What is Aurigami (PLY) and How Does it Work? | KuCoin Crypto Gem Observer
Decentralized finance (DeFi) has emerged as one of the most promising subsectors of the crypto industry. By offering financial instruments and services while eliminating intermediaries, DeFi positions itself as an integral part of the web3 financial ecosystem.
DeFi’s promise is already evident, with lenders embracing the sector to get high interest rates. Borrowers also enjoy perks like immutability and transparency, which prevent preferential treatment. Additionally, borrowers get loans quickly compared to securing loans from banks. Apart from lending and borrowing, DeFi offers other services, including saving and asset management.
As more users realize that DeFi offers more perks than traditional finance, the space continues expanding swiftly. According to data from analytics firm DeFi Llama, the total value locked in DeFi protocols currently stands at $211.11 billion, up from $630 million in early 2020.
Although the nascent industry has grown significantly over the past few years, the growth curve is starting to flatten due to several factors. As it is, embracing crypto is hard enough for a significant percentage of the global population. As such, onboarding DeFi is more complicated.
To address this issue, Aurigami, a decentralized non-custodial DeFi protocol on Aurora, offers a seamless onboarding process for users to effortlessly lend, borrow, and earn interest with their crypto holdings. Depositors offer liquidity and earn passive income, while borrowers get to access loans in an over-collateralized manner.
How Does Aurigami Work?
To get started with Aurigami, users need to deposit tokens that the protocol supports. Depositing funds allows users to either earn interest depending on the demand of the borrowing market or use their assets as collateral to borrow. For users looking to borrow and lend, the protocol uses the interest from lending to offset the accumulated interest from borrowing.
Once a user deposits assets, the protocol assigns them to smart contracts. Lenders will get auTokens that match the value of their deposited assets. Whenever they need to withdraw funds from the liquidity pool, lenders will need to use auTokens. These coins are also tradeable and transferable.
Lenders will continually earn interest on their deposited assets. An algorithm adjusts the earnings for each asset depending on their independent market conditions. The exchange rate between auTokens and the underlying assets increases as more interest is earned in the market and vice-versa.
Aurigami does not have a minimum or maximum limit for deposits. Additionally, users can always withdraw funds provided they are not actively being used to borrow. The withdrawal of such funds would not result in the liquidation of loans.
Borrowing funds on Aurigami requires users to navigate the “Deposit” tab under “My Account” and enable the use of deposited assets for collateral. Once a borrower completes this step, the platform will update their Borrow Limit based on the available collateral.
The Borrow Limit is equal to the borrow utilization at 100%. Borrowers need to maintain this delicate balance to avoid liquidation. Once a borrower’s borrowed position surpasses the Borrow Limit, Aurigami will liquidate the deposited assets that a user agreed to use as collateral.
Aurigami’s platform uses three colors to represent various levels of borrow utilization to help users understand how close they are to liquidation.
Green means a user’s borrow utilization is 75% or lower, which is relatively safe. Orange indicates the borrow utilization is between 75% and 90% and prompts users to pay close attention to their positions. Red means the borrow utilization is between 90% and 95% and calls on users to improve their borrow utilization. Once the borrow utilization exceeds 95%, users face a high liquidation risk.
To improve borrow utilization, users can deposit more funds to increase their collateral. Alternatively, they can repay a portion or the complete amount of the borrowed funds.
What Makes Aurigami Unique?
Aurigami has a unique proposition that sets it apart from other DeFi protocols. By aspiring to become the foundation of a thriving DeFi ecosystem, the project has attracted Blue-Chip venture capital firms like Dragonfly Capital, Polychain Capital, Mechanism Capital, Amber Group, Coinbase Ventures, and Jump Crypto to invest in its private round.
Aurigami also has a tightly managed circulating supply for its native token, PLY. The project achieves this by leveraging a progressive locking mechanism for its liquidity mining incentives. This feature helps foster the protocol’s sustainable growth and healthy price discovery for PLY.
Moreover, Aurigami has a robust roadmap that involves UST asset listing, LP token staking, and creating an Innovation Zone that allows the listing of Aurora long-tail assets in isolated pools. Additionally, the project seeks to introduce a fixed lending rate.
Who created Aurigami？
Aurigami is proud to have assembled a core team with diverse backgrounds who are united by their common passion for DeFI. The team is led by co-founders Lucas and EY with TN Lee, CEO of Pendle as Advisor.
Aurigami’s Dev team consists of multiple Math and Informatic Olympiad winners who are deeply experienced in blockchain. Most notably, the team contributed to a solution that led to a 2x improvement in gas consumption efficiency on Aurora, as featured here (https://aurora.dev/blog/aurora-engine-2-4-0-release).
The team’s strength is endorsed by leading VCs who participated in the private round such as Dragonfly Capital, Polychain Capital, Amber Group, Coinbase Ventures and Jump Crypto among others.
More Details about Aurigami:
Aurigami’s unique value proposition and innovative tokenomics make it stand out as one of top protocols to look out for. Aurigami, as a leading protocol on Aurora, is well positioned to capture the value from the rapid expansion of the entire Near and Aurora ecosystem. As a money market, Aurigami in particular will be a keystone protocol instrumental in laying down the foundation of a thriving DeFi economy. By extension, this makes PLY tokens a good investment if you’re confident in the growth trajectory of Near and Aurora.
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