A decentralized, non-custodial crypto asset lending platform offering both over-collateralized and under-collateralized loan, and an ERC20 converter.
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.
Upon depositing liquidity a lender receives a matching quantity of AADA tokens, the protocols token, a derivative that map 1:1 to the underlying asset. A lender's balance of AADA will grow thanks to the accrual of interest from loans taken out against their deposit.
Borrowers can borrow from any of the asset pools and the interest rate they pay is dynamic and calculate based on the utilization rate of the pool.
Dynamic Interest Rates
If a liquidity pool has a low utilization rate i.e. not many loans are being drawn from it; then the interest rate will be low to incentivize borrowing from that particular pool.
If a liquidity pool has a high demand i.e. many loans are being taken against the assets in that pool so that the liquidity is almost fully allocated; then the interest rates will be higher. This encourages both the repayment of loans and more deposits from lenders looking to capitalize on the greater gains to be had from lending at higher interest rates.
The idea behind this dynamic interest rate, which begins to rise excessively as a pool approaches saturation, is to prevent pool saturation, i.e. when 100% of the pool is allocated to borrowers; so liquidity providers can’t withdraw their deposited collateral when they want.
Flash loans are designed for developers and allow anyone to borrow any amount of an available assets without putting up collateral. This is under the condition, written into a smart contract, that the liquidity is returned within one block of the initial transaction.
AADA token is the platform's token which lenders receive for depositing to liquidity pools and also accrue as interest on their deposits. These tokens can be staked to the platform for voting in governance votes, or stored in wallets to accomplish the same function. The whitepaper states that Aada wants to provide higher voting powers to those staking liquidity to DEXs but can’t assure this until a “stable DEX platform is built on Cardano”.
A dynamic quorum has been put in place for governance votes. This means that for a proposal to be accepted it must have a significantly higher majority of yes votes over no votes in order to pass.
A safety module is in place where users lock their AADA tokens to protect the protocol and receive daily fixed rewards. This is to reduce the impact of a shortfall event, i.e. unexpected loss of funds from:
- Smart contact risks
- Liquidation risks
- Oracle failure risks
Aada DeFi Academy
This DeFi academy has been built to help spread the word about DeFi and educate users new to the space
Aada have partnered with Chainlink and will utilize their oracles for a Cardano price feed on the platform.
Aada has also built Cardano’s ERC20 converter built into the platform to help facilitate project migration to the Cardano blockchain.