Nor is there a doubt that the world DeFi or decentralized finance is Ethereum (ETH)But that could change in no time, especially with networks that define themselves as more scalable. One of them is EOS. However, many will surely wonder, can EOS really allow advanced DeFi functionalities? The answer to this is given by Block.one, the company behind the development of EOS and also creator of EOSREX, the first DeFi ecosystem of EOS.
What is EOSREX? The first DeFi on EOS
EOSREX is actually short for “EOS Resource EXchange” or “EOS Resource Exchange”. The proposal for the development of EOSREX was presented by Dan Larimer on the official blog of Block.one on August 2st, 2018 and aimed at creating a market for leasing resources (CPU, Memory and Network) for EOS users.
The idea is simple: allow EOS users to have their EOS or its memory, CPU and network resources to keep them in a market and offer them on loans. In this way, users can access them by paying a fee, and thus a large amount of resources could be available and generating profits for their holders. All while solving a serious problem within EOS: network congestion. Thus, the first version of EOSREX was released on December 13, 2018, becoming the first EOS DeFi platform since then.
Solving a structural problem
Shortly before EOSREX went public, EOS had had some congestion problems that prevented it from functioning properly. In fact, making transactions or interacting with the DApps of the platform was a headache, and all this because the "free" resources of the network were insufficient to meet the demand. In this sense, a means had to be found to encourage large holders to put their resources up for rent. The result of this was EOSREX.
The founders of the initiative defined the result as a complete success. In fact, during the launch of EOSREX it was possible to capture more than 40% of the underutilized resources of the network, and as of today the percentage remains the same. In this way, users who put their resources in EOSREX obtain earnings in the form of interest for each resource placed. In short, if you are an EOS user with CPU, memory and network resources being rented from EOSREX, you will receive profits for placing those resources on the market and offering them for rent. This of course does not mean that you cannot withdraw your resources when you want and take control of them again. We are facing a DeFi in which instead of having a pool of assets we have a pool of resources that you can rent whenever you want.
How does EOSREX work?
Now, how does this mechanism work? To understand this we must bear in mind that in EOS, if we want to perform an operation we need three resources: CPU, memory and network. The CPU is used to process the information of the transaction or operation that we carry out. On the other hand, memory is necessary to store the information that said operation needs to be executed within the EOS virtual machine. And finally, the network allows us to send and receive the appropriate responses from the network that is part of EOS. Put bluntly, without these three resources available we can't do anything on the EOS network.
This is certainly a very different operating scheme, for example, from the one we see in Bitcoin with its commissions. However, it is very similar to Ethereum and its Gas, and there is a powerful reason for it: EOS, like Ethereum, works on the basis of smart contracts and a virtual machine with many parallels to Ethereum.
In this sense, what the creation of EOSREX seeks is to create a market where users with a large amount of resources can place them for rent. In this way, if a user does not have enough resources (CPU, memory or network) for a transaction, they can simply rent them and from there be able to carry out their operations without problems. In return, all users who place resources or EOS in EOSREX earn a percentage based on their participation in the system, a percentage fed by the interest on each loan made by the system.
The REX token, the heart of resource exchanges
So basically EOSREX is a resource exchange system. The platform guarantees at all times that a user does not lose their privileges: such as their voting power or that of keeping custody of their EOS. But for this to work, EOSREX creates a working structure where the REX token is key to everything. This non-transferable and non-negotiable token represents a claim of economic activity within the REX group, so it is essentially an internal accounting unit. This means that each user who injects resources into EOSREX (in EOS or resources like memory, CPU or network) can acquire REX.
The acquisition and use of these REXs is under a regime of use designed to avoid excessive market manipulation. The smart contract that manages the token is designed to prevent each REX token that we buy from being sold before the expiration of its 4-day deposit term. That is, each REX token that we acquire in EOSREX, can only be sold four days after its acquisition.
Despite this, many prefer to leave their REX within the system for a simple reason: REX staking offers dividends that will be reflected later in their EOS, which can be highly positive for those who make a medium-term stake (about 6 months or more).
Additionally, the price of the token is affected by demand for the resources and any additional system fees channeled to REX. This situation enhances the gain of the stakers making it more striking.