How it works
Two main stakeholders:
Liquidity Provider - Investors seeking passive income and with a low-risk appetite. Assets of LPs will be utilized, and the platform will provide a return to the LPs.
Traders, farmers, etc. - who want to increase their positions by borrowing liquidity from the agreement with the backing of collateral and paying interest on it.
Araya Credit will be a module native to Sui introduced by Araya, which allows users to interact with any Defi protocol that is in the whitelist (to avoid attacks from malicious actors). An Araya credit account can be understood as an isolated smart contract, while the smart contract holds user funds and margin funds (borrowing). Users can use their credit account's manager to give execution commands to it, but the smart contract does not provide users with direct access to the funds in the credit account itself.
Third party liquidators will liquidate positions held by traders and farmers before the liquidity provider's assets begin to be exposed to the downside. If all functions are in order, the liquidity provider's assets will be returned to the pool after the liquidator has completed its work.
The liquidation of a credit account can be started by the liquidator when its health factor (derived from the risk control algorithm) is less than 1.
Araya charges fees for different operations, part of which goes to the treasury reserve for any situation that occurs at any time, and part of which goes to different protocol operations. All parameters and expenditure decisions are dependent on governance.