All you need to know about Ardana

What is Ardana, one of the most promising projects on the Cardano blockchain?

Ardana, a DeFi hub built on the Cardano blockchain, is due for a main-net launch by the end of the year. It consists of multiple independently functioning protocols that work together to build a Decentralised economy on Cardano. It’s ecosystem comprises of an over-collateralized stablecoin platform, an AMM - dex called Dana swap, and a DAO body to help it run efficiently. 

With Ardana, users can generate stablecoins using Cardano native tokens as collateral deposited in its Vaults. Ardana Vaults are non-custodial and permissionless, and all generated stablecoins are backed on-chain by excess collateral. dUSD tokens are created when users deposit collateral assets into vaults through unique smart contracts known as Collateralized Debt Positions (CDPs) within the protocol.

What is Danaswap?

Danaswap is an AMM, a decentralized exchange designed to achieve high-speed & ultra-low slippage multi-asset swaps. It supports the minting of various stablecoins. In essence, the availability of multiple stablecoins allows the user to have a digital forex market to trade between popular fiat pegged Ardana stablecoins (dUSD, dEUR, dGBP). One can earn interest through yield farming and lending by depositing supported stablecoins. Users also earn a market-making fee for depositing their assets into the pools and are rewarded with the governance token DANA for their liquidity provision.

How does Ardana work and the tokenomics of the DANA token

Liquidators can bid in an auction for the collateral of the liquidated vaults with dUSD or any other Ardana stablecoins. A specific discount rate is determined algorithmically for the auctioned vaults, which will float between a floor of 5% to a cap of 20%. The protocol charges a small fee for these liquidations.                                         

A portion of the stablecoin revenues earned from the protocol is forwarded to a reserve called the “Stability Buffer.” This reserve serves as a liquid backstop which maintains the price stability of Ardana’s stablecoins. Whenever there is an undercollateralized vault without a sufficient amount of liquidations to cover the debt, the stability buffer uses its stablecoin reserves to participate in collateral auctions.

There is a cap on the number of stablecoins the stability buffer can hold after which the generated revenue is transferred to the Reserve Buffer.

 To protect the Ardana Protocol from compromised price oracles, Ardana uses its own decentralized oracle solution for fetching price feeds known as the Oracle Gate Module (OGM). OGM acts as an intermediary and a layer of defense between itself and the price oracles delaying the price feed by one hour, which effectively allows emergency Oracles or an Ardana governance vote to freeze compromised oracles individually.

DAOs on Ardana

DAO teams are independent actors that supply various services to the Ardana Protocol, which include moderating the Ardana governance forums and performing market analysis. The governance process includes two phases to ensure the governance decisions are thoughtfully considered and the consensus is reached through proposal polling before the final voting is conducted.

While holding DANA does provide users to participate in decision making, the long-term holders can time lock their Dana to get exDANA, which incentivizes them with a pro-rata share of the protocol revenue. In effect, it encourages holders to participate in governance in good faith for the protocol's long-term development.