Overcollateralised Loan [WIP]
Last updated
Last updated
The following guide describes how a user can use Pendle LP wstUSR tokens as collateral to borrow USDC and withdraw on external wallet?
Even though Arkis provides extensive capabilities for margin trading and undercollateralised leverage, traders still want to make overcollateralised loans through Arkis for several reasons:
Risks: Margin trading involves higher liquidation risk, which must be controlled. An overcollateralised loan is less risky and has much lower liquidation risk.
Other opportunities outside of Arkis: if an Asset Manager wants to deploy assets into a high-yield protocol that Arkis does not support or do their trading externally, they can use supported assets as collateral (Pendle LP wstUSR in this case), borrow assets from Arkis, withdraw them into their wallet and deploy them into high-yield protocol or use those assets for internal trading (market making, for example). This structure ensures that the Asset Manager does not have to sell collateral to participate in high-yield trades.
We assume that an Asset Manager already has access to the pool for this trade. They need to check the collateral available for this pool and their corresponding Stress Tests to control their liquidation.
Secondly, they need to ensure that their wallet address, which was previously whitelisted to interact with the pool, has enough LP-wstUSR-25Sep2025.
By clicking Borrow, we open a Margin Account and take the loan from the pool.
An Asset Manager should choose LP-wstUSR-25Sep2025 as collateral to initiate the trade.
User can see the Risk Factor of the Margin Account at trade origination. By choosing different values of collateral relative to the borrow amount, the Asset Manager can see how sensitive their Risk Factor is relative to leverage. Clicking on Confirm Transaction, we start the process of taking the loan.
First, we need to sign Token Allowances from our wallet to provide an Arkis Protocol allowance for interacting with collateral tokens.
When allowances are accepted, Arkis Protocol will initiate a transaction request to send collateral tokens from the borrower's address to Margin Account.
When the transaction is signed, the Asset Manager receives notification that the leverage was taken successfully.
When the Asset Manager signs a transaction, Arkis Protocol initiates the following process of Opening a Margin Account:
Take Margin Account (smart contract) out of pre-minted Margin Accounts inside of Margin Account.
Allocate collateral tokens to the Margin Account.
Allocate leverage from the Liquidity Pool to the Margin Account.
As these operations are not instant, it takes up to 10-15 minutes for them to complete, the Asset Manager can ensure that the Margin Account address was reserved for them by clicking on the "On Hold" tab.
The user should refresh the page and see when their Margin Account appears in the Opened tab. Now the account is ready to be interacted with.
When Margin Account is opened, we can check it's two most important metrics:
Stress-tested Value
Risk Factor
Stress-Tested value is the sum of assets inside the Margin Account adjusted for Stress-Tests configured within a specific pool.
At origination, our account contains:
1 PT-eUSDe-29May 2025
0.5 LP-eUSDe-29May 2025
2 USDC (borrowed assets).
For Pendle LP/PT oracles Arkis uses Pendle Oracle to convert the value of Pendle PT/LP tokens into the underlying asset and then applies Stress-tested value from the pool to price underlying asset in borrowed assets terms.
As a result:
1 PT-eUSDe-29May 2025:
~1 eUSDe * 0.85 = 0.85 USDC
0.5 LP-eUSDe-29May 2025:
~1.04 eUSDE * 0.85 = 0.884 USDC
2 USDC = 2 USDC
Total Stress-Tested Portfolio Value = 0.85 + 0.884 + 2 = 3.768 USDC
Risk Factor is a Portfolio Stress-Tested Value divided by Borrowed Amount: 3.768 /2 = 1.84
An Asset Manager can now request Arkis' Operations team to withdraw USDC into their external wallet through operations@arkis.xyz by providing the wallet address to which the borrowed USDC should be transferred.
