Agility Protocol Review: Potential Platform To Solve LSD Liquidity Challenge
With the current LSD array’s expansion, liquidity is a critical concern in DeFi. The increased ETH LSD liquidity has a significant impact on broadening the user group for that project and producing more money. Let’s learn details about this project with Coincu through this Agility Protocol Review article.
What is Agility Protocol?
Agility is a project in the Liquid Staking Derivatives (LSD) array, helping to increase real yield for LSD users, while providing liquidity for other LSD protocols.
Fueled by its vision to optimize liquidity for LSD holders (stETH, rETH, frxETH, ankrETH), Agility also aims to expand the trading market for LSD assets and foster deep liquidity for Liquid projects Staking linked to its platform.
At the core of the Agility platform lies two main systems: the LSD liquidity distribution system and the aUSD stablecoin platform. These systems come replete with an array of features encompassing liquidity provision, lending, and farming capabilities, among others.
One of the hallmark offerings of Agility is its liquidity distribution platform for LSD assets. By acting as a conduit for liquidity, it empowers LSD users to maximize their real yield potential. Additionally, this distribution system provides ample liquidity support for other LSD protocols, thus fostering a more interconnected and thriving ecosystem.
Complementing the liquidity distribution system is the aUSD stablecoin platform. Designed to optimize capital efficiency, this stablecoin system opens up new avenues for traders and investors to make the most of their assets. By mitigating the volatility commonly associated with cryptocurrencies, aUSD provides stability and predictability, driving more users toward the Agility platform.
Agility’s commitment to enriching the LSD ecosystem is further exemplified through its platform’s support for trading aUSD. As a platform that encourages liquidity distribution, Agility generates increased demand for Ethereum derivatives, thereby bolstering the overall ecosystem’s resilience and growth.
The agility platform does not only cater to the needs of seasoned traders and investors but also extends its benefits to new market participants. Its products are focused on multiple fronts:
- Boostrap Liquidity Depth: Agility empowers liquidity creation for LSDs, enhancing their overall market presence and appeal.
- Optimize Capital Efficiency: By providing aUSD stablecoin services, the platform enables efficient capital utilization, paving the way for more sustainable investments.
- Increased Demand for LSDs: Agility’s user-centric approach stimulates greater demand for LSD assets, fostering a more vibrant and thriving marketplace.
Presently, Agility offers support for a comprehensive range of LSDs, including stETH, rETH, frxETH, and ankrETH, signaling its commitment to cater to a diverse community of users and assets. Now, the Agility Protocol Review article will explore how the project works.
How does it work?
In the world of decentralized finance (DeFi), Agility has unveiled a groundbreaking platform that promises to generate significantly higher yields for LSD (Liquidity Sensitive Deposit) and ETH holders. By utilizing a unique system called the “LSD Liquidity Distribution,” participants can unlock new opportunities for profit and liquidity provision.
The process begins with LSD or ETH holders depositing their assets into Agility, where they receive either aLSD or aETH. From this point forward, users have several options at their disposal:
- Hold aLSD: By choosing to retain only aLSD, users receive profits directly from their corresponding LSD holdings, with aETH carrying no yield.
- LSD Liquidity Distribution: Users can utilize their aLSD to partake in the “LSD Liquidity Distribution” program. This initiative facilitates the provision of LSD liquidity to various Vaults, including prominent protocols like Lido, Frax, or Rocket Pool. In return for their contributions, participants are rewarded with additional, higher yields.
- Mint aUSD: For those seeking trading or hedging opportunities, Agility offers the option to use both aLSD and aETH as collateral to mint aUSD. This process requires a collateral level of 130%, meaning each aUSD requires at least $1.3 worth of aLSD/aETH. To ensure stability, a liquidation level of 110% is maintained, preventing excessive risk.
The core of Agility’s appeal lies in its “LSD Liquidity Distribution” system, which harmonizes the efforts of three essential components:
- LSD Protocols: Leading DeFi platforms such as Lido, Frax, and Rocket Pool are eager to attract liquidity for their LSD/ETH asset pairs. As an incentive, these protocols allocate funds to incentivize users to contribute their idle LSD and ETH holdings.
- aLSD/aETH Holders: These individuals are the LSD/ETH holders who possess unused assets and are keen to capitalize on them. Through Agility, they gain access to the opportunities provided by the LSD Protocols.
- Agility: Positioned as an intermediary, Agility bridges the gap between LSD Protocols and aLSD/aETH Holders by utilizing strategically designed LSD strategy vaults.
One of the standout features of Agility’s system is the integration of the vetoken model, specifically the esAGI token. Participants engaging in the “LSD Liquidity Distribution” program are entitled to receive a portion of esAGI emission tokens from Agility, determined by their chosen vaults. The emission rate is established through a democratic voting process involving esAGI holders, allowing for transparency and fair distribution. Moreover, LSD Protocols have the option to incentivize voting through esAGI by adopting a mechanism similar to Curve‘s.
Agility’s comprehensive approach not only facilitates yield generation directly from vaults but also encourages active involvement in the “LSD Liquidity Distribution” program. By embracing this revolutionary DeFi platform, aLSD/aETH holders can unlock the full potential of their assets, enabling seamless trading, hedging, and yield trading opportunities on various perps and associated platforms, ushering in a new era of DeFi possibilities.
Agility’s mechanism consists of two major components:
- LSD Liquidity Distribution System: Gathers user liquidity and distributes it to other LSD protocols.
- aUSD system: Incentivize users to mortgage LSD tokens and stablecoins in order to mint aUSD and benefit from trading and lending.
LSD Liquidity Distribution System
Agility Protocol’s innovative platform facilitates the distribution of liquidity for various LSD protocols, offering participants enticing rewards and profits. The protocol allows LSD projects to join and establish strategic vaults on their platform, enabling them to tap into new liquidity streams.
One of the primary ways users can participate is by providing liquidity to the rETH-WETH (Ether) pair on Aura, contributing to the LSD pool on Gearbox, or offering LP rETH-WETH Aura liquidity on Pendle. These contributions grant users the opportunity to earn rewards in the form of esAGI, Agility’s governance token, in addition to a share of profits regulated by the respective vault they participate in.
A unique aspect of Agility Protocol is the ability for users to stake AGI, the platform’s native token. By doing so, they receive esAGI tokens and obtain voting rights on the distribution of esAGI rewards to the vaults within designated epochs. An epoch represents a predefined time period, varying depending on the specific project and underlying blockchain.
The voting process carries significant weight, as vaults with the most votes are entitled to receive a greater share of the esAGI token emission. This incentivizes participants to rally behind specific vaults, generating more emission, and consequently attracting more liquidity providers.
However, the competition for liquidity is fierce, with LSD protocols vying for an edge by enticing users with higher esAGI token rewards if they vote for their respective vaults. This mechanism results in a dynamic and competitive environment, fostering a healthy ecosystem for liquidity distribution.
Moreover, participants can also bolster their earnings by leveraging the “Farm” feature on Agility. By staking tokens, users can access additional profits in the form of esAGI.
Unlike traditional cryptocurrencies that can experience significant price fluctuations, aUSD is designed to maintain a 1:1 peg to the USD, offering users a reliable medium of exchange and store of value within the Aligity ecosystem.
Minting and Collateralization
At the heart of the aUSD system lies the mint/redeem mechanism, enabling users to deposit assets like LSD tokens, stETH, ETH, USDC, or DAI as collateral to mint aUSD. This collateralization process helps maintain the stability of the stablecoin by ensuring that each aUSD in circulation is backed by an appropriate reserve of other stable assets.
Liquidity Peg Mechanism
To bolster liquidity and foster a vibrant marketplace for aUSD, Aligity pairs it with various stablecoins. Users contributing liquidity to aUSD/stablecoin pairs receive rewards in the form of esAGI tokens. The liquidity peg mechanism is crucial in supporting aUSD’s 1:1 peg to the USD, but also creates opportunities for arbitrage when aUSD fluctuates above or below its intended value.
Stabilization and Emergency Liquidation
To safeguard the protocol’s solvency, the aUSD stabilization mechanism acts as a pool for liquidated debt. Users can participate in this module by providing aUSD, and in return, receive rewards in the form of liquidated assets. Additionally, Aligity has implemented the aUSD Emergency Liquidation Mechanism (AELM) as a safety net during times of market volatility or infrastructure attacks. AELM allows users to redeem aUSD for their collateral, ensuring their assets remain secure.
aUSD Lending Platform
The aUSD system introduces a lending platform that offers users two ways to generate profits. Firstly, users can provide aUSD liquidity to LSD lending pools, earning rewards in the process. Secondly, they can deposit aUSD into loan liquidation pools, each supporting the liquidation of different assets. This allows users to choose pools based on their preferred risk and potential returns.
aUSD Trading Platform
Aligity aims to enhance the applicability of aUSD through a dedicated trading platform. Here, users can engage in various activities, including buying and selling aUSD. Additionally, the platform offers unique features such as trading and hedging with perpetual contracts (perp) for assets like aLSD and aETH, a decentralized exchange (DEX), and options trading.
- High security: Data is saved on the blockchain, where transactions are encrypted and authenticated using powerful cryptographic algorithms, ensuring data security and dependability.
- Authenticity: Data is evaluated by a large number of network nodes, which helps to assure data correctness and dependability.
- Portability: Agility LSD is meant to connect with other systems, enabling data movement across systems easy.
- Scalability: To suit the demands of enterprises and organizations, the Agility LSD platform is scalable and developing.
Agility LSD also has a token called AGI token on the Ethereum blockchain, which is used to trade amongst members of the Agility community in order to pay fees for services and goods supplied by the Agility system.
- Token Name: Agility
- Ticker: AGI
- Blockchain: Ethereum
- Token Standard: ERC-20
- Contract: 0x5f18ea482ad5cc6bc65803817c99f477043dce85
- Token Type: Utility, Governance
- Total Supply: 16,287,208
- Circulating Supply: 16,287,208
Agility allocates 88% of AGI tokens to incentivise mining, 10% to Treasury, and the remaining 2% to Marketing and Early Liquidity.
AGI can be turned into esAGI, which can only be used to participate in governance votes, earn money from the platform, and bribe LSD Protocols.
To redeem from esAGI to AGI, token holders may choose one of two timeframes and trading rates: 1:0.5 for 3 days or 1:1 for 14 days.
LSD Strategy Vault
- 70% share for users $esAGI vote for Vault
- 30% share to users providing liquidity
- 90% share for users $esAGI
- 10% on Treasury
Trading system aUSD
- Redemption fee (0.5%) – Treasury
- 10% – Market Builder
- 20% – aUSD borrowers
- 10% – Tresury
- 60% – Market maker (Liquidity Provider)
Moon Phase (May – July 2023)
- Locking functionality for LP tokens.
- Platform for LSD liquidity distribution in PoS networks.
- The fundamental idea is followed by the LSD liquidity distribution platform (Jurassic).
Mars Phase (July – November 2023)
- Provide a bribery feature for the LSD liquidity distribution platform.
Galaxy Phase (November 2023 onward)
- aUSD Trading Platform – Cretaceous Period. Increase the utility of aUSD by adding extra features.
- Interaction between the LSD liquidity distribution platform and the aUSD liquidity distribution platform.
Conclusion of Agility Protocol Review
Agility is a project that aims to assist disperse liquidity for LSD protocols while also developing a USD stablecoin to provide consumers with stability. It is a promising blockchain platform that claims to deliver flexibility, scalability, and distribution to blockchain applications.
However, in order to successfully use Agility LSD in blockchain, it is necessary to have a thorough understanding of its design, optimize for performance, ensure privacy and security, integrate well with other systems, and carefully analyze and evaluate application, configuration, and scalability requirements.
Agility LSD, when used correctly, may assist developers in creating strong and efficient blockchain applications. Hopefully the Agility Protocol Review article has helped you understand more about the project.
DISCLAIMER: The information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.