Binance and Eosfinex Join EOS DeFi Protocol to Handle Smart Contract Upgrades
Equilibrium, an EOS-based decentralized finance, or DeFi, project similar to MakerDAO (MKR), is adding four block producers to its governance system, most notably Binance.
Other members include Eosfinex, an EOS decentralized exchange affiliated with Bitfinex, as well as stand alone block producers EOS Nation and EOS Cannon.
The group of four will act as “governance supervisors” for the system. Their primary purpose is to sign off on smart contract upgrades for Equilibrium.
As Alex Melikhov, the CEO of Equilibrium, told Cointelegraph, this leverages a distinctive EOS feature:
“One of the main advantages of EOS lies in updatable smart contract code. In other words you can migrate to new versions of your application seamlessly without hard stop of the whole system.”
This approach is different from Ethereum, where new iterations of DeFi protocols generally require a complex migration procedure. The old versions may eventually be shut down to avoid security risks, as was the case with Maker’s single collateral Dai, or they may be left to their own devices, like with Uniswap V1.
Supervisors hold portions of a multi-signature key that is used to authorize upgrades to the ecosystem. They are chosen among “the most known and reliable ecosystem participants who could bid their reputation on the integrity and relevance of the smart contract updates,” Melikhov said. The decision to include new entities rests with all existing council members, and not just Equilibrium, he noted.
This approach is an interesting middle ground in the world of DeFi. In many Ethereum-based projects, the founders of the protocol hold admin keys that give them special rights over the contract, a practice that the community frowns upon. This is usually done with the promise of destroying those keys once the protocol is mature enough.
Equilibrium’s governance is instead “already decentralized,” Melikhov said, though he conceded that it is not a fully trustless process that is secured by economic incentives or algorithms.
The project went for an alternative approach of “creating a proof-of-authority framework which consists of trusted counterparts that are independent according to their background,” he explained. There are no plans to destroy these upgrade keys, as that would imply missing out on EOS’ added possibilities.
This approach fits within the wider context of EOS governance, which is based on agreements between specific stakeholders.
Binance wants more uses for BNB
A Binance representative told Cointelegraph that the exchange considers EOS a “promising blockchain for DeFi development,” especially for its cross-chain capabilities. Given that EOSDT recently integrated Bitcoin (BTC) as a form of collateral, the company sees a place for the exchange’s token as well:
“We hope to see our BNB token as an asset integrated into more DeFi apps, and we think it can be introduced as a new type of collateral for the EOSDT stablecoin at some point.“
Binance’s addition as a supervisor does not require the ownership of Equilibrium’s governance token, NUT, as the spokesperson explained. Nevertheless, the exchange seems to be incentivized to see the project succeed.