A Quick Update on our Money Market on Aave

On the recent roadmaps, we have a deliverable of the Aave Test Phase and the rollout of the full Money Market. Now that we’re in the midst of it, we can see that this needed some more granularity. Of course, it sounds simple, just set up a test money market, but then you start asking the obvious and not so obvious questions and that’s where it gets interesting. I’m sure the old Uniswap crew think setting it up is like turning on a light…

The mechanics of the pool are simple:

  1. Create a stablecoin that will represent the increase in value for the holders.
  2. Use our fiduciary account with cash, that will buy invoices.
  3. Connect an Oracle that will reliably report data from the fiduciary account.
  4. Insurance.
  5. Buy invoices.
  6. Ensure invoices are paid.
  7. Repeat steps 5/6.
  8. Increase invoices available to purchase.
  9. Issue more of the stablecoin.
  10. Repeat steps 5/6.
  11. Repeat steps 8/9.
  12. Repeat steps 5/6.
  13. Repeat steps 8/9…

Graphically, it looks something like this:

The first step and the core of the project is CrUSD. Most of you haven’t heard of it yet, we pronounce it “Cruised”. It’s an insured USD stablecoin, transparently backed by real-world assets. The coin is already deployed to our wallet on the Kovan testnet. The link is functioning as expected and the balance is increasing nicely. We issued 600,000 CrUSD because it roughly matched one of our existing real-world off-chain accounts that is buying daily invoices on a 7-day cycle. We could have forced in some test data but nothing is better than the real thing. Eventually, we will use a Chainlink Oracle to provide the data feed.

The real testing here is in the elasticity of supply. The process is simple as long as the invoice supply is constant or increasing. (It probably goes without saying: we are using invoices but this obviously works with any real world asset.) We can always absorb small variations on the ins and outs of the coin flows. It’s a large fluctuation either way that might require more fine-tuning and not in a typical minting/burning cycle that will be ongoing. Ideas are welcome…

So now we are coming to end of our own testing on CrUSD. The next step is to let the community have some and test it. For that, we need a faucet which should be ready this week. In order to make this a fair process, we have set some limits that will allow a wider distribution. At time of writing, the parameters are set to release 5,000 CrUSD per hour. During that hour, there will be a limit of 500 CrUSD per wallet. And a total holding limit of 5,000 CrUSD per wallet. In parallel, we’ll be connecting the Oracle, and then handing the whole thing over to the Aave crew to deploy.

And then Stani says: what if you could borrow against the CrUSD?
Derek Mayne

Derek Mayne

Engineer turned entrepreneur. Background in FX and specialist financing. PhD Structural Engineering (Calgary)