Introduction to Agave
Introducing $AGVE, or Agave, a decentralized non-custodial money market protocol where users can participate by borrowing or lending money through the application. Agave is a fork of Aave, built by the 1Hive community and deployed on the xDai chain where network fees are substantially lower. Additionally, the platform is expected to undergo many changes to build on the system that Aave has built, with the intention of making Agave even more integrated than Aave. This will be accomplished with further integration of other 1Hive projects such as Celeste, marketplace games, and the Honeyswap exchange.
Users can deposit tokens into the smart contract protocol, where they receive a ‘aToken’ back in return. This ‘aToken’ will accrue interest for token holders. Additionally, users can enable their deposit to be used as collateral and thus use this to borrow other assets. This allows users to leverage their deposits. For example, if a user deposits $HNY into the protocol, then they can use that $HNY as collateral to borrow $XDAI to buy more $HNY. This becomes much more lucrative when compared to mainnet Ethereum because of the low fees on xDai.
This allows 1Hive to offer more to its users. Currently, the main platform built from 1Hive is Honeyswap, which is similar to Uniswap but build on the xDai network. With the addition of Agave, users will be able to earn a yield on regular Honeyswap liquidity tokens, thus giving them an additional income stream from the fees generated on Honeyswap by providing liquidity.
Capabilities of the Agave platform:
Lending: Users can lend tokens to the protocol which allows them to earn interest. This interest is dependent on the utilization rate of the token in the protocol. As the demand increases for a lent token, increasing the utilization rate, the interest rate for lenders would also increase.
Borrowing: Once a user lends to the protocol, they have a line of credit that they can use to borrow against. There is a maximum amount that can be borrowed, so users will have to stay below that threshold or risk getting liquidated.
Delegated Borrowing: Lenders can extend their line of credit to other addresses which opens up the possibility of users who have no deposits in Agave to lend from the protocol without capital.
Flash Loans: Agave flash loans will allow users to borrow multiple tokens in the same transaction. These flash loans do not need to be totally paid back in the same transaction, which means some of the loan can be added as debt if the user has enough collateral in the protocol.
Agave will have a fixed max token supply of 100,000 tokens. These tokens will be used to govern the protocol, liquidity, development, and community incentives. The token distribution is as follows:
- 5% to the Agave seed team — 0 day cliff, 365 days fully vested
- 8% distributed to the 1Hive community via a fair launch airdrop
- 5% to the 1Hive DAO for permanent staking — this staking will bootstrap security for the platform and provides a income stream for the 1Hive common pool, which can be used for future projects
- 10% will be added to a HNY/AGVE liquidity pool on Honeyswap to provide liquidity for the platform
- 72% remaining will be held by the Agave aragon DAO for future use — the Agave token holders will decide on how the remaining 72% token supply will be used. Examples are incentivizing liquidity, development, and marketing.
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