Borrowing Overview
Arkis Margin Engine, Margin Account, Compliance Manager, and Liquidity Pools are core parts of our leverage infrastructure.
Last updated
Arkis Margin Engine, Margin Account, Compliance Manager, and Liquidity Pools are core parts of our leverage infrastructure.
Last updated
Arkis provides leverage to Asset Managers through a robust infrastructure that includes the Arkis Margin Engine, Margin Accounts, Compliance Manager, and Liquidity Pools. This system enables more flexible trading and capital flows, with margin calculated at a portfolio level which can aggregate and offset positions’ risks.
A Margin Account is essential for traders seeking to take leverage through the Arkis protocol. It is a standalone smart contract available on the networks where the trader wishes to operate. Traders choose the leverage asset (such USDT, USDC, wETH, wBTC) and provide the necessary collateral.
Properties of Margin Accounts
Each account is a separate smart contract containing collateral and leverage assets.
Traders can manage their Margin Accounts similarly to how they manage their personal portfolio or MetaMask wallet, with the ability to swap, stake, or provide liquidity if these operations are whitelisted by the protocol.
Each Margin Account acts like a proxy to a wallet and can be used via Wallet Connect to interact with integrated DEXs/Protocols.
Performance, NAV, and transactions for each Margin Account can be tracked separately using Etherscan or respective blockchain explorers.
Margin Accounts are reusable, meaning that an Asset Manager controls a Margin Account when they have initiated a loan, but the same Margin Account might be used by another Asset Manager when the previous one closes it and repays the loan.
The Compliance Manager regulates the venues, DEXs, protocols, tokens, and transactions permissible within a Margin Account. It ensures traders cannot engage in high-risk activities with non-whitelisted tokens or unauthorized DEXs. The Compliance Manager defines:
Approved protocols/DEXs/Venues for trading.
Allowed actions and smart contracts for execution.
Whitelisted tokens for use on DEXs.
For each new protocol integration, the integration pipeline happens in two steps:
Add actions and adapters to Arkis Protocol to whitelist protocol operations.
Add logic for portfolio monitoring and stress testing to the Arkis Margin Engine.
Add Liquidation logic for the protocol.
This centralized analytics module calculates the real-time Margin Account portfolio value and calculates the Risk Factor metric, which defines if the portfolio value is enough to cover the borrowed assets amount.
Asset Managers borrow capital from Liquidity Pools. When the loan is originated, Arkis Protocol takes collateral from the Asset Manager and borrowed capital from Liquidity Pool and posts it into Margin Account.
Each Liquidity Pool defines what can be done within this pool, what are the whitelisted tokens and protocols and who can borrow from it.
Asset Managers can click the "Details" tab to see the details of each pool configuration.
Each pool has the following set of parameters:
Pool Address, on-chain address of the pool.
Interest Rate Model (IRM), which defines how LPs get yield on their assets. Different pools within Arkis have different IRMs ranging from widely used utilization-based and fixed rate to more sophisticated (Expected Value or Funding Rate based).
Whitelisted Assets and Whitelisted Protocols define which assets Asset Managers can interact with if they borrow from this pool. This list defines collateral risk exposure of Liquidity Providers who provide liquidity into a particular pool.
Token Oracles: Oracle feed (can be off-chain price feed), which are used to price Whitelisted Assets.
Stress-Tested Values: % subtracted from an oracle price to get the price of an asset. Used as a margin of safety for Liquidation. Refer to Stress-Tested Value for more information.
Asset Managers who are allowed to borrow from the pool.
Margin Call Risk Factor Value: the value of Risk Factor when Asset Manager is margin called.
Liquidation Fee: protocol fee for liquidating unhealthy loan position.
By clicking "Borrow" an Asset Manager initates the flow of opening Margin Account and taking a loan through Arkis.
First, the user must decide on how much they want to borrow and list of collaterals they want to provide to secure the loan.
The borrow value can be bigger than the value of provided collateral? Both collateral and borrowed assets are allocated to Margin Account - which is a smart contract controlled by Arkis Protocol. However, an Asset Manager can trade through Margin Account on integrated and whitelisted DEXs and protocols and interact with whitelisted assets. So essentially, for an Asset Manager can margin trade.
An asset manager can choose "Leverage" part of the borrow modal to automatically set borrow amount as a function of target leverage. Once all transaction details are set - a user can click "Confirm transaction".
The user provides allowances to the protocol to interact with collateral assets within their wallet.
Once all transactions are signed - the protocol takes collateral and starts Registering Margin Account.
When the transaction was initiated - you will find that the protocol took collateral assets from your wallet. There are 3 statuses of Margin Accounts:
On Hold: The protocol registered the Margin Account, took collateral from an Asset Manager, and is busy allocating borrowed assets from the pool to the Margin Account. An Asset Manager can't use the Margin Account yet, but can already see it's address.
Opened: Margin Account is ready to be used for margin trading.
Closed: Margin Account was closed or Liquidated.
