June ends just right! The moment we’ve all been waiting for is here. After long days of development and security audits, we are excited to announce that Akropolis protocol has launched on the Ethereum mainnet! Security audit, initial product spec, redesign, liquidity mining incentives, UI/UX enhancements, new products and more in this article.
Important things first — security audit
We’re proud to share that our framework for launching financial DAOs — AkropolisOS — is fully audited by Certik team (feel free to examine the security audit here). TL;DR: potential critical issues are resolved and fixed, all minor bugs are fixed. We will be announcing a bug bounty shortly and welcome any early feedback and feature requests, the most comprehensive feedback and most innovative feature requests will be awarded $1000 in AKRO on a monthly basis.
AkropolisOS is an unopinionated, modular and upgradeable framework built with OpenZeppelin SDK and rooted in Facade software design pattern. Aimed at a developer rather than the end-user audience, AkropolisOS empowers developers to quickly set up and collectively manage DAOs with entirely customisable user incentives, automated liquidity provision enabled by the bonding curve mechanism, programmatic liquidity and treasury management. AkropolisOS provides lego-like scalability without the loss of coherence and security during upgrades.
What can you build on AkropolisOS?
We believe in the value of dogfooding, so below are our two DeFi products built on AkropolisIO, that serve to address two important needs:
Combined, they offer two main native DeFi equivalents of core financial services: insurable savings (variable and fixed-rate savings deposits) and access to credit, without reliance on the traditional banking system. Our future work will go some way towards reducing systemic risk in native DeFi products.
Today, however, we focus on the Sparta v0.1 release.
Sparta — What is it and how does it work?
Sparta is the first implementation on AkropolisOS.
Sparta is an Undercollateralised Loans and Savings Pool designed to deliver access to undercollateralised credit, and provide a combination of native yield and “interest rate income” to its members.
We wanted to launch as soon as possible after the audit is completed, so Sparta v0.1 naturally has restricted functionality, with the new UX/UI and integration with an automatic rate rebalancer (RAY<>Curve) coming up.
So what can you do as a Sparta v0.1 user? Things that our members can do:
Contribute funds to the pool and hold internal pTokens (pool shares). Their price is determined by the bonding curve and changes as a function of liquidity amount in the pool. It is designed to allow for secondary liquidity management and our version of “ragequit”;
Take out an undercollateralised loans from the pool (providing only 50% of collateral, i.e. 50% LTV or Loan-to-Value);
Lend funds to members of the pool by staking in favour of their loan request and earn higher APR (please remember higher APR reflects higher risk).
All early participation in Sparta v0.1 will be counted towards the forthcoming liquidity mining programme. You can check the FAQ for interacting with the Sparta here.
Keen yield farmers can customise Sparta v0.1 to create a true farming co-operative, with larger farmers backing smaller one’s trading proposals, feeding the loan and trade proceeds into a jointly managed co-op treasury. A word of caution: whilst this is an entirely possible use case, it is high-risk and repayment of the trade proceeds won’t be entirely trustless in this particular use case.
Over the next days, we aim to introduce several important features and additions (roadmap here). More on it below:
In addition to governance use of AKRO, we will be introducing additional incentives for the product users. All pool members will receive AKRO in accordance with the liquidity they provided to the pool (passively) and to lenders & borrowers in accordance with loan sum. More details will be announced soon, but liquidity mining rewards begin to accrue at launch!
Any project in DeFi sphere (and Web3 in general) faces a lot of limitations and UI/UX problems. We’re not an exception here — as a lot of other projects, we want to improve user experience and make our Pool as simple as possible to use. As most of the functionality is already there, we have started to work on UI/UX improvements following the latest design trends and in-depth usability tests. We have already redesigned our website (take a look at akropolis.io!) and are now working on the product prototypes — check them out!
We want to give users as many incentives to join us as we can — additional passive income is one of them. We have developed a module which utilizes Robo-Advisor for Yield from Staked.Us to rebalance between such protocols as Aave, Compound, dYdX, Fulcrum (disabled atm) to earn higher passive yield. Another part of rebalancing module is Curve.fi which rebalances between different stablecoins to provide higher APR. At the moment, funds will be sent to one of them (based on higher yield after all transaction fees) upon the deposit.
We are well aware that one of the big limitations to user adoption is gas fees — you always need to have a small amount of ETH to pay for transactions, and gas price is subject to network load & can skyrocket any time. To solve this problem, we plan to integrate OpenGSN, which allows paying transaction fees in the token which person sends (in our case — in DAI).
We all know by now that security audit alone does not guard against security issues and risks that are yet to be discovered as ecosystem evolves. Alongside with bug bounty, we will be offering an opportunity to purchase insurance coverage against hacks & code issues via Nexus Mutual or Opyn.
We’re building Akropolis Protocol with decentralization in mind. To be able to react quickly to any potential issue, Akropolis will keep the ownership of the protocol in this initial launch phase. As a part of the gradual decentralization process, we will be setting up a governance portal where AKRO token holders will be able to vote for different protocol parameters, such as loan & APR sizes, yield sources, bonding curve parameters, etc.
In addition to DAI, we want to add support of different SoV stablecoins to enable passive yield accumulation and loan issuance in various tokens.
In the near future, we will add USDT, USDC and RSV stablecoins to Sparta.
Upcoming Updates / Liquidity Mining
We will wrap this up by touching upon liquidity mining incentives and how they feed into our product.
Given the liquid nature of capital in DeFi, most of the yield-farming capital that exploded recently still represents largely speculative capital and is therefore non-sticky, as has been demonstrated by the recent capital inflows into Compound, Balancer, Curve, and others. Whilst yield-farming activity does not reflect long-term holders and dedicated network participants, we aim to reward them through our liquidity mining incentives.
Liquidity mining is not a new idea, but it has been given a new lease of life and acceptance after the COMP-induced yield-farming phenomenon. Liquidity mining is essentially incentivising liquidity provisioning to a protocol through native token rewards. Well-structured incentives allow liquidity to flourish and attract greater trading volumes. Whether this is the most cost-effective bootstrapping tool, is still subject to debate in the ecosystem.
Our view is that the current surge in DeFi APYs will subside; only the projects with unique moats will be able to capture the fickle super-fluid capital that prevails in DeFi.
Liquidity profiles matter for liquidity mining incentives. The graph below should be helpful in unpacking them.
We allocated half of the Foundation tokens or 20% of total token supply (TTS) to liquidity mining incentives, which you can see on the chart in pink. Team tokens unlock over the next 24 months on a monthly basis and represent a minor part of the TTS. Thus, the circulating supply of AKRO reaches 100% by summer 2022. For full details, please see our transparency disclosure at Messari. The details of our liquidity mining incentives will be published over the next few days.