Aurora is a combination of Ethereum protocols and applications, which jointly forms a decentralized platform of banking and investment. This platform offers the public with a financial network that is advanced and stable. Aurora has a cryptocurrency, which is decentralized, namely Boreal. This cryptocurrency is developed on Ethereum blockchain.
The decentralized capital controls the supply of Boreals in order to maintain the stability of its price and to match its demand. Initially, it maintained uniformity with US dollars. Boreals are powered by a blend of reserves and debt in Ether. In the beginning, the decentralized capital will keep all the reserves in Ether. Later, it will move towards maintaining the financial reserves.
The borrowers of Boreal loans are first required to apply to the decentralized capital and then they have to go through a credit and background check. Once the approval is given to the borrower, he receives Boreals, along with the schedule of repayment. The borrowers can buy goods and services through the money borrowed on the network of Ethereum. They can also sell the Boreals in exchange for some other cryptocurrency in the open market.
Any person who makes use of the Ethereum platform is authorized to take a loan from the crypto-bank. In the beginning, the users will not be able to take loans of a huge amount but as they will create their history on the bank, users will be able to take more loans with fewer interest rates.
This system is not like the system we see nowadays where a college student has a credit limit lower than a person who possesses the ability to manage the credit card. The assessment of creditworthiness will be done by the banks on the basis of all the available information. The trustworthiness of the borrower is judged through his/her ‘Know your customer’ attestations and loan history.
It will enable the bank to correct the profile of the user. There are other ways also to judge the creditworthiness of a person, like work experience, professional abilities, and skills, but such details should be attached to the on-chain identity of the individual. Borrowers are allowed to take a new loan without submitting the collateral security. Collateralized loans will have a lower rate of interest as the presence of collateral reduces the risk of the bank.
In order to keep the bank open and decentralized to the customers from any place in the whole world, it is essential for the bank to have some other sources through which they can procure finance. The additional source of revenue for Aurora is IDEX.
The International distributed Ethereum Exchange is a decentralized network of exchange, which is developed by Aurora. IDEX is a composition of shared database and Ethereum contracts that maintains the transaction order. The earning received from this exchange platform is distributed equally amongst network participants and banks. The IDEX fee is paid through Boreals with a minor discount.
IDEX offers an actual time trading experience through the use of blockchain-based settlement and execution. Users can do continuous trading, they can place several orders at once, and can cancel them without paying any gas costs.
IDEX is a combination of Ethereum smart contracts and trading engines that are centralized. The functions performed by the trading engine include matching trade, ordering books, and managing the list of incomplete transactions, whereas Ethereum smart contract performs the function of storing all the assets and managing their trade settlement and execution. By dividing trade matching and settlement, IDEX fuses the experience of the user with the speed of centralized exchange platforms. If you want to know more about Aurora and IDEX, then read its whitepaper.