Frequently asked questions about the Algofi Lending Protocol.
Update (January 2022): The Algorand mobile wallet has been updated to remove this warning.
Users can clear (delete) application data on the Algorand blockchain at any time they choose. Therefore, without proper security measures, a user could borrow an asset and then delete this data from the corresponding application.
To protect the Algofi protocol from attacks relating to clear state, a storage account must be created to immutably store user information. This storage account will hold all the data for a primary account's supplied and borrowed assets. In order to make the data immutable, this account must be rekeyed. Note, rekey warnings in the opt-in process correspond to this storage account and not your primary account.
To achieve performance benchmarks, the Algorand blockchain imposes certain restrictions on smart contracts, among them the number of internal operations (arithmetic, read, write, etc) a smart contract is allowed to do per transaction.
Algofi smart contracts are computationally intensive, so the extra transactions sent on a user's behalf are there to secure the additional operations needed to keep contract state up-to-date.
Note, this will be abstracted away when Algofi migrates to AVM 1.1
Algofi smart contracts use Inner Transactions to facilitate borrowing, removing collateral, etc. Inner Transactions are used to send transactions on behalf of the smart contracts. For example, in a borrow transaction, the user instructs the smart contract to send assets from the smart contract address to the user which adds an additional transaction and therefore an additional 0.001 ALGOs to the transaction fee.
The cost of creating the storage account for the Algofi lending protocol described in the section above 3.199 ALGO and is the primary driver of the opt-in cost.
The cost of creating the storage account for the Algofi staking contracts is 0.64 ALGO.
Users can opt-out of the protocol in their account page, upon success you will be refunded the ALGO you set aside to satisfy the minimum balance of the storage contract.
Your Algorand Account has a "Minimum Balance" that increases as it opts into or creates applications and assets. See Algorand Parameter Table for the min balance increases. The ALGOs in your minimum balance cannot be removed from your wallet unless you opt out of the assets and applications you are opted into. As such, these ALGOs are not available to be supplied to the Algofi Lending Protocol even though they are in your wallet.
The use of Ledger of on the Algofi lending protocol is not currently supported (Ledger is supported on the Algofi DEX + NanoSwap). This is because of the Ledger wallet hardware limitations listed here. The core developers are working to find a way to extend Ledger support or find alternative solutions.
In the meantime, it is recommended to use a dedicated factory-reset iPhone with the Algorand Official mobile wallet. It is recommended to modify the phone to reset after 10 failed login attempts.
It is expected that with AVM 1.1 and an update on Ledger's side the core developers can find away around current limitations.
In these transactions, the Algofi protocol uses Inner Transactions, a feature of the Algorand Virtual Machine (AVM). Inner Transactions are transactions issued by the smart contracts themselves (instead of the user). Currently, AlgoExplorer and the Algorand Official mobile wallet do not display these transactions on their UI. As a result, users cannot see the actual transfers of assets in withdrawal or borrow transactions. The assets, however, are being transferred and you can see your balances updated. See https://developer.algorand.org/docs/get-details/dapps/smart-contracts/apps/#inner-transactions to learn more about inner transactions.
Initial assets were selected according to use or potential for use in the Algorand ecosystem. These assets were chosen sparingly since the Algofi protocol can only ever support a limited number of assets.
Future asset onboarding will be decided by the DAO (when governance is launched) which governs the protocol.
With a lending protocol, users can simply lend their assets to earn passive income.
Users can also access leverage to increase their trading and yield farming positions.
Users can lend Algo, goBTC, or goETH as collateral, then borrow USDC or STBL. Users can then trade USDC or STBL into Algo, goBTC, goETH, etc. to increase exposure to crypto assets.
Users can lend Algo, goBTC, or goETH as collateral, then borrow USDC / STBL. Users can then trade USDC or STBL into YLDY, OPUL, etc. and take in Yieldly pools. Farmers earn interest on their Algofi collateral (less the borrow interest paid on USDC or STBL) and the stake APR from the Yieldly pool.
When you supply to the Algofi protocol, you're automatically accruing interest in the token you have supplied (e.g. ALGO supply earns interest in ALGOs). Interest is being updated at most once per minute on the smart contracts. When you later withdraw your assets, you withdraw a greater amount. The difference between the amount you supplied initially and the amount you withdraw represents the interest that has accrued.
Similarly, borrow interest is accrued for borrowers at most once per minute. When you repay, you'll send a greater amount than you borrowed. The difference between the amount you borrowed initially and the amount you repay represents the borrow interest that has accrued.
Yes, the interest rates are variable. The interest rates change as the Borrow Utilization changes. As more assets are borrowed vs. the amount supplied the Borrow Utilization increases and interest rates rise. As more assets are repaid vs. the amount supplied the Borrow Utilization decreases and interest rates fall. See Interest Rate Model for more information.
Provided you maintain your collateral so that your Borrow Utilization does not exceed 100% (at which point you can be liquidated), you can borrow as long as you want. The loan terms are not fixed, they are floating. You can partially or fully repay at any time.
Yes, the Algofi protocol has been audited by Runtime Verification. The staking contracts use the manager / market paradigm built by the core developers to achieve a staking contract.
In your wallet. The Algofi staking contracts leverage Inner Transactions to transfers ALGO and ASA rewards to user accounts.
For an example claim transaction, see here: https://algoexplorer.io/tx/group/n6Ryc97UiTLD7GdG7wTvUULjHqLP%2BglTFZDDVbmWSfI%3D
In the final transaction of the group, LEBMI4PMWOHOFFCDDWWQPHDJSOE2PRSOMCGLT666II624YMB6UPA, inner transactions send ALGO + STBL rewards to the user.
The Aeneas Retroactive Reward was implemented using logic sigs that make a zero value PaymentTxn with close_remainder_to = user. That means the full balance of the account is sent to the user regardless of what amount is specified.
Aeneas Retroactive Rewards Claimed
There are some issues with the Algofi app that are still being worked on and improved. In some instances app.algofi.org loads to a blank white page for a given user. This is usually a result of stale data in that user's cache.
This is a hard problem for the Algofi team to robustly debug and fix as these issues are usually not replicable by the development team. That being said, Algofi continues to locate and remove possible sources of this issue. In turn, the frequency of occurrence continues to decrease.
Please clear your cache if you experience this issue and it should immediately resolve.