Introduction - Aada Finance
Aada Finance is a revolutionary lending protocol that operates on the Cardano blockchain. It is designed to be non-custodial, interoperable, and decentralized. The protocol enables users to 1). lend their assets and earn interest, or 2). borrow crypto assets and use them as financial tools.
Aada V2
Since its inception in September 2022, Aada Finance has been at the forefront of innovation in the Cardano community. With the launch of Aada V2, Aada Finance is taking another step towards empowering the Cardano community by providing innovative DeFi solutions that leverage the power of the Cardano.
The use of Aiken for smart contract development, the introduction of peer-to-pool mechanics, Fragment Protocol and UI in Terms of Fees, and the implementation of operator-free oracles are some of the key features that will make Aada V2 a significant milestone in the world of Cardano DeFi.
Integration fo Aiken
One of the standout features of Aada Finance V2 is the integration of Aiken, a programming language and toolkit for smart contract development on Cardano. Aiken, incubated by TxPipe, aims to provide a robust and efficient smart contract development experience, with a primary feature being the ability to target Untyped Plutus Core (UPLC), also known as Plutus. This will enable Aada Finance to deliver a new smart contract language compatible with Cardano's smart contract virtual machine, providing modular simplicity similar to Ethereum's Solidity.
With the integration of Aiken, Aada Finance V2 will introduce new peer-to-pool mechanics to the ecosystem, allowing users to deposit and borrow funds in dedicated pools, thereby increasing fund liquidity and availability. Here are some first impressions of the smart contract design:
Peer-to-Pool Design
The peer-to-pool design will enable anyone to create a pool by depositing a native token such as ADA or AADA. In return, the smart contract will mint two non-fungible tokens (NFTs): one that verifies pool ownership and another delegation NFT necessary to delegate the pool to a stake pool operator (SPO). This innovative design will create a genuine, open pool market, each employing dynamic deposit APR. Borrowers will have the flexibility to pay fixed interest depending on the time of taking the loan and pay different interest for the same loan/collateral positions.
Interest Rates
Interest rates on Aada Finance V2 will follow a similar approach as Aave, with algorithms and rates that gradually increase until a utilization rate of 45%. Beyond this threshold, there will be a sharp increase in the projected APR, incentivizing more lenders to deposit and encouraging borrowing when the demand is low. Notably, the minimum interest rate will be set at 2%, in line with a DAO proposal regarding the minimum interest vesting threshold for V1 loans.
Fees and Oracles
Fees and Oracles are critical elements for achieving true decentralization in DeFi protocols, and Aada Finance V2 aims to set a new standard for Cardano.
Fees
Regarding fees, Aada Finance V2 will split the protocol and user interface (UI) into two separate entities: the protocol, consisting of smart contracts, liquidity pools, and token holders, and the UI, consisting of the app.aada.finance website and the batching mechanism. This split will enable users to interact with the smart contracts directly without the need to access the app's interface, making it cost-free with only network fees applied. However, using the V2 interface will provide a more user-friendly interaction and will come with operating fees, primarily for batching and updating Oracle data. The protocol fees will initially be flat at 0% until reaching decent liquidity, and the fee system parameters will be subject to changes through governance.
Oracles
Regarding Oracles, Aada Finance V2 will introduce operator-free oracles, removing the need for third parties to operate them for the protocol to function. Every token will have its 'Oracle NFT' stored in oracle_validator.ak, with parameters including token price and expiration time. The NFT will mirror the 'Pool NFT' in a decentralized exchange (DEX). The 'Oracle NFT' is locked in the smart contract and can only be spent if sent back with a new expiration time set within 10 minutes from the current time, making it secure and tamper-proof.
The pool and collateral contracts will ensure the 'Oracle NFT' data is securely updated and synced with the DEX, ensuring accurate and reliable price data for the protocol.
Stay tuned for more updates on Aada Finance's official channels, and get ready to experience the next level of DeFi on the Cardano blockchain with Aada V2!
