Agio provides a unique safeguard for the community's assets through its compensation funds denominated in $AUSD, initially acting as the market maker on our coverage platform. As the platform evolves, users will have the opportunity to become market makers themselves, adjusting their rates in response to demand, similar to protocols like Aave.

For instance, if an investor participates in a pair with significant volatility and experiences a sudden market downturn, they will receive compensation for their losses in $AUSD, assuming there is sufficient liquidity in the treasury. In the event of inadequate liquidity, positions within the pool will be automatically closed, and all participants will receive their assets (assets initially placed in the pool along with the compensation fee).This innovative approach marks a significant milestone in the crypto space, providing the community with protection while maintaining control over their assets.

Fees play a vital role in ensuring the smooth operation and sustainability of Agio, much like how insurers contribute to the functioning of an insurance system. These fees are indispensable for the protocol's continued operation. Every time a swap occurs, whether it involves converting an asset to a Ctoken or exchanging different covered tokens, a swapping fee is applied. These fees are essential for maintaining the protocol's operations and ensuring its long-term viability.

Initially, the pools do not rely on fees for their operation. However, fees will play a crucial role in expanding the capacity of the pools. These fees will be utilized to buy back $AUSD from the treasury, thereby fostering a healthy ecosystem growth. As the platform gains popularity, fees will indirectly benefit individuals seeking to sell their coverages to others. Currently, the Agio treasury serves as the market maker for covered tokens.

It’s defined according to the volatility of the pair in the market.For example, the fee rate on an agio/stable coin pair will be low while the fee rate on a degen pair will be high.

In theory, the team has the ability to adjust these rates, which fluctuate daily in response to the volatility and interest of each pair, similar to an options platform. There are two primary reasons for this flexibility. Firstly, it allows the team to align the rates with market conditions, and secondly, it ensures the protocol remains adaptable. It's important to emphasize that any rate modifications will be approached with careful consideration and community input, prioritizing the preservation of trust. As a result, users will always have visibility of the fee rates before engaging with covered assets.