Stoicism is the art of remaining calm under highly strenuous situations. A highly strenuous situation that some of you degens may have faced is paying off an interest-accruing position. Sleepless nights. Constantly checking for price dilution. Having friends ready to help close the position if things go awry.

You could leave it up to chance and trust yourself to remain calm in the face of adversity, or you could simply choose Aurelius Finance and not worry at all.

Aurelius is a stablecoin CDP with an integrated money market protocol housed on Mantle, the promising optimistic rollup on Ethereum. It is also the first OATH Chapter and will be managed by the OATH Foundation in collaboration with the team from Cleopatra Exchange. Within its short time of being live, the protocol has managed to amass over 500k in TVL - without turning on incentives!

In this piece, we will cover what Aurelius Finance is, how it works, and more.

But before we dive in, let us give you a quick rundown on wtf OATH chapters are.

The OATH Chapter

OATH Foundation is a DeFi infrastructure builder that helps build protocols across various networks. At its core, an OATH Chapter’s purpose is to solve the liquidity fragmentation issues across various networks.

As part of that, the Foundation works with partners who utilize OATHʼs architecture to build protocols across networks. Each instance of such a protocol (aka Chapter) is overseen by a senior engineer at OATH.

So far, Aurelius Finance is the first OATH chapter.

What is Aurelius Finance

Aurelius is a contender to the leading money markets in DeFi today. Thanks to Mantle, it offers the same flexibility of a top-tier lending/borrowing protocol without the unaffordable gas burden that comes with transacting on Ethereum. The protocol has received a significant grant from Mantle Network (200K MNT), which equips them with the resources to broaden the impact of the protocol theyʼre building.

In essence, Aurelius issues interest-free loans using the $aUSD stablecoin. Yep, you heard that right. Interest-free loans. I promise I’m not messing with you. Let’s go over all of it below.

How it works

When taking out a loan on Aurelius, it is paid in the aUSD stablecoin. But rather than paying interest, users simply pay a 0.5% issuance fee.

Suppose a user comes to take out a $100 loan. They deposit sufficient collateral and receive their 100 aUSD. On the platform, the debt will appear as 105.5 aUSD because 0.5 aUSD is the issuance fee, and the 5 aUSD will be held as a liquidation deposit. When the user pays back the 100.5 aUSD, the 5 aUSD deposit will be paid into their position and closed.

The 5 aUSD is minted and held by the system in case you get liquidated in order to compensate for gas. It is not additional debt that you have to pay back!

This is all made possible by two key components:

• The Rehypothecation Engine
• The Stability Pool

When we speak about rehypothecation in this context, we aren’t referring to your favorite LRT ponzu. Over here, it refers to how an integrated lending market makes the platform tick.

The featured integrated lending market automatically makes collateral available to borrow externally, which facilitates a constant yield source for Aurelius and aUSD.

When collateral is deposited on Aurelius, anyone looking to borrow volatile assets can borrow said collateral from the Aurelius lending platform, which generates yield for the depositors. Borrowing these volatile assets also requires posting collateral, and Aurelius conducts liquidations to protect aUSD and Aurelius users.

Now, let’s come to the stability pool.

It's the ultimate source of liquidity for aUSD. The ultimate purpose is to repay debt from liquidated positions and establish a consistent source of yield for aUSD.

More details on how liquidations work will be given later in this article, but the Stability Pool plays an important role in the liquidation process. When a position is liquidated, an amount of aUSD equal to that position's remaining debt is burned from the pool for repayment. In exchange, the collateral comes into the stability pool.

It’s a single-sided pool that ensures liquidations remain efficient while also being a source through which users and AU stakers can be rewarded.

Note that while the stability will always remain accessible, in certain scenarios where positions that have a collateral ratio below the Minimum Collateral Ratio (MCR) aren’t liquidated, withdrawals may be temporarily suspended.

Alright, now that you understand the crux of how Aurelius works, let’s get into the finer details of liquidations and how the different tokens work.

Liquidations

There is a minimum collateral requirement for any borrow positions that are opened on Aurelius. These requirements vary based on the collateral type that users deposit. You can find more details about that here.

The Stability Pool carries out these liquidations to ensure the system does not suffer from bad debt. Once a liquidation does happen, a depositorʼs position also gets altered; however, to compensate the deposit for that alteration, they receive a percentage of the liquidated collateral. By depositing into the Stability Pool, your aUSD may be burned to liquidate volatile assets, but you will receive those volatile assets proportionally and at a discount. This way, it is always profitable to liquidate.

The aUSD token

aUSD is the stablecoin offered by Aurelius that aims to stay pegged to 1 USD, but largely oscillates between the $0.995 and $1.08 range. This is due to the minting and redemption of $aUSD tokens.

An issued 1 aUSD token can be redeemed for $1 worth of collateral. If the peg falls below $1, there is an arbitrage opportunity to buy up cheap aUSD and redeem it for $1 USD. An issued 1 aUSD token can also be bought for $1 worth of collateral. If the peg rises above $1, there is an opportunity to deposit collateral, mint aUSD, and sell it to the market for more than $1 per aUSD.

Incentives

The protocol has been making strides in partnerships and establishing alliances.

Now, users can LP to pools on CleopatraDEX and earn boosted APR (thanks to Aureliusʼ bribes). This boost comes from Mantle's 200K MNT stimulus.

More details on deposits are here.

Users can deposit their $mETH holdings on Aurelius and start earning yield. Remember to bridge to Mantle! Additionally, users can get collateral to participate in Aurelius Finance on Cleopatra Exchange, FusionX Finance, and Agni Finance.

Aurelius has been quite explicit with their airdrop announcements as well; just FYI. 👀

Speaking of which.

The AU token

AU is the governance token of the protocol and powers the Aurelius Finance protocol. Since Aurelius is an OATH Chapter, its emissions are controlled by and in collaboration with the OATH team. Aurelius Finance will distribute AU tokens as part of a planned airdrop in the future. Keep collecting points by interacting with the protocol to qualify. Oops, perhaps we weren’t allowed to share that… 😉

The finer details with regard to tokenomics, emission schedules, and distribution are still being worked out, so we recommend staying close to their socials to be the first to get the updates on this information.

Recovery Mode

The protocol has established a Recovery Mode, which gets triggered if the poolʼs collateral ratio falls below a healthy amount. This threshold is known as the Critical Collateral Ratio (CCR). If any of the borrow positions fall below this CCR, then they are instantly liquidated in that pool.

Security

Aurelius relies on API3 for price feeds. Since it utilizes the Ethos Reserve codebase, the protocol is battle-tested. Ethos Reserve codebase has been audited by CertiK and dozens of security engineers in a $150,000 Code4Rena security audit.

Now that you’re familiar with the protocol, you may be thinking, “Hmm, wouldn’t mind getting started on that. Maybe get me a nice little airdrop down the line. Not too shabby”.

Well, instead of going out and figuring out how to do all that yourself, we thought we’d simplify it for you.

Navigating through Aurelius

Aurelius Finance offers a hyper-simplified UX for users. Upon entering the website, users can enter the app by simply clicking through the “Enter Aurelius” button.

Step 1: Connect your wallet, and remember to switch to the Mantle network. Once you’ve done it, you can start opening positions by depositing collateral and/or by lending your assets to the protocol.

Step 2: Check out the markets where you can deposit liquidity in the “Lend & Borrow” section. You can find it in the left pane.

Step 3: To borrow aUSD against the accepted collateral, head to the “aUSD Positions” section. Click on “Get Started” to open a new position, and you’ll be asked to select the type of collateral you wish to deposit.

Step 4: Review the health of the accepted assets. You can check it at the top of the page.

Once you’ve opened a position, you’ll be able to monitor it in the “Dashboard” section.

Closing thoughts

Aurelius Finance is establishing the lending/borrowing space on Mantle. Its community members on Discord are just about to touch 1K members overall. They have managed to acquire a dedicated community of believers and not just airdrop farmers.

In the true sense of building alliances and shaping partnerships, Aurelius has partnered with several partners like Ramses and Cleopatra. In addition, they are guided by the capable minds of the OATH Foundation.  Basically, things are looking up.

This promising protocol is currently in its growth phase, and we anticipate that with the issued incentives and consistent support from Mantle and OATH, it will have a promising growth curve in the future.