What is Moola?
Moola is a non-custodial liquidity protocol built on the Celo blockchain that is democratizing access to yield and credit. Depositors earn passive yield which is paid for by borrowers who are able to take over-collateralized loans in perpetuity or under-collateralized flash loans. Moola has shared ancestry with Aave v1.
The Moola protocol has been independently audited since the open source code was migrated from Ethereum to Celo. The original Aave codebase has also been audited here and here. Moola is open source so everyone can independently verify the code base as well as build applications that interact with Moola.
How do I use Moola?
To use Moola you first need to connect a supported wallet and initiate a deposit transaction. Once you’ve made a deposit you will earn passive yield. You can borrow against your deposited assets. Any interest you earn as a depositor will offset some of the interest rate you pay as a borrower.
How much does Moola cost to use?
Moola does not charge any fees to deposit or withdraw. All transactions on Moola including deposit, withdraw, borrow, and repay incur Celo network transaction fees which are used to secure the Celo network (currently ~$0.001 per transaction). Overcollateralized borrowers incur a loan origination fee of 25bps in addition to the borrow interest rate. Undercollateralized flash loans incur a flash loan fee of 9bps.
Where does Moola custody my deposited assets?
Your assets are custodied in a smart contract. The smart contract code is public, open source, and has been audited. You can withdraw your funds from the smart contract anytime or transfer your claim to the deposited assets to any other address on the Celo network.
What are mTokens?
Moola Tokens such as mcUSD, mcEUR, and mCELO are transferable cERC20 tokens that represent claims on the deposited assets plus accumulated yield. Each mToken is worth exactly one Token (e.g. 1 mcUSD = 1 cUSD). When a user deposits Tokens into Moola, they receive an equivalent quantity of mTokens in return. mTokens can be redeemed for Tokens at a 1:1 ratio at any time by submitting a withdrawal transaction.
Are there any risks?
As with any new technology, not all risks can be eliminated. Some of the risks related to Moola are smart contract risk (unknown vulnerability with the code) and liquidation risk associated with the collateral liquidation process. Steps taken to minimize these risks as much as possible include opening the code base for the public to review, undergoing code audits, and publishing an open source liquidation bot.