Litepaper

Abstract

Danogo is a decentralized lending and borrowing protocol built on principles pioneered by Compound Finance (https://compound.finance/documents/Compound.Whitepaper.pdf) and adapted for the Cardano blockchain. While Liqwid Finance completed the first implementation of Compound Finance on Cardano in 2022, Danogo introduces a novel approach to DeFi implementation on Cardano with the following improvements:

1. Support multiple independent oracles concurrently (our oracle smart contract will be open sourced and available for all other Smart Contract to access oracle sources onchain from Indigo, Liqwid, DJED, Orcfax, Charli3, Minswap, Splash & other DEXes at the same time)

2. Support DEX LP tokens as collaterals

3. Loan smart contract is inter-operable with other smart contracts, thus making loans programmable. This open door for new use cases to be built on Danogo loan to grow DeFi ecosystem on Cardano

4. Remove batching, hence enabling continuous interest compounding while Liqwid interest are only accrued at fixed intervals during batching.

5. Introduces novel parallel-threaded liquidation mechanism to enhance resilience during extreme market conditions. In 2023, Indigo faced a two-hour liquidation queue because liquidations had to be executed sequentially (https://messari.io/report/cardano-ecosystem-analysis-q2-2023). This will protect supply pools from default risks during extreme market conditions.

6. Cross deposit idle fund to optimized yield for Suppliers; Danogo pools put all idle funds on Liqwid and keep qToken instead, this way Danogo suppliers will always earn yield, even when waiting for borrowers.

7. Danogo smart contracts are written in Aiken and will be open-sourced once thoroughly audited. This will enable other developers to build independent off-chain front-ends with further use cases to ensure decentralization of the protocol.

Danogo aims to serve as a composable, scalable, and secure financial primitive for the Cardano DeFi ecosystem.