquidity pool system to create tradable pairs. Instead of using fees to incentivize liquidity pools, Equalizer uses a continuous loop system to utilize tokens tied to the fees to incentivize its system. This system creates an equalized situation that can allow for token utility and growth.
The incentive system is in place to provide a steady loop of incentives to ensure a low-slippage trade can be completed with fair fee charges.
Equalizer utilizes two tokens.
- $EQUAL – The token’s basic liquid form. This token is used as a transferable method of distributing emissions and has the ability to be locked into a veNFT
- veEQUAL – $EQUAL can be locked in the form of veEQUAL into an NFT, which adopts the VE model for obtaining fees and directing emissions.
- Various lock periods can be selected, and it is a transferable asset
- The percentage of your lock time will be issued to your veEQUAL – The longer you lock, the more veEQUAL received
Initial Supply and Token Distribution
The initial token supply has been dispersed as per the chart above.
- The initial token supply will be limited to 2,500,000 tokens.
- Airdrop, initial liquidity incentive, and team distribution will be locked $veEQUAL for a maximum of 26 weeks.
- Marketing & treasury $EQUAL tokens.
- The idea is to have a fair mix of liquidity incentives and decentralized distribution. Allowing for team focus, marketing, and longevity of the platform.
The team chose to reward users and protocols that had a deep understanding of the Solidly system. The more involvement with Solidly, the more users were rewarded with the EQUAL airdrop.
Each weekly emission will occur from the start of each EPOCH. The emissions will not have a ramp-down period to eliminate dilution and token price depreciation. Emissions will be kept at a slow but steady decline to ensure the equalization of the platform for liquidity incentives and fees for the $veEQUAL holders.
Emissions will have a 0.5% decline rate per week. This will provide a slow & predictable decline in emissions that will last into the next century.
Gauge Voting & Bribes
veEQUAL holders will place their votes once a week on the selection of LP pairings they would like emissions to be distributed to. The pool that you vote at the percentage of your vote will receive 100% of the fees that the pool generates. All trading fees accrue in the epoch following the vote snapshot.
Once your vote has been placed, the same rolling vote will carry until the voter changes their vote. Note: To earn bribes from any pool in the epoch, you must re-cast your vote each epoch.
Bribes will be claimable 24-48 hours after the snapshot, which occurs at Wednesday 23:59 UTC, the end of each epoch. All unclaimed rewards will accrue to future epochs.
The Equalizer Flywheel
Three types of rewards exist for users of Equalizer protocol. These rewards form the sustainable backbone of the project and continually incentivize participants to engage with the protocol.
These rewards are:
The emissions are reserved for LP providers and are distributed over each epoch based on $veEQUAL votes before the start of the new epoch. The rewards will stream over the epoch available for claiming as they accrue.
Fees are generated each time a trade is completed on the exchange. These fees are then streamed back to the gauge voters in their proportionate share of the vote. You can claim these rewards as they accrue for your selected pair/s.
Equalizer has set the fees at a rate of 0.2% per trade for volatile pairs and 0.02% for stable pairs. This fee can be increased to 0.3% if the community wants. This fee structure supports the promotion and retention of liquidity, which is essential for maintaining low-slippage trades.
Lastly, bribes are an additional opportunity for anyone holding $veEQUAL. Bribes are potentially allocated to a gauge to incentivize voters to vote for that pair.
- Equalizer Docs – First step for any user
- Equalizer Medium – For the latest updates on the protocol
- Equalizer on the Fantom Network! Everything You Need to Know! – Austin from Blockbytes breaks down the Equalizer protocol and guides you through the UI
- Dune Analytics Board – Plenty of helpful data points covering the distribution and circulation of the EQUAL token
- Official Discord and Twitter