Essential Tools For Advancing Finance: Flash Loans Come To Elrond DeFi Via Equalizer
Loans are essential tools in any financial system. They contribute to the growth of the global economy by enabling businesses and entrepreneurs to capitalize on opportunities. This results in the creation of jobs, assets, and revenue, which further create new opportunities, in a positive feedback loop.
However, accessing loans is a complex process that requires collateralization, lengthy verification procedures, and results in generally large interest rates, with a large portion of the loans defaulting and ending up in debt collection procedures.
Decentralized Finance products based on blockchain smart contracts have enabled the creation of a new type of loan, called “flash loan”, which is an improvement over traditional loans as they do not require collateral nor do they run the risk of defaulting.
Flash loans are either granted and paid back with interest or not granted at all. They are called “flash” because the entire process of granting and paying back the loan is executed in the single unit of time required to produce a blockchain block. The most well-known use cases for flash loans are arbitrage, collateral swapping, liquidations, and portfolio rebalancing.
We are excited to announce that flash loans are coming to Elrond DeFi via Equalizer, who are building a dedicated flash loan platform!
Through the integration of our mainnet into their flash loans marketplace, Lenders will be able to contribute eGold and other assets issued on the Elrond Network into liquidity pools, and Borrowers will be able to take out flash loans for capitalizing on opportunities on the Maiar Exchange and other DeFi platforms deployed on our blockchain.
“Flash Loans have been capturing the attention of the DeFi space because they enable complex financial systems to quickly converge to a market optimum, while also acting as a correction mechanism for high-risk experimental products. A DeFi system correctly designed to accommodate this innovative tool has transformational potential for global finance. We look forward to seeing Equalizer go live on our mainnet." said Beniamin Mincu, Elrond Network CEO.
“We are excited about the opportunity to work with Elrond’s WebAssembly Virtual Machine for deploying our logic in a high speed and low-cost DeFi ecosystem. Features such as the 30% royalties for Smart Contracts and inexpensive token transfers will create a cost/benefit dynamic that we believe will be very appealing to our userbase” said Iulian Nita, Equalizer Project Lead.
The collaboration is important for Elrond because it gives participants in our DeFi ecosystem access to Flash Loans, arguably one of the most innovative tools that are made possible by blockchain finance, which will greatly enhance the opportunities for market actors and result in an overall healthier DeFi landscape.
Elrond is the internet-scale blockchain, designed from scratch to bring a 1000-fold cumulative improvement in throughput and execution speed. To achieve this, Elrond introduces two key innovations: a novel Adaptive State Sharding mechanism, and a Secure Proof of Stake (PoS) algorithm, enabling linear scalability with a fast, efficient, and secure consensus mechanism. Thus, Elrond can process upwards of 15,000 transactions per second (TPS), with 6-second latency, and negligible cost, attempting to become the backbone of a permissionless, borderless, globally accessible internet economy.
Equalizer is the first dedicated flash loan marketplace built on top of a scalable infrastructure that can handle the rising demand of decentralized lending and borrowing and that can boost the trading volume of any listed asset. It offers top benefits over the popular do-it-all DeFi protocols and sets itself a class apart by offering lower fees, a virtually unlimited choice of token vaults, high liquidity through yield farming, and multi-chain capabilities.
Equalizer enables profitable trading strategies for arbitrage, liquidations, portfolio rebalancing and collateral swapping.