Genshiro – Equilibrium’s DeFi Parachain on Kusama Network

Genshiro, Equilibrium’s DeFi conglomerate, recently went live with Crowdloan, their first DeFi product on the Kusama blockchain. Just like Kusama is a canary network to Polkadot, New products on the Equilibrium blockchain are to be tested on their canary network – Genshiro. With the promise to do everything that the current DeFi primitives can do, but with lesser risk and cross-chain support, Genshiro aims to position itself as a one-stop shop for all experimental traders looking to be one of the early adopters of new products. From Crowdloan, which was recently launched on June 15, to any of the future iterations and products, including derivatives, perpetual swaps, futures contracts, ETFs, commodities and stocks. 

Why Genshiro?

Some of the key features that differentiate Genshiro from their competitors are:

1. Genshiro offers a very low minimum collateralization ratio (just 100% – as opposed to the industry average of about 300%, with Maker DAO being the notable exception at 150%) which introduces high levels of flexibility for leveraging and margin trading. 
2. Genshiro allows all the popular cryptocurrencies including numerous ERC-20 tokens from the get-go, as opposed to their Polkadot line. Equilibrium’s Polkadot-based product line will be focussed on low-volatile and only a select few of the popular ERC-20 tokens, and are less choosy in picking assets available on their canary network.
3. Genshiro’s governance model is unique, and innovative as well. The users will be allowed to stake their GENS token (more on this in a bit), to propose and vote on new system parameters. The weightage of their votes will depend on the duration of staking – typically, the longer a user’s fund has been staked, the more weight their vote will carry. 

Crowdloan – An Overview 

Polkadot allows parachains to source tokens for their parachain bids in a decentralized crowdloan. Genshiro has proposed what is referred to as “a novel approach to the collateralized stablecoins and lending facility backed by a portfolio of crypto assets”. In summary, Crowdloan’s approach differs from other stablecoins like DAI in the following ways:

1. There are no arbitrary, set interest rates. The interest is determined by the borrower’s portfolio, the debt amount, system liquidity, and price risk.
2. No set, arbitrary LTV (Loan to Value Ratio –  an assessment of financial risk by lending and refinancing companies.) requirements. The system ensures that all positions remain solvent at a 100% collateralization ratio. 
3. No set, arbitrary penalties for liquidation, and zero hidden fees when borrowers default.
4. Eliminates the process of liquidation auctions, making Keepers obsolete
5. The design allows for building a spot trading DEX in the future. 
6. Genshiro offers the highest APR for crowd loan participants, the current estimated APR is 66%.

The system risk is assessed using a detailed algorithm, as seen in this snippet of their whitepaper. 

How Genshiro Works

The flowchart represents the business processes behind the system for all stakeholders. Keep in mind that the DEX is not live yet, but is set to go live sometime in the near future. 

GENS Tokenomics

GENS is a Kusama-based, multipurpose token to be utilized within the Genshiro ecosystem, acting as the internal currency of Genshiro, serving the following functions. 

1. Governance token, allowing holders to enforce governance decisions through referendums
2. Validators/Collators are incentivized with GENS tokens for running blockchain nodes.
3. Transaction fees and interest fees are paid in GENS tokens
4. The reward for liquidity providers is also paid in GENS tokens
5. Utilised as bailout and collateral liquidity, once GENS tokens obtain value. 

The team has decided to fix the initial token supply of GENS token at a 10:1 ratio to the EQ tokens, bringing the total number of GENS tokens to 1.2 Billion, distributed as follows. 

KSM holders are incentivized to bid their tokens on Genshiro parachain, and in turn, receive 40% additional bonuses. 

Recent Progress and a Look Into The Future

As mentioned earlier, Genshiro went live with their Crowdloan product, as recently as June 15^th. In an effort to cover their operational costs, they launched a limited edition NFT collection on Rarible, which featured cats associated with different cryptocurrencies. Curiously, they integrated these NFT cats with Chainlink, to change some attributes of these cats based on the real-time prices of the corresponding cryptocurrency. For instance, when Bitcoin crosses the $100,000 threshold, a golden version of each cat NFT would be unlocked. Since then, the GENS IDO went live on DODOex on June 16, while June 18 and 19 saw the announcement of the token’s Kucoin and BKEX listings respectively. Currently, they are participating in the Kusama parachain auction, till they do win the slot. Eventually, once that happens, the team has promised to launch the core Genshiro functionality on the mainnet. 

Investors

Genshiro is backed by popular names in the Blockchain venture capital industry, including KR1, Block Dream Fund, GBV, SIGNAL VENTURES, AU21 Capital, BITRISE CAPITAL, HYPERSPHERE, FBG CAPITAL among others. Check the image above for the full list of investors and backers. 

In Conclusion

Genshiro seems to be an exciting venture with innovative, and dare I say ambitious expectations. Their platform architecture and governance models are truly well-thought-out, making the system extremely sustainable and innovative, to say the least. Much depends on how fast they do get the Kusama parachain bid, and the future seems quite promising for this project. You can find more details about Genshiro and Equilibrium on the following links:

1. Genshiro Website
2. Equilibrium Website
3. Genshiro Tokenomics complete details
4. Genshiro Whitepaper
5. Medium 
6. Genshiro Twitter
7. Genshiro Telegram