As we approach the next major milestone, we’ve recently shared the following two elements of our V2 protocol with our community — fees and oracles. Now, it’s time to spread the news to a larger audience!
Fees and oracles are fundamental for achieving permissionless and genuine decentralization. In this regard, we aim to ensure these elements complete our vision while setting a new standard for Cardano DeFi. Here’s what you need to know about the way fees and oracles will work on Aada V2:
Aada V2 to Split Protocol and UI In Terms of Fees
Two of the most crucial elements of every pooled lending protocol are decentralization and liquidity. In this regard, Aada Finance’s V2 aims to tackle the dilemma by splitting the app into two separate entities:
- Protocol (smart contracts, liquidity pools, and token holders);
- UI (the app.aada.finance website, and the batching mechanism).
While this method isn’t new in DeFi (e.g., Liquity), it’s an essential tool for ensuring true decentralization. The split will enable users to interact with the smart contracts without the need to access the app’s interface. Using this method will be cost-free, and only network fees will apply.
Of course, using the V2 interface will allow for a more user-friendly interaction. In turn, the UI will charge operating fees, mostly for batching and updating Oracle data. While the protocol will adopt a more complex fee system, its parameters will be liable to changes through governance.
Disclaimer: The protocol fees will be flat at 0% until reaching decent liquidity.
Decentralized and Operator-free Oracles on Aada V2
Oracles play an integral role in every lending and borrowing protocol’s operation. But to ensure they’re resilient and efficient, they must be decentralized. In this regard, Aada V2 will introduce operator-free oracles that remove the need for third parties to operate them for the protocol to function.
How it works:
- Every token has its ‘Oracle NFT’ stored in oracle_validator.ak.
- The NFT has a datum with a few parameters, but the most important are token_price and expiration_time.
- NFT mirrors the ‘Pool NFT’ in a DEX (e.g., Minswap).
Since the Oracle NFT is locked in the smart contract, the latter allows spending it only if:
- The NFT is sent back to the same smart contract
- The new expiration time is set to no more than 10 minutes from the current time
- The price is only updated according to the value shown by the mirror NFT on the DEX. In other words, it’s non-modifiable.
Ultimately, everyone can update the NFT price, getting an accurate price from the underlying DEX. Last but not least, the pool and collateral contracts will ensure the ‘Oracle NFT’ is still valid by refreshing its price and expiration date.
About Aada Finance V2
Aada Finance V2 is a pooled lending protocol (peer-to-pool) on Cardano. It leverages the Aiken smart contract language to provide modular simplicity similar to Ethereum’s Solidity combined with smaller transaction sizes and higher efficiency. The V2 protocol will enable users to create a pool by depositing a selected Cardano native token. Each pool will employ dynamic APR for deposits, allowing borrowers to pay fixed interest, which is different for each loan/collateral position.
Make sure you follow us on Twitter, Discord, and Telegram to keep updated about our progress toward V2!
