The Aave Protocol released on public Testnet!
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Today marks an important step forward for Aave: The release of the public testnet (Kovan Network) of the protocol, including the documentation, the new website, and a developers portal.
Key functionalities
- Perpetual loans: Users are able to get liquidity from their deposits without any duration and repayment schedule.
- Stable rates: The Aave protocol implements a new financial instrument for borrowers called Stable Rate lending. Stable rate loans behave as fixed rate loans in the short term, but the rate might be re-balanced in the medium/long term in response to extreme changes in the market conditions. We talked about this functionality before in the private Testnet launch article, it can be found here.
- Flash Loans: This is an exciting new feature that will allow developers and integrators to build never-seen-before arbitrage tools. The concept is quite simple: developers will be able to borrow liquidity from the Aave protocol within one transaction, with the condition that the same liquidity is returned to the protocol before the transaction ends. If this does not happen, the transaction gets reverted, effectively undoing all the actions executed until that point, which guaranties the safety of the protocol and the funds.
- Tokenization: Aave will implement a tokenization feature on all the deposits. Users will receive derivative tokens in exchange for any deposit, called aTokens, which carry the value of the deposited amount added by the accrued interest. ATokens can be safely stored, traded or transferred.
- Five different stablecoins: Starting from day one, the Aave protocol has wider support for multiple stablecoins on the market. The stable currencies supported are DAI, USDC, Synthetix USD, Tether USDT, and TrueUSD TUSD. These currencies will have different configuration parameters as they carry different centralization and liquidity risks. You can refer the Aave Protocol Currency Risk Assessment here for further information on how the reserves for these currencies will be configured.
- Eleven different assets: The protocol has the wider support for different ERC20 tokens on the market. All the currencies are part of trusted, well known projects and have been previously assessed for security risks. The currencies include Ethereum ETH, Maker MKR, Augur REP, Basic Attention Token BAT, 0x ZRX, Wrapped BTC WBTC, Ampleforth AMPL, ChainLink LINK, Decentraland MANA, KyberNetwork KNC, and of course our LEND token. As for the stablecoins, every asset carries a different risk and it has been assigned different configuration parameters, as well as the ability of being used or not as a collateral. Again, it’s important to take a look at the Currency Risk Assesment.
Revamped Tokenomics
With the introduction of the Aave protocol, we bring the Aave Token $LEND at the center of the ecosystem. Compared to the current use cases with our legacy apps, the following has been implemented:
- Deflationary economy: The protocol will collect part of the fees collected by the platform and burn them, forever. Right now 10% of the collected fees are burned, and the burning parameter will be configurable through token-based governance in the future.
- Governance: We are introducing two governance layers, that will define how the Aave pool and the protocol will be configured and updated. Specifically the platform features a Protocol Level Governance, that will empower the community with the possibility of deciding the future of the protocol by voting on proposals by the dev team, especially on smart contract upgrades.
And in the short term future a Pool level Governance, which will allow depositors and borrowers to vote on the economic parameters of the pool, including new currencies, base interest rates, and liquidation configuration.
Voting power within the protocol level governance will be solely based on the LEND token.
- This is only the first iteration of our governance model and we will continue to add features to empower the protocol and its stakeholders within our path towards decentralization.
- Additional token utilities: LEND will retain some token utilities from our legacy products, including the possibility of being deposited, borrowed, used as collateral and for fee reductions. Specifically, borrowers will be able to reduce the borrow fee by 80% after depositing 500.000 LEND into the protocol.
Documentation
The Aave Protocol has been built with developers and integrators in mind, therefore documentation is extremely important. The Aave Developers Portal includes everything that is needed to start building on Aave, including the contracts addresses in the Kovan Testnet, the ABIs and full feature specifications of the protocol. The Developers Portal also includes a section about Security, in which users can find the report of our first audit by Trail of Bits. The Formal Verification by ChainSecurity and a second audit by OpenZeppelin are still in progress, and the reports will be published once completed. Following the completion of the audit process, the source code will be released to the public and a Bounty campaign will start.
The Aave app
Together with the protocol, today we release for public access our brand new Aave app, that can be accessed here.
The app is designed to allow users to quickly access all the user oriented features of the protocol. The app has also a comprehensive selection of different wallets supported, with more to come.
The Aave app will in fact support multiple browser wallets (MetaMask, Dapper, Trust, Coinbase Wallet) as well as the WalletLink protocol (Coinbase Wallet) to use your smartphone as a hardware wallet, and Fortmatic.
Testing the App
Testing the Aave app is really easy: You first need to configure your favourite wallet to use the Kovan Testnet and get a few Kovan ETH (the faucet here is a good start, https://faucet.kovan.network/). Once done, head to the “Faucet” screen on the Aave app, which you can find on the bottom right of the view after unlocking the wallet:
From the Faucet page, you will be able to instantaneously receive 100.000 test tokens by clicking on the “mint” button:
That’s it! You can now deposit the newly minted test tokens into the protocol, and borrow against them. Look at those profits increase in the dashboard! Please note that the client app is still under heavy testing and may be subjected to bugs. Feel free to report any issue you may find!
If you have any changes/improvements/suggestions, please join our Telegram channel or our Discord community. We would love to hear from you!
