What is Angle Finance?

The stablecoin market is overwhelmingly denominated in USD-pegged assets, the majority being USDT and USDC. Similarly to the foreign exchange market, tokenized fiat currencies occupy a central role in DeFi markets.

The problem with USD-pegged stablecoins like USDT and USDC is that they are centralized, meaning they are issued by a third party that can easily blacklist them. This model often clashes with the ethos of DeFi, which strives to make finance easily accessible to anyone on the globe.

Angle Protocol aims to build the necessary tools to make the best out of centralized and decentralized stablecoins, as well as of over-collateralized and under-collateralized approaches. Angle is a decentralized version of centralized protocols allowing swaps at oracle value between synthetic assets and collateral. The Protocol expands its offering beyond USD-pegged stablecoins and introduces EUR-backed stablecoins.

The goal of Angle’s protocol is to mint stable assets tradable on the blockchain. To explain Angle's mechanism, let's give a simple example of how it works. Let's say you want to buy stablecoins pegged to the EUR. Using Angle, you can deposit any collateral from their whitelist of supported collateral, and issue agEUR for a small fee. The collateral deposited belongs to the protocol.

Conversely, agEUR can be converted back into the of your choice collateral, and agEUR is burned. To offer swaps at the correct market rate, Angle Protocol needs to be able to access price feeds for all the supported collateral/stablecoin pairs: it does so using oracles.

Oracles are a crucial part of the DeFi infrastructure. They are third-party services that provide smart contracts with external information. In this context, oracles provide price feeds to the protocol. Having a reliable oracle ensures the assets are converted at the fair market price. The DeFi industry is no stranger to oracle hacks, the most popular example being front-running attacks.

In this scenario, the attacker takes advantage of the oracle latency to buy crypto assets at a discounted price, and then sells when the oracle updates the price. It is a risk-free approach that has been constantly addressed since DeFi became popular. Angle Protocol has put a lot of effort to prevent front-running from happening. The protocol uses two mechanisms to defend against front-running attacks: multiple oracles and the fee mechanism.

Angle uses a combination of Chainlink and Uniswap V3 TWAP oracles with a 10 minutes time window. The idea is that whenever there is a need for an oracle value, the protocol chooses between the output of the Uniswap feed and the Chainlink feed that is most at the advantage of the protocol.

Uniswap and Chainlink are the best on-chain oracles in the industry, which is why Angle has never suffered from an oracle hack.

Angle Protocol also has its own native token called ANGLE. It is mainly used as a governance token within the Angle DAO governance structure. Similarly to Curve, ANGLE token holders vote which liquidity pools to incentivize with ANGLE rewards. 

How does Angle Protocol work?

Angle Protocol is a decentralized, overcollateralized stablecoin issuance service. It can be used to issue stablecoins, called agTokens, designed to mirror the value of an asset they are pegged to.

Angle Protocol supports multiple stablecoins, each with its own liquidity pool. This means each liquidity pool operates independently and has its own collateral. Because crypto assets are volatile by nature, the stablecoin issued at constant risk of depegging. To ensure permanent stability, Angle generates arbitrage opportunities that help maintain the peg.

Let’s say that 1 agEUR trades at a price above 1€. The incentive is to mint agEUR for 1€ worth of collateral and then sell these newly minted agEUR for more than 1€ on the market. This reduces the price closer to 1€. If 1 agEUR trades at a price below 1€, the incentive is to buy agEUR on the market for less than 1€ and get 1€ worth of collateral by swapping the agEUR bought using Angle. This increases the price closer to 1€.

Opportunities for arbitrage are however reduced when there are mint and burn transaction fees. With a 0.3% transaction fee on each side, it is no longer profitable to do arbitrage for price deviations of less than 0.3%, meaning in this case that the price of the stablecoins can vary between 0.997€ and 1.003€. Fees on Angle Protocol are a feature, not a bug, as they reduce the opportunity for a hacker to execute a front-running attack. 

Angle Protocol Core Module

Angle Protocol's Core Module relies on three types of agents which all benefit from it to maintain the stability of Angle stablecoins: stablecoin seekers or users, hedging agents, and standard liquidity providers. 

Stablecoin seekers are the regular users, who are looking to swap their crypto assets for a stablecoin of their choice. They pay small transaction fees when they mint and/or burn, usually around 0.3%.

Hedging agents get leveraged positions on a pair collateral/stablecoin in the form of perpetual futures. By doing so, they insure the Core module against the volatility of the collateral. On the one hand, if the price of the collateral they contribute to increases with respect to the value of the stablecoin, they can make leveraged capital gains, but on the other hand if the price decreases, they can lose a portion of the collateral they initially brought.

Standard Liquidity Providers lend money to the Core module and in return get part of the transaction fees induced by stable seekers minting and burning, as well as part of the returns made from lending some of the reserves to lending protocols (like Compound or Aave). They serve as the insurance of the insurance that is made up of Hedging Agents.

Angle Protocol Borrowing Module

Angle Borrowing Module is one of the minting mechanisms for Angle stablecoins. It is similar to how DAI stablecoins are minted on Maker. 

With the Angle Borrowing module, users can deposit collateral tokens in a vault and mint (borrow) agTokens from their deposits according to specific parameters. This allows them to keep exposure to their tokens deposited as collateral, while benefitting from disposable liquidity in stablecoins.

One key difference from protocols like Maker is that any type of collateral is accepted, even yield-bearing tokens. As a result, users can mint Angle stablecoins using yield bearing tokens and get their debt automatically repaid by the increase in value of their collateral.

Angle Protocol Flash Loans

Flash loans are a type of loan that allow to borrow and repay tokens in one transaction. Thanks to that, the entity taking out the loan don't need to put down any collateral, as the lender is guaranteed to be paid back if the transaction is executed. This also allows them to borrow/mint huge amounts of agTokens through flash loans.

The main use case for flash loans is arbitrage between pools, which usually helps rebalancing liquidity over the ecosystem.

Flash loans offered by the Angle protocol are free. For each stablecoin, there is a cap on the amount that can be taken during a flash loan, this cap is controlled by governance.

How to make money on Angle Protocol?

Making money on Angle requires some knowledge about trading and risk management. It is an intermediate-advanced dapp that offers users the possibility to mint agEUR and trade using leverage. But don't be discouraged, there are also a couple simple ways to make money on Angle.

Price Prediction for Angle Protocol — Can it hit $10?

Buying and hodling ANGLE — the native token of the Angle Protocol— is one way of potentially making money on Angle protocol.

The main utility for ANGLE is to serve as the governance token for the protocol. As the need for decentralized stablecoins in DeFi increases, Angle protocol has a fair shot at capturing this segment of the market. Over time, the governance votes will have a greater impact, resulting in more bids for ANGLE tokens.

On top of its stablecoin services, Angle protocol also enables a suite of financial services. The value of ANGLE will be influenced by the number of new users and the total value locked in the protocol.

By looking at its current price, it’s natural to think about the chance of ANGLE hitting $10 per token. This can happen sooner, or way in the future, and is determined by a couple of ever changing factors.

Let’s examine the potential growth of the ANGLE token by analyzing its tokenomics. ANGLE Chain’s current market cap sits comfortably at ${MARKET_CAP}. With {CIRCULATING_SUPPLY} ANGLE tokens being in circulation today, that means a price of {PRICE} per ANGLE.

How did we come to that calculation? It’s quite easy, the price of an ANGLE token is equal to its current market cap divided by the number of tokens in circulation. Dividing ${MARKET_CAP} by {CIRCULATING_SUPPLY} gives us a result of {PRICE} for each ANGLE coin. 

By changing the order in the simple formula above we can use it to calculate other things as well. This helps us a lot because we can deduce the market cap of ANGLE at different token prices. Then, we can use the result to compare it to the current state of the network and see what would be required for ANGLE to hit that price.

At a price of $10 per token, that means the current market cap of ANGLE would equal ${{CIRCULATING_SUPPLY} * 10}. Remember that we arrived at this number by multiplying the amount of circulating tokens by $10.

Now let’s shift our attention to the fully diluted market cap.

Some blockchains may have their tokenomics built in a way that only a small percentage of tokens are circulating at the beginning. This can be misleading because we don’t have the full picture and only take into account the current number of coins released in the market.

The fully diluted market cap represents the total value of a coin if all tokens were in circulation. ANGLE’s whole supply of tokens is {MAX_SUPPLY - TOTAL_SUPPLY + CIRCULATING_SUPPLY} ANGLE which means that no more coins above that number will ever be created.

These tokens are not created at the discretion of a specific entity. They are created automatically by the network to reward different actors that keep it secure.

How does this impact the price of ANGLE? Taking into account the current price of an ANGLE token, that would result in a fully diluted market cap of ${MAX_SUPPLY - TOTAL_SUPPLY + CIRCULATING_SUPPLY * PRICE}. ANGLE coins that have been burned are not taken into consideration because they have been permanently removed from circulation.

Whether it seems gigantic or not, the number we came to above only takes into account the current price of an ANGLE token. Doing the same calculation but with a price of $10 gives us a result of ${{MAX_SUPPLY - TOTAL_SUPPLY + CIRCULATING_SUPPLY} * 10} for the ANGLE protocol fully diluted market cap.

These are all crucial details to know when calculating if ANGLE can reach the price of $10 per token. If the diluted market capitalization is way too high, the token has little room left to grow. Blockchains in general have no cap on the value they can reach, whether that number seems possible it’s totally up to you.

The future of ANGLE depends solely on its growth as a network used by tens and hundreds of millions of users. Technically, it is possible for the price of ANGLE to reach $10 by 2030. 

If you’re looking to add some ANGLE to your portfolio, the most trusted places to get some are Binance and Coinbase.