When you search for aurigami, your search engine might be confused and show you posts on Origami. At least, that’s what happened to me. After reading up on aurigami, it made sense why they went with the name. But let’s start from the basics.
What is Aurigami?
Aurigami is a decentralized, non-custodial liquidity protocol running on Aurora, the EVM-compatible blockchain on top of NEAR. It’s the first and only money market protocol on Aurora and enables users to start earning interest on their digital assets effortlessly.
Thanks to DeFi lending and borrowing, lending has become a lot more accessible, and borrowers don’t have to go through arduous approval processes or involve any third parties at all. Aurigami brings lenders and borrowers together, creating a system where those looking to earn interest deposit their income to earn passive income; and others take out loans.
As in other DeFi protocols, all loans are overcollateralized to ensure that lenders don’t lose funds even during a market drawdown. Interest earned from deposited assets offsets the interest from borrowing, a process that the team at aurigami calls “folding” — fittingly.
When users repeat the cycle of borrowing and depositing, they maximize the folding loop and increase the overall rewards they earn and the amount of the native token $PLY that is mined. Repeated folding creates a beautiful profitable ecosystem — just as folding origami paper creates all kinds of figures.
When depositing into aurigami, users practically lock their tokens in a smart contract. In return, they receive auTokens, which are yield-bearing assets and can be traded and transferred, providing liquidity.
The interest one can earn depends on the borrowing demand. Currently, yields range from 4% — 68% (on PLY), and assets supported include stablecoins such as USDT, and popular cryptocurrencies such as wrapped Bitcoin, staked NEAR, and ETH.
Aurigami doesn’t impose any minimum or maximum deposit and withdrawal amounts and enables users to freely experiment with functionalities such as flash loans and fixed lending rates to create optimal yield-earning strategies.
Unlike other money market protocols such as Aave, aurigami has two different tokens:
- PLY: the native token that comes with governance voting rights
- PULP: a maturing token that functions like a voucher. After a certain maturity period, PUPL can be redeemed for PLY.
You might wonder what the logic behind such a system is. It’s best illustrated with the Papermill gamification event the team kicked off after their token generation event.
While users could pre-mine tokens, throughout the event, they’d be given a choice to either claim early and do so at a disadvantage or wait for a higher reward. In practice, those claiming in the first week after launch would receive a split of 5% PLY/95% PULP, whereas, after 48 weeks, the split was set at 99% PLY/1% PULP. That means those claiming fast would have to wait until their maturity period, incentivizing holding and giving investors the freedom to choose when to claim.
The maximum supply of aurigami is set to 10 billion $PLY and is released over four years. 40% of the supply is allocated to liquidity mining and 12.5% to the treasury to continue growing the protocol. A breakdown of the token allocation is below.
All in all, aurigami seems pretty successful with its approach since more than $21 million worth of assets are currently locked in it. I just wonder how interest rates will long-term hold up if there is constantly a lower demand for borrowing than there is for earning interest.
That isn't a problem specific to aurigami, but every lending and borrowing protocol — since the best use-cases for taking out loans on these platforms are trading and leverage.
I might try putting in some stablecoins and see what happens. If you want to do the same: https://app.aurigami.finance/. But only what you can afford to lose.