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
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
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
Once a user lends to the protocol, they have a line of credit they can use to borrow against. The
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.
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.
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.
- 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.
- 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
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.
linking to the discussion around the agAave token here