Aura Finance Review – Simplifying Liquidity and Governance for DAOs, DeFi Projects, and the Community as a Whole

• Aura Finance allows DeFi stakeholders to increase their governance power and yield potential.
• Aura’s protocol is essential for a DAO that wants to expand its offering for its users.

For every new project launched into the world of DeFi, one of the first and most pressing challenges is the need to raise liquidity. Without liquidity around a new native token, DeFi systems are unable to scale their offering and continue to build long into the future.

While many DeFi platforms offer some form of yield farming or staking system, very few are able to gain the required liquidity from these liquidity pools alone. Without incentives for doing so, users simply hold their native tokens or use them within the DeFi app itself. While sustaining the ecosystem, this does nothing to help it grow.

This is actually one of the leading issues with new DeFi projects, as users don’t want to provide liquidity to a system that they’re unfamiliar with and don’t recognize any incentives for. That’s where Aura Finance comes in. This new protocol allows DeFi projects to gain liquidity rapidly, providing incentives to users for staking and creating an easy method of governing DeFi systems.

As an all-in-one solution, Aura Finance has everyone talking. Let’s break down exactly what this project is offering.

What is Aura Finance?

Aura Finance allows DeFi stakeholders to increase their governance power and yield potential. Built on and initially for Balancer, Aura has grown to become the first choice for any DeFi system that operates with vote-escrowed tokens. Within the Balancer ecosystem, Aura allows users a range of new methods to interact and generate income from their digital assets.

Instead of only benefiting one group, Aura provides incentives for everyone involved. For those interested in staking BAL, Aura allows people to rapidly get started with veBAL. Aura offers a tokenized wrapped token, auraBAL, which users can then stake in order to start to reap the rewards. Not only are users able to claim BAL as a reward for this process, but they can also claim bbaUSD as swap fees on Balancer. Users can trade their auraBAl back to BAL whenever they would like, creating a completely flexible system.

Alternatively, for those interested in being liquidity providers, Aura creates a swift onboarding process. Instead of the complex process of staking LP tokens within the Balancer gauge system, Aura simplifies the process, reducing the knowledge barrier that impedes many from getting involved in these financial systems. Using this system, investors can get a boost on owned veBAL, while simultaneously getting a continual flow of AURA rewards.

Within Aura’s ecosystem, they allow users with AURA tokens to monitor and govern. Any AURA tokens that are locked into the system give users an equal number for voting on governance issues. This is mirrored within Balancer, with individuals being able to vote with veBAl that they secure through the Aura protocol. 

Simply put, Aura is a complex ecosystem that simplifies staking and liquidity, providing for the masses. 

Where Does Aura Come From?

Aura was founded with a central mission: allowing for a new wave of ve tokens, ones that accommodate users and DAOs and help them to navigate the world of DeFi. Starting off with Balancer, Aura provides a method for vote-escrowed tokens to coordinate governments, incentivizing participation. 

Its main goal was instant of interest to the blockchain community, with DAOs like Badger, Temple, Olympus, and Gnosis all turning to this system. AAVE has even recently announced it will be using AURA when they begin to produce its GHO stablecoin. At present, Aura manages over $425 million USD TVL, demonstrating the huge community drive behind this project.

An interesting element of Aura is that it operates in a decentralized manner. Instead of having a main team that leads the business, Aura is a community-run project, sourcing information and polling decisions across a network of contributors. With this decentralized approach at its core, Aura embodies the pillar attributes of a blockchain system. While providing users with a world-class experience, it actively contributes to a more decentralized and accessible world for all. 

What Problem Does Aura Solve?

New DeFi projects that launch often face the nearly impossible task of gaining liquidity for their project. Without a history of working within the community or on the system, this early hurdle is often insurmountable. Especially for DAO-run projects, this problem is only furthered, with governance tokens and power becoming another piece of the puzzle to consider. 

Beyond just enhancing the Balancer ecosystem, Aura’s protocol is essential for a DAO that wants to expand its offering for its users. For users that want to create a DAO that has control over their treasury, Aura provides native token access alongside compatibility with reserve assets.

DeFi environments can employ Aura as a secure reserve layer. From there, they’ll be able to access a world-class level of security and accessibility. Users and whales within a new DeFi environment will be able to rapidly move funds into a system, using the ERC-4624 standard to quickly invest capital into a new treasury.

For new systems with ve initiatives, Aura also allows for the rapid generation of liquidity for their native tokens. Generating liquidity is always a difficult primary endeavor, especially for new DAO projects. With Aura, DAOs are able to construct new voting incentives on specific liquidity pools.

For example, if Balancer wanted to increase BAL, they would be able to do so at a rate of ~$2 of BAL and AURa for every $1 of their voting inventive. This is a way of fast-tracking the generation of liquidity, providing a system where DAOs can quickly increase the overall liquidity of their native token(s). 

Through this intuitive structure, DAOs are able to boost the liquidity of their tokens while also formulating a comprehensive treasury structure. For many DeFi businesses, this simplifies the hardest part of operations, allowing for the rapid scaling of Web 3 projects.

Main Features of Aura

Aura is so effective due to the comprehensive web of features that it offers. Instead of specializing its features to accommodate one specific group, it takes a holistic approach.

Aura has features that both users and DeFi systems can put to use and benefit from:

• Providing Liquidity
• Boosting Staking Rewards
• Advanced Governance
• World-Class Security

Let’s break these down further.

Provide Liquidity on Balancer

For those already using Balancer, the integration of Aura into this system only services to provide further incentives to get involved in liquidity projects. By providing liquidity within Balancer via depositing BPTs into Aura, users are able to unlock a plethora of rewards.

From boosted AURA and BAL rewards to even reducing Balancer trading fees, Aura’s protocol brings a new layer of incentives to the system for everyone.

Boost Staking Rewards

Within Aura, users of Balancer are able to obtain boosted rewards. By converting 80/20 BAL/ETh into auraBAL, users can gain veBAL rewards. Beyond that, they get a share of the system revenue in BAL and AURA.

This method allows users to earn more when staking, pushing the Balancer system to the max. By using the Aura protocol and staling auraBAL, the protocol also becomes self-sustaining, as staking directly reaps rewards that then contribute back toward Aura’s own success.

Advanced Governance

Aura has employed a vote-locked system within their ecosystems. Due to this, they facilitate on-chain governance, allowing people to get involved with voting decisions by employing their tokens. Users are able to vote-lock AURA, gaining the ability to participate in governance through voting. The vlAURA tokens produced will also produce further incentives within Balancer, creating a mutually beneficial system.

The Aura Foundation is a core part of the DAO, with community endeavors at the core of this protocol. Instead of being run by a centralized team, Aura is devoted to community-building. As a reflection of this, Aura has also forged the Ecosystem fund. This fund is put aside for developers and builders to construct integral infrastructure for the future of the ecosystem.

Educational programs are especially highlighted here, with Aura planning for their future with meticulous detail. The community-led governance that Aura offers gives projects full control of their treasury, change parameters, and protocol in general – contributing to a personalized and effective governance system. 

World-Class Security

Of course, for any system that accepts user funds, even if it is decentralized, security must be a top priority. Aura has kept this in mind as they developed their protocol, ensuring that every system they partner with has access to a world-class security system.

Aura focuses on four core areas, using them as the pillars of their advanced security:

• Fork Testing – Before releasing deployments, Aura always comprehensively tests new deployments using forking. By fork testing, they can test functionality in a live environment, simulating real-world contract deployments and checking for any potential exploits or vulnerabilities before they come into play.
• Internal Auditing – Aura runs frequent internal auditing sessions, where developers will meticulously review code and produce audit reports. This makes sure everything is continually checked for vulnerabilities, helping to contribute to a secure system.
• Codebase – Aura Finance always ensures that their smart contracts are completely secure. They do this by protecting the master branch with consistent peer reviews and CI passing. With comprehensive integration tests, their internal systems are water-tight.

While not all of the features that Aura employs to keep their protocol safe, this snapshot demonstrates their commitment to a healthy and exploit-free ecosystem.

Final Thoughts

Aura Finance is a phenomenal example of Web 3 systems and protocol solutions that allow the entire ecosystem to thrive. By giving users more of an incentive to get involved with liquidity pools and staking on systems like Balancer, they help DeFi systems rapidly gain liquidity.

That’s not to mention their apt integration of governance systems, providing DeFi projects with a way of generating awareness and desire for voting tokens. As an all-in-one solution to a plethora of problems within DeFi, Aura helps DeFi projects, stakeholders, and the community as a whole.

And, with over $450 million TLV and nearly 11 million AURA locked in, this protocol is already making waves in the community. We can’t wait to see just how much more Aura brings to the table over the next few years.