Announcing Agaave, Aave on xDAI

What is Agaave

Agaave is a decentralized non-custodial money market protocol where users can participate as depositors or borrower. It is a fork of Aave, deployed on xDAI, and is being developed by active members in the 1hive community.

Depositors provide liquidity to the market to earn a passive income, while borrowers can borrow in an overcollateralized (perpetually) or undercollateralized (one-block liquidity) fashion (ie flash loans).

How does it work

Users deposit tokens into the protocol, they receive an aToken token in return. This aToken then accrues interest. Further, when depositing, users can enable their deposit to be used as collateral and use this to borrow other assets. This is functionally equivalent to offering leverage facility. For example, if a user deposits HNY, they can then use that as collateral to borrow DAI and buy more HNY.

How does this benefit 1hive

Currently, we have Honeyswap, which allows users to trade on xDAI with super low transaction fees. Given the relatively low volume, the total fees generated in HoneySwap (0.3% per trade) are rather low, and as such we have subsidised liquidity providers by allowing them to farm HNY. This has had mixed results.

With Agaave, we would enable users to earn a yield on regular HoneySwap Liquidity tokens without a HNY subsidy. It also adds extra incentives to liquidity providers by giving them an additional stream of income above the fees generated on HoneySwap.

One of the most powerful features of DeFi is its composability. Currently, HoneySwap is not composable with the other DeFi protocols because it is on a separate chain. With Agaave, we will now have another protocol on xDAI making it more ‘sticky’.

Although we will be forking Aave, we will use this as a base for a protocol that fits the needs of the 1Hive community.

Token listing on Agaave will be more frictionless than Aave. Using Celeste, anyone can add a token to the Agaave market by staking the Agaave token, if a token does not meet the associated Aragon Agreement it can be challenged with Celeste.

These are some ways that Agaave will provide HNY more utility as well as increase the price of HNY.

Capabilities

Lending

Users can lend tokens to the protocol. Interest is determined dynamically by the Utilisation rate of the token in the protocol. So as the supply of the token decreases, the interest rate increases

Borrowing

Once a user lends to the protocol, they have a line of credit they can use to borrow against. The

Delegate Borrowing

Lenders can extend their line of credit to other addresses. This effectively gives opens the possibility for users who have nothing deposited in Agaave to lend from the protocol without capital.

Flash Loans

Agaave flash loans are more powerful than most offered on mainnet. Users are able to borrow multiple tokens in the same transaction. Additionally, Flashloans in Agaave do not need to be totally paid back in the same transaction: Some of the loan can be added as debt if the user has enough collateral in the protocol.

Token

Aave has a token primarily used for governance over the protocol.

  • adding/removing tokens from the market
  • enabling/disabling the ability to use specific tokens as collateral
  • setting the collateral rates
  • Maximum LTV (loan to value rate)
  • Liquidation threshold
  • Liquidation penalty
  • Used as collateral
  • Stable borrowing

The token is also stakeable, giving AAVE holders the ability to earn a yield on the AAVE token itself. The pool of staked tokens is used as insurance in the case of a shortfall event.

Scope of MVP

Front end for interacting with the protocol

  • The front end of Aave is not open-sourced so we will have to build one ourselves from scratch. This MVP UI will enable the community to test out the functionality without having to interact with the contracts directly.

Backend

  • We will need a server to calculate historical interest rates for the front end. Aave uses TheGraph to serve this up to the UI. We will have something similar.

Contracts

  • We will not be modifying any of the core Aave contracts other than the market configuration
  • ChainLink Aggregator contracts (oracles)

Outside the scope

  • any smart contract changes to the core protocol
  • modifying the economics of the system
  • integrations with Celeste

Financing

Green Hornet is loaning the project 50 HNY and 1000 DAI to bootstrap the development of the project. The funds are held in this multisig. When we are halfway through the MVP development cycle, we will apply for the funds to be refunded from the honeypot.

honeypooh will be doing the heavy lifting on the front end and as such will be compensated flat fee of 5000 DAI for the MVP. The rest of the team (currently: anisoptera, sandpiper, monstrosity, greenhornet) will be paid $40/hr of work on the project.

Anyone wishing to be part of the initial development team should contact monstrosity. He will add you to the private chat we are using to coordinate.

Team

@GreenHornet @Monstrosity @befitsandpiper @anisoptera honeypooh

UPDATE

linking to the discussion around the agAave token here

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Amazing!!! Thanks for the beautiful explanation!

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This is really incredible guys, you are really making xDai to side-chain of choice for DeFi. Can’t wait to try it out.

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Can you elaborate on this?

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One of the first ways is to use Celeste for token listings. The way it will work is we would lay down some guidelines as to what makes a token eligible for listing, this could include

  1. The token should have a pair with HNY on HoneySwap with a minimum amount of liquidity ($100k sounds about right)
  2. Listed on coin gecko
  3. some other criteria the community thinks is important

Anyone can add a token to Agaave permissionlessly by staking some tokens. If anyone thinks the listing does not meet the criteria it can be challenged, if found to not meet the criteria by the Celeste protocol, the lister will be slashed

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Amazing, that’s what we need, more projects from 1hive !

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HI,

can we get more details on financing part, I see there is loan from green hornet for 50hny. But the price of hny keep changing, I wonder how we going to pay that 50 hny. is it going to flat 50 hny without looking to price or it going to be the same of usd values .
its kind of not the best approach to loan project without asking the community.

can we also get what members did to worth their payment ?

is there going to be funds to be ask later on , and how much its ?


I do have more questions but new token, but I will leave it later.

best of luck

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First of all I want to wish you a good start to this project and to be launched as soon as possible(just kidding :joy:).
And definitely will be good to give us some feedback like every two weeks or something like that where we can track progress for this fork.

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What benefits are there to coordinating privately? Also presumably you’ve been discussing this in the Tulip channels? Can coordination not continue there?

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The tulip channel started getting very cluttered and busy making it difficult to coordinate work.

Brainstorming can happen in tulip but the immediate project team needed to be able to ping one another and do a a lot of follow up on action items and task specific question before this forum post without scanning through a lot of post. We can start moving more of the conversation to tulip channels especially if proposal passes. I would just ask that we be very strict with where communication take place

  • tulip swarm (for dev and direct work related defi discussion) vs
  • tulip bees (for ideas and questions related to defi)
  • use other channels for other discussions

Yes, we plan to have meeting minutes, trello, zen hub, github, calendar, and any other project mgmt tools open. I agree, I think it makes sense that we do a formal forum post ever week or two for a project update.
Thanks

Absolutely, this post is a preliminary project scoping communication for awareness and to get feedback from 1hive. Once some time is given for 1hive to share their thoughts on the high level scoping we dig deeper. We will try to post as much info as possible before the proposal so all questions can be thoroughly vetted.

The Tulip channel is a bit busy, if I make a new working group channel for this below the current tulip working group (accessible to those who have the tulip role) can we move discussion there? With the condition that it may be removed in the future.

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I do think what will suggestions is good. it will help the community understand agaave, and follow latest developments. (´ ∀ ` *)

also more transparent

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That’s probably a good idea to create a temporary new channel.

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I think the loan approach is reasonable personally, as it puts more pressure on you to ensure it gets delivered. However, we should have more detail on how funds will be used and to have @boring877’s questions addressed. Then when it comes to repaying the loan the community can decide whether the funds were used as specified, and taking into account the progress made at that point, decide whether they should repay it or not.

Do you have an estimate for the total cost?

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Yes, I will let @GreenHornet answer repayment question. We are on the same page with this I just want it to come from him.

Expectation on cost of project is to have 2 request for $30k. The first request would be $30k for mvp. The second request will be re-evaluated after mvp and have it’s own independent proposal so the community can asses if the mvp was worth the funding and if they want to continue funding/adjust. I don’t want to speak about v1 much since it should be up to the community how we should proceed on that based on results of mvp. It is possible The team for v1 will be some new and or different members.

Funding breakdown for mvp

  • Honeypooh $40/hour, estimate 6 weeks, 20hrs/week = ~$5000
  • Anisoptera $40/hour, estimate 6 weeks, 20hrs/week = ~$5000
  • Sandpiper $40/hour, estimate 6 weeks, 10hrs/week = ~$2500
  • Monstrosity $40/hour, estimate 6 weeks, 10hrs/week = ~$2500
  • Greenhornet $40/hour, estimate 6 weeks, 20hrs/week = ~$5000
  • Unknown Additional cost (more frontend/backend dev help) = $10,000

For v1 launch. Time line and cost we think should be similar

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So for a bit of context. I have been interested in forking one of the lending platforms for a while. Personally, I feel like we need to prioritise forking more DeFi protocols on xDAI as the network effect would really make xDAI orders of magnitude more attractive. I had a stab at Aave v1 myself a while back but it’s definitely not a one bee job!

With the bandwidth of the seeds fully tapped out with Celeste, and so save the endless talking I decided to finance the project with my own HNY knowing there is a risk I may never get it back. Also for this community to mature, we as a community need to take more initiative in pushing forward in the areas we feel passionate about.

1Hive has no core devs, If you want something done, you need to do that shit yourself!

So to get the ball rolling I put up my own HNY and sought out some of the most active members with the skills to make it happen and here we are.

As to how we will calculate the HNY value, we will be paying the swarm every two weeks. we will replicate what swarms currently do and take a USD value at the time we pay ourselves. as to not make the calculations messy, we will take the USD value of HNY from the first payout. the exception to this is @honeypooh (i don’t think he is on the forum). he will be paid in USD by myself.

I found him on upwork, and agreed a flat fee of $5000 ($1000) of which has already been paid. At a later date, we will make a proposal for funds from the HNY pot. the $5000 will be at the HNY price at the time of the proposal.

We are keeping track of our hours, although the reality is we will probably be doing more hours than the time than the hours billed. We are all bees and want to do what’s best for the hive. We are open to suggestions on how we can do this better. This is the first time a group of non-seeds have attempted something this ambitious and so any help is more than welcome

:honeybee:

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cool stuff, wish you guys the best.

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Thanks for building this, this is a powerful dapp capable of not only bringing immense value to the HNY token but also opening up the xDai chain especially considering that nothing of such exists yet.

I do have a major concern thou and it is security. Given the rate of flash loans exploit in this space i hope the team will have that at the fore front of their mind while working on this project, not just flash loan exploit but all spheres of this project.

This is very exciting and i can’t wait for the product to be out. Hats off to all those involved in making this a reality.

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