Fully decentralized lending and borrowing protocol backed with NFT’s and built on Cardano blockchain
Aada is a decentralized money market protocol based on lending pools of crypto assets. In this market users can be depositors (lenders) or borrowers.
Lenders deposit their assets into smart contract controlled liquidity pools and accrue interest paid on loans drawn from the liquidity they provide to the pool.
An NFT-Bonds Strategy
NFTs represent an individual's deposit on the platform. Representing these deposits as NFTs means that they are tradable on the open market while the funds they represent are locked in the protocol accruing interest.
Lenders - When a lender deposits assets into the protocol a new NFT-bond representing their assets, and any interest it accrues from that point forward, is minted and sent to the lender. If the lender trades their NFT-bond to another user the new holder, upon trade-in, is entitled to the initial amount and the interest the bond has accrued since its creation.
Borrowers - A borrower is also a depositor because they must deposit assets to collateralize their loan. They receive an NFT-bond representing both their deposited collateral and their loan. Whoever holds this bond must provide the loan amount in order to claim the collateral also locked up with the NFT-bond.
Borrow interest rate
Aada’s Interest rate aim is to manage liquidity risk and optimize the Utilization rate. The borrow interest rates come from the Utilization Rate (U). U is an indicator of the availability of capital in the pool. The Interest rate is used to manage liquidity risk through user incentives:
● When capital is available: low-interest rates encourage more loans from borrowers;
● When capital is scarce: high-interest rates encourage repayments of loans and more deposits from lenders.
The AADA token
+ Staking incentives
Stakers within the Safety Module receive Safety Incentives. The initial SI rewards are [750 AADA/day + collected platform fees] to be split between the stakers. The Safety Incentive's allocation quarterly date should be voted on before the end of the 3 months (90 days) distribution schedule.
+ Risk of staking
In the case of a shortfall event, the Safety Module uses up to 30% of the assets locked to cover the deficit. Shortfall event The primary role of the Safety Module is to protect the protocol against unexpected loss of funds stemming from:
● Smart contract risk: On the smart contract layer, there is a risk of a bug, a design flaw, or a potential attack.
● Liquidation risk: The risk of an asset failing that is being used as collateral on AADA; the risk of liquidators failing to capture liquidation opportunities promptly; or the risk of the principal asset being repaid having low market liquidity.
● Oracle failure risk: Risk of the Oracle system failing to properly update prices in the event of a severe market downturn and network congestion; risk of the Oracle system failing to properly submit prices, resulting in improper liquidations.
In a shortfall event, the Safety Module will use up to 35% of the capital delegated as a pledge. Recovery issuance occurs if the seized SM assets don't cover the total debt. The drawn SM amount and the issued AADA go toward covering the deficit. The 35% rate and all related variables are subject to reduction, increase, and alteration via an AIP.
+ Voting rights
To vote, you need to hold AADA in your wallet or stake AADA tokens in the Aada Safety Module. Additionally, we do want to provide higher vote weight to users who are providing liquidity on DEX pools. This would put Adaa's future into the hands of people who care about the protocol's success.
+ Voting threshold
The threshold is dynamic and can change depending on the quorum plus the difference in votes for and against a proposal. If there are only a few votes against a proposal, the threshold will not change. However, if the number of votes against the proposal is significant, the threshold can be raised so that there must be more votes in favor of the proposal. This is done to ensure that a proposal receives widespread approval before implementation.
If the quorum is 30%, the differential is 25%, and 3% of the total votes are against the Proposal, the threshold would remain at 30% (because 25+3 = 28 < 30).
If the quorum is 30%, the differential is 25%, and 6% of the total votes are against the Proposal, then the threshold would be raised to 31% (because 25+6=31), so more "yes" votes would be required for the Proposal to pass.
+ Aada Improvement proposal (AIP)
AIP is an acronym for Aada Improvement Proposal, just as BIP stands for Bitcoin Investment Proposal. The AIPs set out the technical standards (protocol specifications, contract standards, client APIs, etc.) for the Aada protocol.
Aada DeFi Academy
This DeFi academy has been built to help spread the word about DeFi and educate new and existing smart contract developers on Cardano.