It’s no secret that people can make money with digital currencies — as different coins or tokens rise and fall in value. It’s completely realistic to find your digital assets suddenly worth a vastly different amount than they were the previous day, week, or month.
But stablecoins aren’t prone to this kind of volatility and are actually designed to maintain the same value regardless of how the market moves.
But this doesn’t mean stablecoins can’t be harnessed for making money in other ways. By comparison to conventional crypto coins, stablecoins offer opportunities for additional revenue beyond trading or holding. Let’s explore the EOS-based stablecoin EOSDT, based on the Equilibrium decentralized finance (Defi) framework, to learn how stablecoins can be profitable.
EOSDT is a decentralized stablecoin that enters circulation when crypto holders stake their EOS assets to the EOSDT smart contract. Users collateralize their digital assets and receive price-stable currency pegged to the US dollar in return. What they choose to do with it after that is up to them. Whether it’s to make conventional online payments or harness EOSDT’s unique characteristics to make some money.
We, of course, encourage you to do your own research (and this is certainly not to be considered as investment advice), but we’ll flag some commonly understood commercial use cases that make EOSDT worth paying attention to. Here’s what you should know how to do:
1. Open an EOSDT position
If you want to make money with EOSDT, the first step is to generate some. Go to Equilibrium’s self-service gateway, stake your EOS as collateral to back the value of your stablecoins, and store them in any one of the wallets that support it. Congratulations, you’re the proud owner of some decentralized stablecoins that can be used in many promising use cases.
2. Collect profits as the system rebalances itself
Cryptocurrency values fluctuate constantly. The most basic mechanisms protecting EOSDT’s underlying assets from this volatility is the initiation of collateral sell-offs for EOSDT at a discount. EOSDT holders can return their stablecoins to the system in order to participate in a sell-off, preserving the framework’s balance and earning on it.
It bears mentioning that there is a more sophisticated mechanism for instant liquidations on the way. Users can deposit their EOSDT holdings into a special pool to enjoy passive income. While the system runs an automatic EOSDT liquidation, instantly buying out liquidated collateral at a 3% discount. This enhanced liquidation system turns collateral back into EOSDT on connected decentralized exchanges with a pre-agreed spread.
3. Leverage your EOS holdings
Suppose a user has 1,000 EOS. If they’re bullish on this cryptocurrency and believe the price will increase, they can put up 1,000 EOS as collateral for generating EOSDT. Let’s say they decide to generate 1,000 EOSDT, trading it for more EOS (or any other crypto, for that matter).
After user buys $1,000 USD worth of EOS, let’s suppose their bullish prediction was correct and the price increases by 50%, leaving the user with $1,500 USD of EOS. Whenever they want to unlock their pledged EOS, they need to pay back the initial 1,000 EOSDT they generated, plus a small fee that’s currently set to just 1% APR. After receiving their initial EOS, they’re left with an extra $500 USD worth of EOS to boot. This profit is the direct result of being able to leverage your existing EOS for more crypto.
4. Passive income with EOS’s resource exchange (REX).
The EOS blockchain supports a marketplace called REX . This sees people lend EOS to the system, earn fees on that stake when others borrow it in the form of CPU/NET resources. It’s a very popular market for its passive income opportunities — almost every EOS holder uses it. These people might have to choose between depositing their holdings into REX or using Equilibrium to generate EOSDT. But Equilibrium made this choice easy by integrating with REX — now EOS holders can enjoy both options at once. This way, EOSDT combines all the opportunities offered by REX with cheap leverage for all your digital assets holdings. This lets users who may not want to generate EOSDT still enjoy the collateral growth as a result of liquidations and REX borrowing.
How does it work? Equilibrium stakes its collateral pool to (over 5.8 million EOS currently) the REX market every five days. Prices increase on REX when users borrow CPU/NET resources, so that’s where the potential for making a profit on Equilibrium collateral holdings comes from. The framework doesn’t sell REX to fix the gain, but instead stakes less EOS than required for the amount of current profit next time. Then it distributes 50% of the unstaked amount to the liquidator smart contract, where it can be bought with NUT tokens at a 6% discount from the current oracle price.
The remaining 50% goes to EOS collateral holders in proportion with their collateral amounts.
5. Preserve the value of the EOS you already have.
Beyond simply making more money, the EOSDT stablecoin lets users move out of risky EOS and into riskless EOSDT on secondary markets. EOSDT will remain a safe-haven currency because its smart contract technology and over-collateralization mechanisms keep it securely pegged to USD. As it’s transparently backed by liquid digital assets, it’s a completely useful tool for helping the crypto community hedge against market turmoil.
6. And why not address trading?
We started by talking about EOSDT’s profitability beyond trading, but we’d be remiss to skip this key point. EOSDT definitely has some outstanding trading capabilities. The previously mentioned cheap leverage combined with Equilibrium’s aim to reduce collateralization levels in the future, it becomes even more appealing to traders. It creates plenty of room for general trading activity, and margin trading specifically.
The first trading benefit is that EOSDT has small spreads on the market. For example, on HitBTC, one of the oldest and popular high-liquidity exchanges in the industry. It has half-billion-dollar daily trading volume, EOSDT’s keeping a tight 0.11% spread (per 1 BTC). It can be combined with trading bots earning on small spreads. Secondly, EOSDT has a lot of liquidity that allows for arbitrage opportunities. It’s a whole new market niche for market makers and arbitrators alike. EOSDT is offering crypto trading community access to many other interesting trading strategies like pyramiding, margin trading, and much more.
Finally, EOSDT offers completely transparent stablecoin collateralization. This important feature means that stablecoin minting is simply not possible until real digital assets go into a smart contract that keeps them completely auditable. There’s no way for any additional tokens to accidentally be issued or for other mistakes to weasel their way into reality.
So keep in mind: EOSDT isn’t just about offering people new ways to transact and spend money. But also about giving those people new ways to earn on their crypto activities. It all starts by generating EOSDT stablecoins here.