With over $9 billion dollars locked up, currently Ethereum is considered to be the king of Decentralized Finance (DeFi). Of that total, $461 million dollars is locked up as collateral for MakerDAO loans, the #1 decentralized stablecoin platform.
Several other platforms are competing for a share of the growing DeFi market, including Vigor, which is a peer-to-peer lending platform similar to MakerDAO running atop the EOS blockchain.
Like MakerDAO, the Vigor platform consists of two tokens:
- VIGOR - The USD pegged payment token
- VIG - The token required to access the platform and participate in governance.
In order to take out a loan with Vigor, users must lock up some EOS as collateral, as well as a proportionate amount of VIG tokens. In return, they receive VIGOR stablecoins pegged to the US dollar. When a user is finished with their loan, they repay it using VIGOR and collect their collateral.
The collateral in Vigor is secured by 21 custodians, who have all been voted in by the community. They control multi-sig smart contracts that have been audited by a third party.
EOSIO Benefits
Since Vigor is running atop EOS, it has some advantages over Ethereum:
- Half-second blocktimes ensuring quick access to funds
- More granular account security
- Feeless transactions
MakerDAO Comparison
One feature of Vigor that distinguishes it from MakerDAO is that in addition to a user's collateral, loans are backed by insurers. These insurers earn a premium for providing extra capital to cover a loan in the event the user's collateral is insufficient. Vigor's FAQ covers how the premiums for this insurance is calculated:
The contract continuously stress tests the system and autonomously updates the insurance premiums. If solvency is below target premiums rise to attract more insurance collateral and slow further borrowing.
Governance on Vigor also differs from MakerDAO in that VIG holders are able to delegate their voting power to DAC (Decentralized Autonomous Community) custodians, who are more knowledgeable or can hire experts. Additionally, both borrowers and insurers have voting rights in Vigor, making it like a bank that is run by both the borrowers and lenders.
Considering the increased transaction times, granular security controls, and elimination of gas fees, platforms like EOS are ideal for DeFi applications. Vigor has improved upon MakerDAO's governance model and added additional insurance to loans. If proven to be sufficiently secure, more DeFi capital will likely come their way.
VIG can be purchased with EOS tokens on the decentralized exchange Newdex.
Sources:
https://launch.quantmre.com/what-is-a-stablecoin/
https://www.vigor.ai/faq
https://www.vigor.ai/#compareDefi
https://decrypt.co/resources/what-is-maker-mkr#:~:text=What%20is%20Maker%3F,two%20tokens%2C%20MKR%20and%20DAI.
https://blog.quillhash.com/2019/10/05/from-ethereum-makerdao-to-eos-vigor-everything-you-need-to-know-about-stable-coins/