Aura Finance is a protocol built on top of the Balancer System to maximize incentives for Balancer liquidity providers and BAL stakeholders.
Putting one’s hard-earned money into something that has never been proven and tested before is a risky move. Thankfully, there are tons of finance projects out there that ensure that their clients are at ease when it comes to big decisions, especially those that involve money. But in the finance world, earning clients’ trust and magnifying a firm’s reach is difficult to attain.
You need to work tirelessly to provide your clients with the security that they deserve and over time, you will build enough rapport to command the respect of an industry. In the world of decentralized finance (DeFi), things are a bit different but the same underlying principles still apply. Aura is one of such projects making moves in this direction.
Table of Contents
Background
Aura abstracts the complexities of depositing into the Balancer gauge system, allowing all Balancer gauge deposits to go through a smooth onboarding procedure. Aura’s creators enable depositors to obtain a high boost via the protocol-owned veBAL while simultaneously earning additional AURA incentives.
Since the inception of Aura, contributors have been focusing on security as a core tenet. They have taken part in numerous audits and established bug bounty programs. Recently, they appealed to major DeFi community members, including developers, investors, and founders, to support Aura through the protocol and treasury multi-sigs.
What is Aura?
Aura Finance is a protocol built on top of the Balancer System to maximize incentives for Balancer liquidity providers and BAL stakeholders via social aggregation of BAL deposits and Aura’s native coin. It is a protocol that is decentralized and community-governed. All activities are directed by token holders via Aura Vote Locking.
The core things to be governed in the Aura system are as follows:
Internal governance proposals (e.g. setting fee rates)
Aura treasury
Balancer Snapshot voting
Balancer Gauge voting
Through the implementation of vote delegation on the Vote Locked Aura contract, Aura has prepared for full-fledged chain governance. Having stated that, a safer form of implementing governance decisions will be employed until the Aura voter base matures and the on-chain governance contracts are audited.
Within the ecosystem, the AURA coin serves as a governance and incentive instrument. Locked AURA coins will have governance powers in the system and will be able to vote on internal proposals as well as protocol-owned veBAL voting power.
Balancer Pool Tokens
Balancer Pool Tokens, or BPTS, are earned by depositing assets into a liquidity pool using the Balancer app.
Balancer Gauges
These BPTs can be used to gain BAL awards by staking them in Balancer Gauges. Depositors receive a “boost” of up to 2.5x their veBAL balance. To obtain a veBAL balance, users must typically lock up BAL in the Balancer VotingEscrow. This is when Aura enters the picture.
Aura for Balancer LPs
Aura allows users to keep collecting their trading fees but at a higher APY thanks to Aura’s protocol-owned veBAL. Simultaneously, Aura LPs will get protocol native (AURA) tokens as prizes. Aura allows consumers to maximize the income on their BPT while also providing exposure to the governance token of a protocol with significant economic weight.
auraBAL
Users can deposit their 80/20 BAL/WETH BPT here and receive auraBAL instead of the non-transferable veBAL. Tokenised auraBAL is delivered to the user at a 1:1 ratio for veBAL and is tradeable on Balancer financing. This BPT is then locked up in Voting Escrow by the Aura protocol for the maximum amount of time, allowing the Aura system to profit from its voting power for raising rewards and voting for gauges.
auraBAL Staking
auraBAL can be staked into the platform to get the standard Balancer admin fees for holding veBAL, in both BAL and bb-a-USD. Users who stake auraBAL will also earn BAL from Aura’s performance fee, as well as the platform native token AURA.
auraBAL Liquidity Pools
Instead of staking auraBAL, users can contribute to the Balancer pool auraBAL/[80/20 BAL/ETH BPT]. Users can then stake the auraBAL BPT token on Aura Finance to get a separate pool of AURA rewards for facilitating others’ access to and exit from the ecosystem via the auraBAL token.
Vote Locking
Locking AURA
Locked AURA will help with Aura protocol governance. Those who lock their AURA before the start of the following epoch will be eligible to vote on all protocol-related choices. Locks are good for 16 weeks. These include its creation and the distribution of the protocol’s veBAL. As a result, locking will be required for users to affect how rewards are distributed; moreover, other protocols have shown the economic power that this carries. Aura lockers will be directly rewarded with auraBAL.
Uses
Balancer gauge voting
By voting for specific gauges, it is possible to direct the flow of incentives on the Balancer protocol. There are significant bribe markets emerging, such as. This allows users to earn a lot of money for their votes.
Security
The security of smart contracts is a primary issue for those working on Aura Finance. To ensure the protocol’s safety, all feasible safeguards must be followed.
Fork testing
Fork testing aids in simulating contract deployments and functionality in a live environment while taking into consideration external dependencies. Aura thoroughly checks deployments with fork tests.
Internal Auditing
Developers are the experts on their code, and time has been set aside to carefully evaluate all code in the system.
Risks
Aura Finance Protocol was designed with its clients’ protection and security in mind. When working with any DeFi smart contract, however, there are inherent risks. Aura Finance contributors thoroughly analyzed their smart contracts and sought external auditors to discover potential weaknesses in the platform prior to deployment. Even yet, the chance of losing some or all of a user’s funds exists for certain risks.
The necessary technologies rely on public peer-to-peer networks, which are not within the Aura community’s control or influence and are vulnerable to several risks and uncertainties (such as cyber assaults, regulatory difficulties, or chain “forks”). The Aura Finance smart contracts (or Balancer’s or another) deployed may not be modifiable, and if the smart contracts are harmed by malfunctions, flaws, hackers, irresponsible coding, or design choices, a client may face an entire loss of all relevant digital assets.
When interacting with the platform, it is best to be cautious and work within one’s own risk framework. Aside from blockchain risks or Aura Smart Contracts-specific hazards, users are also subject to platform risks because Aura Finance connects directly with it. It is also a good idea to go over their paperwork, risk explanations, and Terms and Conditions before interacting with either platform.
Aura Finance does not include wallet software or a node, and such software is an essential third-party or user dependence that has its own hazards when a client chose to connect with the Protocol using it. Furthermore, a client is completely responsible for the safekeeping of the private key associated with their address, as it is impossible to restore or provide a refund in respect of property lost or frozen owing to the loss of private keys or anything else.
Conclusion
One of the characteristics of a savvy trader is excessive caution. The best safeguard is to gather knowledge on a certain finance endeavor. If a potential trader accomplishes this, they will be able to learn everything there is to know about it, as well as examine options that can aid them in their trading career in the business. After learning everything, it is up to them to determine whether to trust a project or look for another that best meets their demands.
