ADALend
Decentralized native cardano protocol governed by DAO
ADALend Whitepaper
Introduction
Current Challenges Facing The Lending Protocol
ADALend to the Rescue 3.1 Key Features of ADALend 3.2 Motivation
Why Cardano?
Use Cases
Blockchain Architecture
Concepts
Backbone 8.1 Core 8.2 LendingPool 8.3 Interest rate strategy 8.4 Utilization of idle assets
User Flow 9.1 Lending 9.2 Redeem 9.3 Borrowing 9.4 Repay 9.5 Liquidation 9.6 Flash loan.
Oracles 10.1 External Oracles 10.2 Internal Oracles 10.3 Mixed Oracles
Protocol Security
Liquidity Mining Program
Governance
Tokenomics 14.1 Token Allocation 14.2 Token Ecosystem 14.3 Token Sales
Marketing Strategy of the Project
RoadMap
Official Support Channel
Disclaimer
1. Introduction
ADALend is building a scalable and decentralized lending protocol within the Cardano ecosystem, governed by the community. Cardano was created as a blockchain platform to aggregate protocols that provide economic support to billions of individuals, and it is currently the market leader in Proof of Stake (PoS).
Over the past decade, the decentralized finance (DeFi) space has continued to evolve to match the development of the digital asset market. The ADALend protocol will power the new wave of flexible financial markets by providing a foundational layer for instant loan approval, automated collateral, trustless custody, and liquidity.
Decentralized Finance (DeFi) is a financial term for a blockchain-based system that utilizes cryptocurrencies to offer transactional financial instruments instead of the traditional central financial intermediaries such as exchange/brokers or banks. It comprises various financial applications and projects on blockchain technologies by making use of Smart Contracts.
It’s a system with a series of blockchain-based peer-to-peer protocols and applications that requires no access right for easy trading of financial tools, borrowing, and lending. As earlier said, DeFi makes use of smart contracts—these are automated enforceable agreements that require no intermediaries to execute and can be accessed by everyone and anyone with an internet connection.
With assets worth over $80 billion currently locked in their ecosystem, DeFi continues to deliver value to its millions of users by growing into an ecosystem of working protocols and applications, thereby making it one of the fastest-growing segments in the public blockchain space.
2. Current Challenges Facing The Lending Protocol
The dynamics of decentralized finance are volatile in response to the ever-evolving digital asset market. This rapidly changing nature of these digital assets now presents itself as a goldmine - it is easy for traders to trade the present-time value of these assets. Because of the simplicity that comes with this benefit, decentralized finance continues to attract investors and traders.
The difference between large and small wealth holders will expand as interest rates and returns rise over time. It is beneficial to both parties if these prices do not fall over time. However, some digital asset management systems still have flaws. The first disadvantage is that some digital assets may yield poor returns due to the increased risks and expenses of preserving them. Asset losses are naturally reported since interest is not applied to offset these costs, raising the vulnerability of digital assets to unforeseen levels. In addition, the lending process and procedures are severely restricted for these assets, which uniquely increases the price of even priceless digital assets because there is no system to check the value of these assets.
Exchange platforms with active lending pools are being developed to allow digital asset traders to trade blockchain assets using margin accounts. Asset lenders provide liquidity to their assets if they are regularly traded by depositing them into contracts through these protocols. These assets can be offered as loans to borrowers, with collateral to replace borrowed blockchains. The advantage of these protocols is that the loans issued do not require individual confirmations.
For borrowers, interest rates are affected by funds available at any given time. Liquidity is inversely proportional to interest rates. For the lender, the credited amount is equal to the interest rate, which guarantees liquidity of assets.
An example of these protocols is the Cardano system. Cardano is a blockchain platform designed to include activities aimed at helping individuals worldwide access financial support through these applicable protocols as the primary Proof of Stake (PoS) platform.
3. ADALend to the Rescue
ADALend devotes its best to building a trustworthy decentralized lending practice governed by the Cardano system. Within this Cardano system, ADALend will influence the flexibility of digital finance markets by providing a basis for immediate access to loans and collaterals, resulting in sustained liquidity of the blockchain assets of the lender.
3.1 Key Features of ADALend
The essential features that distinguish the ADALend protocol include the following:
Permissionless Lending on Any Pairing: Our governance will ensure that the best offers are available and that only the safest oracles are used. We guarantee trustworthy options for utilization by our clients. To achieve this feat, secure authorization channels are used, limiting the need for permission on pairing.
Incentivised Liquidity: Liquidity is predicated on having enough assets in each pool to facilitate lending. ADALend addresses this requirement by incentivizing users to deposit assets and provide liquidity.
Community Governance: Token holders can establish consensus by voting on governance proposals or introducing new proposals for a vote.
Ecosystem Foundation Layer: The ADALend project has the ability to attract assets and build incentives that can empower an ecosystem of financial products.
3.2 Motivation
ADALend pushes consistently to become one of the earliest projects operating within the Cardano ecosystem. These consistent efforts are motivated by:
Users' Growing Interest in Cardano: Cryptocurrency statistics indicate that more and more people are interested in operating within the Cardano system due to the numerous accompanying benefits. The increasing traffic is a significant drive for ADALend.
The Difficulty Associated with Implementation: Cardano ecosystem's smart contract language is the Plutus (similar to Haskell) functional programming language. Functional programming languages are only used by experts but prove to be very efficient. Programming language professionals only utilize these languages, retaining their credibility and efficiency as usage by the public is restricted. With many developers experienced in the Plutus contract language, ADALend aims to be one of the pioneer projects within the Cardano ecosystem.
4. Why Cardano?
Cardano remains an excellent blockchain platform developed and established based on proven evidential techniques and thoroughly evaluated pool analysis. With this advantageous leverage on the ability of Cardano, ADALend maintains a primary objective of scaling digital assets lending practices. This, ADALend will achieve via;
Optimum Security: With the constantly heightening rates of cryptocurrency-related crimes, ensuring adequate security of users and assets remains a priority. Cardano, as a lead proof-of-stake platform, provides an absolute and proven safety of its users.
Third-generation Blockchain: ADA is developed to overcome challenges encountered in using other crypto platforms. Cardano is regarded as a better and more dependable digital investment in comparison to other cryptocurrency assets.
On-Demand Lending: ADALend decentralized application basis provides an immediate reply to loan requests which depends exclusively on the borrower's eligibility to request a loan. This involves how much the borrower understands guiding rules. First-time borrowers may experience difficulties in analyzing the actual value of requested tokens. This group of borrowers needs to apply extra caution in setting the appropriate value of collaterals, as overvalued collaterals may discourage prospect lenders, restricting funding of the loans.
Academic Backing: Cardano is one of the few coins academicians and well-known institutions worldwide utilize and endorse. This adds to its value and increases its stability.
Trustless Operation: Cardano operates on a 100% trustee venture, lessening the need to trust the borrowing party as a lender. Once a borrower puts up a loan request on ADALend, the lending party, ADALend platform, or any other party cannot hinder the said loan request from being activated once the loan amount is granted. So in place of trusting the borrowing party as the lender, decentralization strategies and procedures are utilized to limit the necessity of trusting the borrower, significantly limiting associated risks involved with the implemented borrowing system.
Multiple layers: Cardano imbibes several techniques to enhance rapid transactions and increase scalability by implementing settlement and computational layers.
Using Cardano, we are optimistic about our attaining maturity, which will result in being the top platform of choice for investors and users of digital assets platforms. Investors acknowledge the likelihood of this platform to challenge the presumed status of monopoly in the world of cryptocurrency.
As Cardano protocol remains under the non-profit foundation section, it consistently delivers a variety of advanced functionalities. We project that Cardano will be the future leading blockchain platform well above other competitors.
With this objective in mind, Cardano aims to move an extensive technological standard and an open platform with unmatched protection and incredible transaction speed, all of which result in lesser transaction dues.
5. Use Cases
The Cardano system evolves consistently to accumulate more valuable and newer assets. People with long-term investments with ADALend may utilize the asset as an extra basis for increased investment revenue.
ADALend's primary purpose is to scale asset ownership and provide various measures of available assets with the collateral backing and LP tokens inclusive, leveraging on the Cardano platform, mainly limiting the occurrence of risks.
The ability of Cardano to effortlessly retain new assets and a change in the existing conduct further adds to its value by lenders, investors, and borrowers. With this, asset exchangers can finance new ICO investments by borrowing blockchain assets, while their existing portfolios serve as viable collateral. Also, these traders can exchange their tokens without waiting for a fill order to enable them to trade these tokens. Traders seeking to shorten their exchange token rate can borrow these tokens, send them to a reliable exchange platform and sell the token yielding profits from declines in overestimated tokens.
6. Blockchain Architecture
At ADALend, we are developing a lending protocol intended to improve the effectiveness of digital asset capital – one that oversees multiple lending pools by the hoarded assets. This lending pool has different essential elements – borrowing, utilization ratio, lending interest rate, and liquidation model.
The borrow action involves transferring a specific amount of assets to a borrower in exchange for collateral. This function updates the borrower's balance and fluctuating interest rates, amassing the accrued interest rates of the lender if the borrower's balance surpasses the collateral value due to unstable interest rates.
The liquidation model eradicates risks that arise from trading digital assets, stabilizing exchange rates at a better price.
All digital assets and money markets are defined by lending interest rates, uniformly applied to borrowers depending on borrowed amounts. However, these interest rates remain dynamic due to time-influenced effects on supply and demand in the market. The past narrative of the lending interest rate for the decentralized finance money market is efficiently explained by the Interest Rate Index, constantly computed as the rates usually change due to borrowing, liquidating assets, mining, repaying, and redeeming accrued assets. As transactions are being made, the Interest Rate Index for the asset is updated to compound the net value of the collateral and borrowed assets increasing the asset's value.
7. Concepts
Cardano is a unique blockchain platform founded and developed based on evidence-based methods and peer-reviewed research. Blockchain technology combines pioneering technologies to provide unparalleled security and sustainability to decentralized applications, systems, and societies. Since its launch in 2015 by Charles Hokinson (the co-founder of Ethereum), it has evolved to become a major cryptocurrency and the biggest cryptocurrency that prioritizes its proof-of-stake and environmental impact (Cuthbertson, 2021). Furthermore, Cardano has many features that have been considered part of what makes it a good asset. As part of its evolution to become a leading giant in the blockchain and cryptocurrency market, and in a bid to offer flexibility in the financial market space, ADALend is building scalable and decentralized lending protocols within the Cardano ecosystem, governed by the community. TheADALend protocol aims to power the new wave of flexible financial markets by providing a foundational layer for instant loan approval, automated collateral, trustless custody, and liquidity.
Lending Pool Basics
ADALend is working with a conceptual framework similar to the developmental basis for the evolution of the entire blockchain technology. The ADALend protocol allows a user or holder of the Cardano cryptocurrency to be their lending institution. This is the working principle that also guides the blockchain technology market, with its main aim being to allow its users and holders to become their banking institutions.
Even though the Cardano cryptocurrency is becoming a fast-growing ecosystem, attention has not been placed on building its lending protocol until now. ADALend aims to improve the crypto lending market to remove the government monetary policies. Since cryptocurrency is not affected by government monetary policies, it should also not affect the lending market. This means that the ADALend protocol will be made available and open to all lenders and borrowers, thereby ensuring the transfer of Cardano without borders, jurisdiction, and access to the banking system.
Lending Pool Parameters
Every lending pool has a currency it holds. Lenders deposit their currency into the pool at an interest. The borrower then borrows the currency using another asset (or currency) as collateral. Therefore, this means that there is a need to assess the asset the borrower uses as collateral to ensure that it meets sufficient demand to be used as collateral for the borrowed asset (in this case, Cardano).
There is a need to assess the risk level associated with the asset used as collateral for the process in a scenario where the asset used is volatile. The liquidity of volatile assets also fluctuates because of the time value of the transactions performed with these assets. The volatility of these assets needs to be calculated in a periodic manner that depends on factors such as the borrower’s region and the lender’s interest rate (Eth Warrior, 2018). The volatility situation differs for different regions because it depends on the currency’s value spent in these areas. This means that the ADALend ecosystem will afford borrowers from the other regions equal opportunity.
Following the rule of fair-sharing, there is a specific amount of borrowable assets. It depends on the total amount of collateral deposited and the amount of already borrowed assets. This enables a fair distribution of the available assets to the blockchain community members interested in acquiring those assets. In order to determine how much Cardano assets the borrower will receive, the amount of collateral deposited will be used as a yardstick (along with the time value of money attached to the collateral). The second yardstick (as earlier stated) is the amount of already borrowed assets. This implies that there will be a limit to the number of borrowable assets (in this case, The Cardano). This is to curb excessive or uncontrolled lending to unbridled borrowers; both the lent asset and borrowed asset increase with time. This increment is based on the lending asset's interest rate and the borrowing asset's interest rate. The algorithm decides these interest rates for both lenders and borrowers. For borrowers, the cost of money – the total amount of funds available in the pool at a given time – is what determines the interest rate. This is because funds are borrowed from the pool, and the amount of funds available decreases, increasing interest rates. However, in the case of the lenders, this interest rate corresponds to the earn rate, with the algorithm safeguarding a liquidity reserve to guarantee withdrawals at any time (AAVE, 2020). The algorithm is determined by the company implementing the protocol and varies with the region or market the lenders and borrowers transact their operations.
Loans have infinite duration, and there is no repayment schedule; users can make partial or full repayments anytime. This feature of the ADALend protocol helps to keep the flexibility of the payment intact. There will be no pressure on the borrowers to pay the money, which will give the borrowers ample time to complete the repayment. However, there is a need to ensure that adequate measures are put in place to ensure the borrowers pay back the assets should the collateral not meet the standard.
In case of price changes, a borrow position can be liquidated. A liquidation event happens when the price of the collateral drops below the liquidation threshold. Anyone can liquidate this, and liquidators are incentivized to do so under the liquidation threshold. The liquidation threshold is the percentage at which the loan is defined as under collateralized. This means that if the collateral value rises above that percentage, the loan is under collateralized and can be liquidated.
There are multiple lending pools; each pool holds a single currency. The pool accepts deposits from lenders by giving interest. Users can borrow these assets if they deposit other assets that serve as collateral.
The amount of assets that users can borrow depends on the total amount of collateral deposited and already borrowed assets.
As time goes on, the lent assets grow based on lending interest rates, and the borrowed assets grow based on lending interest rates.
Loans have infinite duration, and there is no repayment schedule; users can make partial or full repayments anytime.
In case of price changes, a borrow position can be liquidated. A liquidation event happens when the price of the collateral drops below the liquidation threshold. Anyone can liquidate this, and liquidators are incentivized to do so under the liquidation threshold.
These borrowable amounts and liquid table positions rely on price oracle driven by trustworthy price data providers.
8. Backbone
8.1 Core
The core contract manages the references of each pool as well as the interest rates per pool. The core of the ADALend lending pool serves as the center of the pool. It speaks of the central idea that drives the development of the protocol. It helps to hold the state of the reserves and the assets deposited. The ADALend protocol is built on the Cardano ecosystem's development to make the ADA cryptocurrency readily available to the community and anyone who believes in the coin's integrity. It is paramount to note that the Cardano ecosystem is subject to much evolution as it expands and moves up in the hierarchy of cryptocurrencies in the blockchain technology space.
A key concept in the core of the ADALend lending protocol is to serve as the central lending platform for the Cardano ecosystem in the DeFi (Decentralized Finance) space. This means it will ensure that the best offers are available and that only the safest platforms are used. It also provides incentivized liquidity. This is liquidity that is predicated on having enough assets in each pool, thereby facilitating lending. ADALend addresses this requirement by incentivizing users to deposit assets and provide liquidity for owned assets. Another concept of importance at the core of the Cardano ecosystem is Community governance. This ensures that token holders can establish consensus by voting on governance proposals or introducing new proposals for a vote. The ADALend protocol also attracts assets and builds incentives that can empower an ecosystem of financial products.
8.2 Lending Pool
The lending pool is another element in the conceptual framework of ADALend. It uses the core and the 'Data Provider' (another essential backbone in the ADALend lending protocol’s conceptual framework). The 'Data Provider' aspect of the lending protocol backbone provides an aggregate of data from the lending pool core. In turn, it offers high-level information to the lending pool.
The lending pool combines the capabilities of the core and the data provider to interact with the reserves through;
Deposits,
Borrows,
Rate swap,
Flash loan,
Redeem,
Repay, and
Liquidation.
Here, there is also the tokenization of the lending position. Any deposit by a user in a specific reserve will lead to the corresponding amount of tokens. These tokens map the liquidity deposit and accrue the interest of the underlying asset that was deposited. The lending pool configurator is another part of the conceptual framework that provides main configuration functions for the Lending Pool and the core. Some functions include reserve initialization, configuration, enabling and disabling borrowing on a reserve, and enabling and disabling a specific reserve usage as collateral. The Functions will therefore integrate the contract with the protocol governance.
Landing Pool Contract
Lending pools has functionalities for:
Deposit
Lending Pool Parameters
Borrow
Liquidation
Repay
Redeem
The protocol provides tokenized assets for deposited assets, enabling users to transfer lending positions to other users. These assets are different per pool.
For example, if a user deposits 1 USDT, they can get 1 adaUSDT—the standard asset you can transfer. And the amount of adaUSDT users hold grows as time goes by, based on the token's lending interest rate.
8.3 Interest Rate Strategy
The protocol provides a variable interest rate for all the lending users. The Interest rate strategy also involves moving between long-term bonds and very short-term treasury bills, based on a forecast of interest rates over a specific timeframe, to provide the maximum increase in price for a portfolio. The protocol offers a variable interest rate for all the lending users. For borrowers, the protocol will provide two kinds of interest rates – stable and varying rates. Usually, the stable rates are higher than variable rates, but it is unaffected by interest rates change. Therefore, stable interest rates are best for long-term loans, while variable rates are good for short-term loans. Crypto traders are interested in implementing the interest rate anticipation strategies at a lower cost look into the interest rate derivative securities, such as options and futures.
For borrowers, the protocol will provide two kinds of interest rates – stable and variable rates. Usually, the stable rate is bigger than variable rates, but it is unaffected by the changes in the interest rate.
However, stable interest rates are best for long-term loans, while variable rates are good for short-term loans.
Both borrowing and lending interest rates rely on the utilization ratio of each pool.
Utilization ratio = total borrowed amounts / total deposited amounts
The utilization ratio will be changed based on the utility of this token and the liquidity mining program supported by the ADALend Governance.
The interest rate curve is different per asset. The optimal utilization ratio for stable coins is high, and the optimal utilization ratio for non-stable-coin is relatively lower.
When the utilization ratio is lower than the optimal ratio, the interest rate grows gently but proliferates when it is more than the optimal ratio.
The rapid growth allows borrowers to return, while the lenders lend more until the target utilization ratio is met.
When we define:
Base borrow rate as Rv0
Interest rate slope below optimal utilization as Rslope1
Interest rate slope beyond optimal utilization Rslope2
The interest rate is calculated as below:
Rv = Rv0 + UUoptimal Rslope1 when UUoptimal
Rv = Rv0 +Rslope1+ U-Uoptimal1 - UoptimalRslope2when U > Uoptimal
It is visualized as the following graph for the case of 80% Uoptimal.
Optimal Utilization
The above graph shows the optimal utilization against the borrowing rate for the user. This means that a particular interest rate yields the best utilization and returns rate for the user. In minimizing the risk involved in interest rate dealings, users must aim to limit the interest rate risk arising from the risk positions. This consists of reducing the share of the variable interest risk positions in the overall risk exposure or restricting the variable interest rate position to within the range defined by the asset owner (in this case, the Cardano ecosystem).
8.4 Utilization of idle assets
The protocol will eliminate idle assets on the platform by transferring a portion of those idle assets to stable swap platforms with no impermanent loss within the permissible range. The utilization of idle assets is part of the ADALend project's backbone or essential program architecture. This means that rather than holding your assets (in this case, ADA) in cold storage, they can be lent out or borrowed to support the ADALend Lending protocol.
This will not only help salvage the idleness of the asset, but it will also yield profit for the holder of the asset. It will, in turn, be to the benefit of everyone in the blockchain market space utilizing the Cardano ecosystem. This also ensures an equitable asset distribution based on the borrower's and lender's respective agreement.
9. User flow
9.1 Lending
The lending operation does not have any conditions to meet, and anyone can deposit any amount and get the equivalent value of share tokens.
9.2 Redeem
The redeem operation is to convert share tokens to underlying tokens. As part of this operation, share tokens are burnt, and the underlying token is returned to the user. The underlying tokens are already grown at this time as the share token's value increases as time goes. The user needs to have enough token balance in his wallet, which will help calculate the underlying amount to redeem. If the reserve available is enough, the borrow/liquidity indexes are updated; else, it will revert.
The requested token is burnt if the health factor is above 1, the total liquidity is decreased, and the interest rate is updated. The underlying asset is transferred to the user.
9.3 Borrowing
The borrow operation sends the underlying asset to the user when the user's collateral amount is larger than the underlying asset he wants to borrow. If the user has enough liquidity, the borrow mode will be valid; otherwise, it will revert. If the user collateral balance is sufficient, the health factor will be above 1; thus, the system will update the borrow/liquidity indexes and credit the accrued interest to the current borrower's balance and the newly borrowed amount.
The reserve total borrow is updated by rate, and the user interest rate mode is set. If any, the accrued interest increases the reserve total liquidity, and the interest rates are updated. The user liquidation ratio is calculated and set, and the underlying user asset is transferred.
9.4 Repay
The repay operation is to pay back the borrowed amount and the interest they need to pay.
If the repayment amount is lower than the amount to repay, the borrowing amount is subtracted by the repay amount.
If the repayment amount is larger than the amount to repay, it will be set as a borrowed amount. The following shows how this process works; The actual amount to be paid by the user is checked if the user's collateral balance is enough that his health factor is above 1 . if the amount to repay is smaller or equal to the fees, the fee amount is updated. Then, the fee is transferred to the destination address; else, the borrow/liquidity index is updated. The accrued interest is added to the current borrow balance, the amount to be repaid is subtracted, and the reserve total borrow is updated by rate. The user interest rate mode is set. The accrued interest increases the reserve total liquidity, the interest rate is updated, and the user liquidation ratio is calculated and set. The underlying asset is then transferred to the reserve.
9.5 Liquidation
The liquidation operation is when collateral is lower than the threshold amount based on the borrowed amount for price changes.
The liquidators can safely take out the borrower's collateral, and the borrower's loan amount is set to zero, and the collateral is removed. If the users borrow in liquidation status, then the health factor is less than one that is the user has borrowed the specific currency and has the collateral the caller wants to buy, the borrow/liquidity indexes are updated, and the accrued interest in the principal balance is calculated, the reserve total liquidity is increased by accrued interest, and the amount of collateral in principal currency is calculated. If the amount is not above 50% of the principal borrow balance, the reserve total borrows are decreased by rate mode, and the user's principal balance is reduced and transferred to the user.
9.6 Flash Loan
The flash loan operation is to borrow a high amount of tokens without collateral, guaranteeing that the user will make the full repayment and interest in a single transaction. The user's reserve is checked, and if it has enough liquidity, the fund is transferred to the active contract and executed. When the fund and fees have been returned, the borrow/liquidity indexes are updated, and the fee is accrued to the reserve liquidity.
10. Oracles
In the blockchain, oracles act as messengers, linking two different data sources while ensuring the information's veracity. The critical dependency in the lending protocol is Price Oracle. We will be utilizing multiple oracles for protocol security. We will be considering the Chainlink and Ergo oracles first based on their reliability. Chainlink is a decentralized oracle network that connects blockchains to real-world datasets, including events, data feeds, and non-blockchain payment methods. A decentralized oracle can convey information to the blockchain that isn't inherent to the blockchain. Chainlink will be used to bridge the gap between traditional data and any future developments in blockchain technology, allowing smart contracts to interface with real-world data and providing them with secure access to key data resources. This will ensure that any blockchain has reliable, tamper-proof inputs and outputs. The Chainlink protocol also includes measures for ensuring data accuracy and reliability.
The Ergo oracles are a pioneer in the field of oracle pools, working with Cardano to provide access to more layers of data availability, veracity, and completeness. Ergo will help bring some unique features such as extended UTXO, sigma protocols, storage rent and garbage collection, stateless clients, and more. There will be three layers to this. The first layer will have the Oracle or data aggregation from several Oracles. While the second tier will contain individual Oracle Pools with the option of collateral slashing for improved data dependability, and the third layer will include a pool of Oracle Pools.
10.1 External Oracles
The information provided by external oracles is the primary source for maintaining the liquidation model.
10.2 Internal Oracles
Internal oracles are used when external oracles are not ready or not available.
10.3 Mixed Oracles
ADALend will use a mix of internal and external oracles for its liquidation model.
The Lending rate Oracle will be the first component to be integrated into the ADALend macroscopic protocol process. That will inform the actual market contracts on the cross-platform rates on provisions by other lending projects (whether centralized or decentralized).
11. Protocol Security
The security of the project is enhanced by protocol architecture, code quality, health monitors, active liquidation bots, and insurance. This will provide secure delivery of data between two parties.
The collateralization ratio ensures that the loan amount is always lower than a specific percentage of collateral, while the origination fee for borrowing prevents spam on the contract.
It incorporates aspects such as; key agreement or establishment, entity authentication, symmetric encryption, and message authentication material construction, secured application-level data transport, non-repudiation methods, secret sharing methods, secure multi-party computation.
12. Liquidity Mining Program
We will use the liquidity mining program to bootstrap the liquidity on the lending pool and control the utilization ratio of each asset. All the actions on the protocol are incentivized by importance level:
Lending
Borrowing
Liquidation
Flash Loan
Governance votes
Governance token LPs
The amount of tokens allocated for the liquidity mining program will be published in the forthcoming tokenomics paper. These liquidity mining programs will need to be approved by the DAO. Until DAO approves the assets, they will be in DAO multi-sig wallet.
13. Governance
ADALend is looking to introduce a new governance system to build a scalable system truly controlled by active users and backers of the community.
The voting power will be calculated by both the native token balance and users’ on-chain / off-chain activity analysis.
The governance decides critical decisions and parameters for the lending pools, including:
Assets adding and removal
Collateralization ratio per asset by asset's risk ratio
Yield programs
Fee rates / Usage of the fees
Protocol upgrades
14. Tokenomics
As stated earlier, all activities on the platform will be done through its native token—LP token. This token will be used to determine the utilization ratio for our lending protocol projects according to the specified objectives and mission statement. The ADALend token is a utility token based on its number of use cases—governance, lending, borrowing, and incentivization.
Furthermore, the deflationary approach will be adopted to ensure that the token's value continually rises. Deflation in this context doesn’t imply the conventional economic approach. Instead, it talks about removing a particular portion of the token from circulation for the perceived value of the token to increase. Different lending protocol platforms have used this approach. Some of the methods employed to achieve the deflationary policy include token burning, token buyback, and token blocking to ensure a recurrent rise in the value of the LP token.
This is the case for ADALend, as plans are in motion for possible token buyback through donations and grants. Also, there is an ongoing negotiation with the platform stakeholders in different countries on achieving this objective.
14.1 ADAL utility & function:
DAO - token holders will be able to participate in DAO, to approve what token liquidity mining will be concluded next (in other words introducing new token), change token pool parameters (collateralization ratio, fees, etc);
Incentivization - ADAL token will be widely used for liquidity providers incentivization - e.g. farming, fixed period staking rewards;
Liquidators "power" indicator - liquidators will be prioritized by how much ADAL they have staked and will be paid with ADAL for liquidation services;
Borrowing fees decrease program for holders (still in discussions);
Reserve currency - ADAL can be swapped on demand for liquidity, for that ADAL/token AMMs will be always launched when introducing a new token.
14.2 Token Allocation
30% of the LP tokens will be for staking, 15% for development, 20% will be set aside for private round, 15% of the tokens will be for the team, the treasury will take 15%, while the seed round and Launchpad will take 4% and 1% respectively.
14.3 Token Ecosystem
The universal token of the ADALend Platform is the LP Token which will serve as the only acceptable token in the ADALend ecosystem. Users of the ADALend platform can use this token to perform various functions, including deploying smart contracts, transferring assets, and purchasing gas for the slave network.
In addition, the tokens on the ADALend platform will serve as the bedrock and lay the foundation for various services within the forum, thereby expanding the ADALend platform ecosystem with each new user that participates and service introduced.
14.4 Token Sales
A total of 45 million tokens will be issued. The tokens will be distributed as follows:
Seed round - 1.8 million tokens
Private round - 3.15 million tokens
Private round A - 3.15 million tokens
Private round B - 2.7 million tokens
Launchpad - 1.8 million tokens
Staking - 12.15 million tokens
Development – 6.75 million tokens
Team – 6.75 million tokens
Treasury – 6.75 million tokens
15. Marketing Strategy of the Project
As a platform that aims to serve the financial market by providing a foundational layer for various assets that gives its users the support to leverage yield farming in the Cardano ecosystem, ADALend will leverage the power of digital marketing to achieve its marketing objectives. To be effectively and thoroughly achieved, we’ll work on two approaches—content marketing and influencer marketing approach.
For our content marketing approach, we will leverage the power of digital marketing to promote our Dapp across social media to its target audience. An enabling and interactive community will be established across all social media platforms like Facebook, Twitter, and LinkedIn to educate our prospects on how the platform works and community forums like Medium and Reddit to achieve optimum reach. Due to the platform’s complexity, both paid and organic approaches will be adopted for broader and faster growth.
The influencer marketing strategy will focus on Crypto influencers and getting endorsements from celebrities and Crypto Thought leaders. This will include sponsorship posts and podcasts from YouTube, TikTok, and Twitter influencers.
Also, we will create the Ask Me Anything (AMA) section on our telegram channel, where owners of cryptocurrency groups can be reached out for discourse. Here, users will be granted access to every information they may need regarding ADALend and how to partner with us.
16. Roadmap
2021 Q3 - Q4
Start
Preparations
Marketing & brand awareness
Testnet Completion
Massive Global Marketing Campaign
Token Listing Submissions
Partnerships & integrations research
2022 Q1 - Q2
Research & Beta
Research & Development of lending platform
Article program launch & content mining
ADALend Prototype Beta Launch
Listing on Major Exchanges (March, April)
2022 Q3 - Q4
Liquidity & Launch
Liquidity Launch
MultiChain Products
Massive User Growth
The full launch of the ADALend protocol
17. Official Support Channel
Website: https://ADALend.finance/ Telegram: https://t.me/ADALend Twitter: https://twitter.com/ADALend_finance Medium: https://ADALend.medium.com/ Facebook: https://www.facebook.com/ADALend/ Reddit: https://www.reddit.com/r/ADALend/ Discord: https://discord.com/invite/2BwEqtj2GC
18. Disclaimer
This document is intended for use by the ADALend team, only for planning statements for the miner's platform business and ADALend token functionality. The ADALend team may adjust the actual business planning according to industry development requirements and related laws, administrative regulations, local regulations, and department regulations. This document does not establish a legal opinion regarding the purchase or sale of ADALend tokens or their associated companies, corporate equity, claims, or owners' equity.
Any similar proposal or price will be applied under the applicable securities law and other relevant laws and regulations. The information or analysis in this document does not constitute investment opinion or advice. It does not constitute non-constitution and should not be interpreted as any civil offer, civil promise, civil action, or civil contract. ADALend tokens are virtual tokens issued by the ADALend platform. And its token holders can redeem points on the ADALend platform. Also, the ADALend team may increase or adjust the ADALend token's service contents according to business development needs. The price of ADALend tokens will be determined through market transactions. Users who purchase and hold ADALend tokens may profit from the price increase of ADALend tokens. However, they may also suffer losses due to falling prices.
The ADALend team makes no promises or guarantees regarding the future price of ADALend tokens. The ADALend team made it clear that ADALend users should be aware of the risks of the projects invested/promoted by the ADALend platform. Individual investors or institutional investors will partake in the ADALend token investment to understand and accept the risk of the project and are willing to bear all consequences and risks accordingly.
ADALend clearly states that it will not bear any direct or indirect losses caused by ADALend's investment projects, including loss of economic benefits due to users' operations; loss of economic benefits due to user's own mistakes, negligence, or inaccurate information; loss of economic benefits caused by the user's transaction of blockchain products; loss of economic benefits due to any failure of the Cardano blockchain; loss of economic benefits due to force majeure, unforeseen risks; loss of economic benefits due to regulatory blockchain technology laws and regulations. 24 ...one tree at a time ADALend tokens are not an investment wealth management product. Under certain circumstances, the value of ADALend tokens may decrease.
The ADALend team does not guarantee the increase in value of ADALend tokens. ADALend tokens should not be considered as having the nature of ownership, control, or decision-making power of the ADALend Platform or its affiliates and companies. ADALend tokens are commercial and do not have the nature of securities. Non-traditional financial products should not be registered as securities in any country or region.
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