Agave is a decentralized, non-custodial money market and borrowing-lending protocol. Users can interact with the protocol by depositing liquidity (lending) or by providing collateral and taking out loans (borrowing).
Although Agave is a fork of Aave, a popular lending protocol running on Ethereum mainnet, Agave has been deployed on xDai Network, a sidechain of Ethereum that allows for significantly faster and cheaper transactions. Agave is currently under active development by members of the 1Hive DAO.
By interacting with Agave, liquidity providers can earn rewards in the form of interest on their deposited funds and borrowers can borrow funds in an overcollateralized (i.e., perpetually) or an undercollateralized/one-block liquidity fashion (i.e., flash loans).
Users who choose to deposit tokens into the protocol will receive an aToken in return. The aToken functions as a receipt for the deposited funds, and simultaneously accrues interest. Upon depositing, users will have the option to enable their deposit to be used as collateral and can then choose to use this collateral to borrow other assets. This is functionally equivalent to offering a leverage facility. For example, if a user deposits HNY, they will be able to use that deposited stake in HNY as collateral to borrow DAI, which can be further used to buy more HNY.
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