Coming very soon, EQUOS will introduce the functionality to earn yield on different asset balances within wallets on EQUOS, powered by Digivault, our custodian platform. This will mean, for example, that holders of Bitcoin on EQUOS will be able to earn yield on their Bitcoin by placing it into a lock account for specified periods of time. This is where EQO’s utility will come into play. EQO will effectively increase the yields available to clients by a factor of at least 10%. Historical yields of different assets will be posted on the website here.
As clients lock up an asset, they will be asked if they wish to lock up EQO against that balance. EQO will have a Power Ratio that grows over the life cycle of the token, increasing every 90 Reward Blocks in line with the ‘halving’. During the first 90 Reward Blocks of the EQO token, EQO will have a Power Ratio of 1 EQO:1 USD. This means that if a client is locking up US$500 of Bitcoin, they would need to lock up 500 EQO against it to achieve the full enhanced yield available for Bitcoin. After the first 90 Reward Blocks, EQO’s Power Ratio increases to 1 EQO:2 USD, meaning the same client would need to lock up just 250 EQO against US$500 of Bitcoin to achieve that enhanced yield. EQO requirements are locked at the initiation of the placement and do not fluctuate over the course of that specific holding period (no matter if Bitcoin or the placed asset goes up or down in USD terms, or indeed if the Power Ratio changes during the period).
Enhanced yield will vary depending on the market environment, but the increase in interest will be at a minimum of 10%. For example, if client A locks up her balance of US$400 of Bitcoin at a time when yield on Bitcoin is at 5% and we are post the first EQO Reward Block ‘halving’, she would need 200 EQO to benefit from the full enhanced yield on her account which would be a minimum of 5.5% (or 10% higher than the normal yield).
As discussed, the EQO Power Ratio will increase by 1USD after every ‘halving’ of the Reward Block. There are seven halvings to get to the final 8th Epoch of reward blocks. This would mean that by the final period, the Power Ratio of EQO will be 1EQO:8USD.
For each fixed term lending activity, there will be two rates for locking up balances the Yield Rate, which is the standard rate that the client would usually obtain for locking up their funds, and the Enhanced Yield Rate, which is the rate that a client would receive if they were to lock up an equivalent amount of EQO in accordance with the Power Ratio.
The Power Ratio is the amount of EQO required to be locked up for each USDC held in lending activity.
The Enhanced Yield Rate will be at least 10% higher than the Yield Rate, as shown in Equation A-1.
Equation A-1: Relationship between Enhanced Yield Rate and Yield Rate Where: Ryield,enhanced is the Enhanced Yield Rate Ryield is the Yield Rate
To learn more about increasing your earning potential, read the whitepaper here.