Whitepaper
Abstract
Abax DAO's overarching mission is to deploy, manage, and continuously improve the Abax Lending Protocol, fostering a decentralized
financial ecosystem that empowers users with efficient lending and borrowing. The development of the Abax Lending Protocol has been
completed, and the project has been audited by Kudelski Security. Following the audit, the project is now in the final stages before the
protocol is launched on the Aleph Zero network.
To fund ongoing operations and promote the Abax Lending Protocol, Abax DAO will hold a Public Contribution event starting on August 6,
2024. This document serves as a comprehensive resource, detailing all relevant information about the project, associated risks, the
underlying technology, and the Public Contribution rules. Abax DAO is committed to transparency and accountability, ensuring informed
participation in the Public Contribution event.
Abax Lending Protocol
The Abax Lending Protocol is a cutting-edge smart contract system that empowers users to seamlessly participate in lending and borrowing
activities. In the Abax Lending Protocol, lenders play a pivotal role by depositing their tokens into the protocol. Any user with sufficient
collateral has the opportunity to borrow these deposited tokens. These unique interactions establish a peer-to-contract relationship where
users can actively participate in financial transactions without the need for traditional intermediaries. The main use case of the Abax
Lending Protocol is the creation of leveraged positions. The protocol charges interest from borrowers that is redistributed to the
depositors. The protocol may apply a fee on the redistributed interest.
The Abax Lending Protocol prioritizes efficiency, a key factor for success in decentralized lending. An efficient protocol benefits both
lenders and borrowers. Lenders can expect higher returns, while borrowers enjoy lower borrowing costs. This makes the Abax Lending Protocol
highly competitive within the market.
To achieve maximum efficiency, the Abax Lending Protocol leverages two innovative systems:
Abax Interest Rate Model:
Compared to competitors, the implemented rate model offers superior customization. This allows for more precise adjustments based on
ever-changing market conditions. This adaptability enables increased capital utilization without introducing undue risk.
Abax Market Rules:
The Abax Lending Protocol introduces an original Market Rules functionality. This empowers users to select from a variety of rules that
define borrowing parameters. Borrowers can choose the rule that best aligns with their needs, maximizing capital efficiency for their
specific positions. For example, the standard market rule allows borrowing and using any available asset as collateral. In contrast, the
Bitcoin Market Rule restricts collateral to assets highly correlated to Bitcoin's price.
The Role of ABAX Token: Crypto-Asset of the Project
The ABAX token holds a central position within the Abax ecosystem, serving multiple key functions. First, any ABAX holder can stake tokens
in the Governor Smart Contract to participate in governance. In this way, one gains the right to vote, receive governance rewards, and with
a large enough contribution, also the right to submit proposals. Secondly, the Token can be used to impact loan fees. It will be able to be
used to both decrease the interest rate paid by borrowing and increase the interest earned on the deposit. The final form of this
functionality will be decided by the governance. The token also remains open to new functionalities, with governance empowered to make
decisions on their implementation.
Abax Governance system
Abax Dao's governance mechanism revolves around the proof-of-stake concept and in its center is The Governor Smart Contract. Participation
in governance is completely voluntary, there are rewards for participants but it involves the obligation to actively vote.
Participation in governance requires staking ABAX tokens within the Governor Smart Contract. Voting power is directly proportional to the
staked amount, establishing a weighted voting system. Unstaking from the contract does not occur immediately but is a two-step process.
Users must first initiate the unstaking process, wait for the unstaking period, and finally collect tokens. Users who have started the
unstaking process will no longer be able to participate in votes. The unstaking period duration is 180 days.
The Governor Smart Contract has the power to dynamically change the parameters of the Abax Lending Protocol, guiding the lending process
based on the collective voice of the community. Beyond its function of overseeing the lending protocol, the contract takes on a
communicative role. It serves as the messenger for the DAO, spreading position on crucial decisions— whether it involves partnerships with
other DeFi entities or other statements made by the DAO.
Penalties for harmful behavior
Two types of penalties exist in the entire governance system:
-
Penalty for making damaging or spam proposals:
Voters can vote to impose a penalty on a malicious proposer. If such a proposal fails and enough votes for imposing a penalty are in
place, 50% of the minimum stake required to create a proposal (0.25% of the total stake) will be burned from the proposer's stake. These
mechanisms exist to reduce the damaging and/or spam proposals.
-
Penalty for inactive voters:
It is required that anyone who has locked their tokens in the governor's contract actively participate in the governance process. In the
event of inactivity, it is possible to remove the participant from governance by forcibly unstaking the participant's tokens.
Rewards for participating in governance:
According to the adopted tokenomics, 50% of inflation is provided for rewards for participating in governance.
Voting Process
Voting is divided into three separate periods, and the required percentage of votes varies during these periods, starting with 100% in the
initial period and gradually decreasing to 0% at the end of the final period. If a governance participant does not take a vote before the
final period, they will be forcibly removed from the governance and their tokens will go through the unstaking process before they can be
received.
To generate momentum and support for the upcoming Public Contribution event, Abax DAO has implemented several promotional campaigns:
Abax Referrer Program
This program empowers community members to become active advocates for Abax. The primary objectives set for participants are expanding
Abax's reach within the Web3 space, promoting the project to new audiences, and attracting valuable individuals who can contribute to and
support the community. In return for their efforts, referrers receive incentives, including a 2% bonus on contributions referred through.
The contributor who uses the referral code will get an additional 1% bonus during the minting process.
Stakedrop Campaign
This campaign is based on the premise that Abax Finance Node nominators will receive ABAX instead of the usual staking rewards. The tokens
generated through this campaign will be subtracted from the pool allocated for the first phase of token generation, precisely from the pot
provided for public contributors.
The campaign began on February 17, 2024, and concluded on July 22, 2024, with a total of 7,500,000 ABAX tokens reserved for
participants.
Zealy Campaign
The Zealy campaign focuses on community education and outreach. Participants engage with educational quizzes and perform social media
actions to promote Abax and introduce the project to new community members. In return for their participation, users receive a bonus during
the minting process.
Extended Public Contribution Bonus
To incentivize larger contributions during the Public Contribution event, Abax DAO has implemented a contribution-based bonus system.
Contributors receive an additional 1% bonus for every 1,000 USDC tokens they contribute during the minting process.
Important Note:
The total bonus amount accumulated through all promotional campaigns is capped at 10% to ensure a fair and balanced Public Contribution
event.
Public Contribution
To address the challenge of initial token valuation, Abax has implemented a novel mechanism called the Balanced Dynamic Cost Model. This
model aims to prevent potential pitfalls associated with traditional valuation methods, which can limit project potential and lead to
investor losses.
Public Contribution has been divided into two phases. During the first phase, 100M tokens will be generated, this phase will last until
this pool is exhausted. In the subsequent second phase, it will be possible to mint tokens, but the cost of generating new tokens will
increase in proportion to the number of generated tokens. The second phase will last 3 months and the supply of this phase is
unlimited.
Initial Allocation
The initial distribution of ABAX tokens is as follows:
- Public Contribution: 20% (8% instantly and 12% vested over 4 years)
- Founders: 20% (4% instantly and 16% vested over 4 years)
- Foundation: 2%
- DAO Treasury: 58% (Locked)
Tokens locked in DAO Treasury can only be unlocked by the DAO Governance.
This allocation is meant to be used for cases such as protocol liquidity incentives, partnerships, bug bounties, and other possible
incentive programs.
Public Contribution: Phase 1
Through Public Contribution, the community will be able to contribute to the project by interacting with the Public Contribution Smart
Contract. During the interaction, each 1 USDC transferred contributor will receive 25 ABAX Tokens + Bonus.
Public Contribution: Phase 2
After distributing all 20,000,000 tokens from the Public Contribution Smart Contract allocated for public contributors, there will still be
an option to mint ABAX tokens, although at an increasing cost.
The cost of receiving 1 ABAX will be:
0.04 + 0.04 x/100,000,000 USDC,
where x is the amount of additionally generated tokens.
The tokens will be generated in such a way so the proportion from Initial Allocation is kept: Minting 1 Abax will additionally generate 1
Abax for founders, 0.1 will be sent to the foundation and 2.9 will be locked in DAO Treasury. Tokens minted in phase two will be subject to
the same vesting period as tokens from phase one.
All funds collected during Public Contribution will be transferred to DAO Treasury, managed by Abax DAO.
Contributions are final and cannot be refunded. While anyone can participate, it's important to understand the risks of interacting with
smart contracts. Contributors should carefully assess their risk tolerance before committing their resources. The minimum contribution is
1 USDC, while there is no maximum contribution.
Token vesting:
Both Public Contribution participants and founders are subjects to vesting. That ensures a long-term commitment to the project and aligns
their interests with the success of Abax. Public contributors will receive 40% of their tokens instantly, with the remaining portion being
vested linearly over 4 years. As for founders, they will receive 20% of the tokens instantly, and the remaining portion will also be vested
linearly over 4 years.
Token Inflation
There will be an annual token inflation equivalent to 10% of the initial supply, which will be allocated according to Governance decisions.
Initially, half of the annual inflation will be distributed as Governance Staking Rewards, while the other half will be allocated for
development purposes. The DAO will have the authority to adjust the inflation rate and modify how the inflation is distributed.
Technology
The Abax Lending Protocol leverages Rust ink! for substrate-based blockchains as its foundational technology. This strategic choice enables
easy deployment of the protocol on various networks beyond Aleph Zero that are built using Substrate technology.
Developed within the Aleph Zero network environment, the Abax Protocol capitalizes on Aleph Zero's innovative consensus mechanism, AlephBFT
Consensus. This unique consensus mechanism endows the network with exceptional speed and low transaction costs, underscoring its efficiency
and reliability as the underlying infrastructure for the Abax Lending Protocol.
Risk
While the Abax Lending Protocol prioritizes security and has undergone a comprehensive audit by Kudelski Security, participation in the
Public Contribution and use of the protocol inherently involves risks.
These risks include potential protocol hacks, as future vulnerabilities or exploits in the Abax Lending Protocol or underlying smart
contracts cannot be entirely eliminated. Additionally, the value of the ABAX token can fluctuate significantly, potentially leading to
financial losses for investors. Furthermore, the Abax Lending Protocol will rely on the stability and functionality of the Aleph Zero
network. Disruptions or unforeseen issues with the Aleph Zero network could negatively impact Abax protocol operations. Finally, the
project's long-term viability depends on maintaining user interest and adoption. In case of insufficient interest in the project or in the
Aleph Zero network itself, the project could potentially be discontinued.
Investors are strongly advised to carefully assess their risk tolerance and conduct their own due diligence before committing funds to the
Abax ecosystem.
Abax Team
Abax Dao was initiated by Konrad Wierzbik and Łukasz Łakomy. Sharing a passion for decentralized finance and blockchain technology, they
recognized the potential of ink!, Aleph Zero, and the entire substrate ecosystem. In 2022, they decided to join forces and start working on
a lending protocol. From the very beginning of the work on the project, the Abax DAO had a decisive voice in matters of protocol. All
relevant aspects were, and still are, discussed and voted on.
The project has been supported by the Aleph Zero Foundation since its inception. In recognition of expertise in smart contract development,
the Web3 Foundation recently awarded a grant to support development team in creation of a new ink! smart contract library.
Konrad Wierzbik
Konrad, a student at Jagiellonian University currently pursuing a computer science degree, brings his academic background in physics,
including a Master's from EPFL to the table. His interests lie at the intersection of these fields, along with economics. He’s been
developing smart contracts for more than 3 years.
Łukasz Łakomy
Łukasz is a seasoned developer with a computer science degree from AGH University of Kraków. He has over five years of experience working
for companies like ABB, WEBCON, and IBM, with a strong foundation in software development, and full-stack development. Additionally, Łukasz
brings valuable experience in building DApps and smart contracts using Solidity, TypeScript, and Rust.
Whitepaper
Abstract
Abax DAO's overarching mission is to deploy, manage, and continuously improve the Abax Lending Protocol, fostering a decentralized financial ecosystem that empowers users with efficient lending and borrowing. The development of the Abax Lending Protocol has been completed, and the project has been audited by Kudelski Security. Following the audit, the project is now in the final stages before the protocol is launched on the Aleph Zero network.
To fund ongoing operations and promote the Abax Lending Protocol, Abax DAO will hold a Public Contribution event starting on August 6, 2024. This document serves as a comprehensive resource, detailing all relevant information about the project, associated risks, the underlying technology, and the Public Contribution rules. Abax DAO is committed to transparency and accountability, ensuring informed participation in the Public Contribution event.
Abax Lending Protocol
The Abax Lending Protocol is a cutting-edge smart contract system that empowers users to seamlessly participate in lending and borrowing activities. In the Abax Lending Protocol, lenders play a pivotal role by depositing their tokens into the protocol. Any user with sufficient collateral has the opportunity to borrow these deposited tokens. These unique interactions establish a peer-to-contract relationship where users can actively participate in financial transactions without the need for traditional intermediaries. The main use case of the Abax Lending Protocol is the creation of leveraged positions. The protocol charges interest from borrowers that is redistributed to the depositors. The protocol may apply a fee on the redistributed interest.
The Abax Lending Protocol prioritizes efficiency, a key factor for success in decentralized lending. An efficient protocol benefits both lenders and borrowers. Lenders can expect higher returns, while borrowers enjoy lower borrowing costs. This makes the Abax Lending Protocol highly competitive within the market.
To achieve maximum efficiency, the Abax Lending Protocol leverages two innovative systems:
Abax Interest Rate Model: Compared to competitors, the implemented rate model offers superior customization. This allows for more precise adjustments based on ever-changing market conditions. This adaptability enables increased capital utilization without introducing undue risk.
Abax Market Rules: The Abax Lending Protocol introduces an original Market Rules functionality. This empowers users to select from a variety of rules that define borrowing parameters. Borrowers can choose the rule that best aligns with their needs, maximizing capital efficiency for their specific positions. For example, the standard market rule allows borrowing and using any available asset as collateral. In contrast, the Bitcoin Market Rule restricts collateral to assets highly correlated to Bitcoin's price.
The Role of ABAX Token: Crypto-Asset of the Project
The ABAX token holds a central position within the Abax ecosystem, serving multiple key functions. First, any ABAX holder can stake tokens in the Governor Smart Contract to participate in governance. In this way, one gains the right to vote, receive governance rewards, and with a large enough contribution, also the right to submit proposals. Secondly, the Token can be used to impact loan fees. It will be able to be used to both decrease the interest rate paid by borrowing and increase the interest earned on the deposit. The final form of this functionality will be decided by the governance. The token also remains open to new functionalities, with governance empowered to make decisions on their implementation.
Abax Governance system
Abax Dao's governance mechanism revolves around the proof-of-stake concept and in its center is The Governor Smart Contract. Participation in governance is completely voluntary, there are rewards for participants but it involves the obligation to actively vote.
Participation in governance requires staking ABAX tokens within the Governor Smart Contract. Voting power is directly proportional to the staked amount, establishing a weighted voting system. Unstaking from the contract does not occur immediately but is a two-step process. Users must first initiate the unstaking process, wait for the unstaking period, and finally collect tokens. Users who have started the unstaking process will no longer be able to participate in votes. The unstaking period duration is 180 days.
The Governor Smart Contract has the power to dynamically change the parameters of the Abax Lending Protocol, guiding the lending process based on the collective voice of the community. Beyond its function of overseeing the lending protocol, the contract takes on a communicative role. It serves as the messenger for the DAO, spreading position on crucial decisions— whether it involves partnerships with other DeFi entities or other statements made by the DAO.
Penalties for harmful behavior
Two types of penalties exist in the entire governance system:
Penalty for making damaging or spam proposals: Voters can vote to impose a penalty on a malicious proposer. If such a proposal fails and enough votes for imposing a penalty are in place, 50% of the minimum stake required to create a proposal (0.25% of the total stake) will be burned from the proposer's stake. These mechanisms exist to reduce the damaging and/or spam proposals.
Penalty for inactive voters: It is required that anyone who has locked their tokens in the governor's contract actively participate in the governance process. In the event of inactivity, it is possible to remove the participant from governance by forcibly unstaking the participant's tokens.
Rewards for participating in governance:
According to the adopted tokenomics, 50% of inflation is provided for rewards for participating in governance.
Voting Process
Voting is divided into three separate periods, and the required percentage of votes varies during these periods, starting with 100% in the initial period and gradually decreasing to 0% at the end of the final period. If a governance participant does not take a vote before the final period, they will be forcibly removed from the governance and their tokens will go through the unstaking process before they can be received.
Ongoing Abax promotion campaigns and their impact on Public Contribution
To generate momentum and support for the upcoming Public Contribution event, Abax DAO has implemented several promotional campaigns:
Abax Referrer Program
This program empowers community members to become active advocates for Abax. The primary objectives set for participants are expanding Abax's reach within the Web3 space, promoting the project to new audiences, and attracting valuable individuals who can contribute to and support the community. In return for their efforts, referrers receive incentives, including a 2% bonus on contributions referred through. The contributor who uses the referral code will get an additional 1% bonus during the minting process.
Stakedrop Campaign
This campaign is based on the premise that Abax Finance Node nominators will receive ABAX instead of the usual staking rewards. The tokens generated through this campaign will be subtracted from the pool allocated for the first phase of token generation, precisely from the pot provided for public contributors.
The campaign began on February 17, 2024, and concluded on July 22, 2024, with a total of 7,500,000 ABAX tokens reserved for participants.
Zealy Campaign
The Zealy campaign focuses on community education and outreach. Participants engage with educational quizzes and perform social media actions to promote Abax and introduce the project to new community members. In return for their participation, users receive a bonus during the minting process.
Extended Public Contribution Bonus
To incentivize larger contributions during the Public Contribution event, Abax DAO has implemented a contribution-based bonus system. Contributors receive an additional 1% bonus for every 1,000 USDC tokens they contribute during the minting process.
Important Note: The total bonus amount accumulated through all promotional campaigns is capped at 10% to ensure a fair and balanced Public Contribution event.
Public Contribution
To address the challenge of initial token valuation, Abax has implemented a novel mechanism called the Balanced Dynamic Cost Model. This model aims to prevent potential pitfalls associated with traditional valuation methods, which can limit project potential and lead to investor losses.
Public Contribution has been divided into two phases. During the first phase, 100M tokens will be generated, this phase will last until this pool is exhausted. In the subsequent second phase, it will be possible to mint tokens, but the cost of generating new tokens will increase in proportion to the number of generated tokens. The second phase will last 3 months and the supply of this phase is unlimited.
Initial Allocation
The initial distribution of ABAX tokens is as follows:
Tokens locked in DAO Treasury can only be unlocked by the DAO Governance. This allocation is meant to be used for cases such as protocol liquidity incentives, partnerships, bug bounties, and other possible incentive programs.
Public Contribution: Phase 1
Through Public Contribution, the community will be able to contribute to the project by interacting with the Public Contribution Smart Contract. During the interaction, each 1 USDC transferred contributor will receive 25 ABAX Tokens + Bonus.
Public Contribution: Phase 2
After distributing all 20,000,000 tokens from the Public Contribution Smart Contract allocated for public contributors, there will still be an option to mint ABAX tokens, although at an increasing cost.
The cost of receiving 1 ABAX will be:
0.04 + 0.04 x/100,000,000 USDC,
where x is the amount of additionally generated tokens.
The tokens will be generated in such a way so the proportion from Initial Allocation is kept: Minting 1 Abax will additionally generate 1 Abax for founders, 0.1 will be sent to the foundation and 2.9 will be locked in DAO Treasury. Tokens minted in phase two will be subject to the same vesting period as tokens from phase one.
All funds collected during Public Contribution will be transferred to DAO Treasury, managed by Abax DAO.
Contributions are final and cannot be refunded. While anyone can participate, it's important to understand the risks of interacting with smart contracts. Contributors should carefully assess their risk tolerance before committing their resources. The minimum contribution is 1 USDC, while there is no maximum contribution.
Token vesting:
Both Public Contribution participants and founders are subjects to vesting. That ensures a long-term commitment to the project and aligns their interests with the success of Abax. Public contributors will receive 40% of their tokens instantly, with the remaining portion being vested linearly over 4 years. As for founders, they will receive 20% of the tokens instantly, and the remaining portion will also be vested linearly over 4 years.
Token Inflation
There will be an annual token inflation equivalent to 10% of the initial supply, which will be allocated according to Governance decisions. Initially, half of the annual inflation will be distributed as Governance Staking Rewards, while the other half will be allocated for development purposes. The DAO will have the authority to adjust the inflation rate and modify how the inflation is distributed.
Technology
The Abax Lending Protocol leverages Rust ink! for substrate-based blockchains as its foundational technology. This strategic choice enables easy deployment of the protocol on various networks beyond Aleph Zero that are built using Substrate technology.
Developed within the Aleph Zero network environment, the Abax Protocol capitalizes on Aleph Zero's innovative consensus mechanism, AlephBFT Consensus. This unique consensus mechanism endows the network with exceptional speed and low transaction costs, underscoring its efficiency and reliability as the underlying infrastructure for the Abax Lending Protocol.
Risk
While the Abax Lending Protocol prioritizes security and has undergone a comprehensive audit by Kudelski Security, participation in the Public Contribution and use of the protocol inherently involves risks.
These risks include potential protocol hacks, as future vulnerabilities or exploits in the Abax Lending Protocol or underlying smart contracts cannot be entirely eliminated. Additionally, the value of the ABAX token can fluctuate significantly, potentially leading to financial losses for investors. Furthermore, the Abax Lending Protocol will rely on the stability and functionality of the Aleph Zero network. Disruptions or unforeseen issues with the Aleph Zero network could negatively impact Abax protocol operations. Finally, the project's long-term viability depends on maintaining user interest and adoption. In case of insufficient interest in the project or in the Aleph Zero network itself, the project could potentially be discontinued.
Investors are strongly advised to carefully assess their risk tolerance and conduct their own due diligence before committing funds to the Abax ecosystem.
Abax Team
Abax Dao was initiated by Konrad Wierzbik and Łukasz Łakomy. Sharing a passion for decentralized finance and blockchain technology, they recognized the potential of ink!, Aleph Zero, and the entire substrate ecosystem. In 2022, they decided to join forces and start working on a lending protocol. From the very beginning of the work on the project, the Abax DAO had a decisive voice in matters of protocol. All relevant aspects were, and still are, discussed and voted on.
The project has been supported by the Aleph Zero Foundation since its inception. In recognition of expertise in smart contract development, the Web3 Foundation recently awarded a grant to support development team in creation of a new ink! smart contract library.
Konrad Wierzbik
Konrad, a student at Jagiellonian University currently pursuing a computer science degree, brings his academic background in physics, including a Master's from EPFL to the table. His interests lie at the intersection of these fields, along with economics. He’s been developing smart contracts for more than 3 years.
Łukasz Łakomy
Łukasz is a seasoned developer with a computer science degree from AGH University of Kraków. He has over five years of experience working for companies like ABB, WEBCON, and IBM, with a strong foundation in software development, and full-stack development. Additionally, Łukasz brings valuable experience in building DApps and smart contracts using Solidity, TypeScript, and Rust.