Frequently Asked Questions

Who deploys Margin Account?

Arkis maintains a pool of pre-deployed Margin Accounts, which are assigned to specific borrowers during fund allocation. If there are no available Margin Accounts in the pool, a new smart contract is automatically deployed by the Asset Manager upon receiving a request. In this process, Margin Accounts are always deployed by the Asset Manager, who automatically becomes the owner of the smart contract

Why Margin Account activation is 2-step process?

A Margin Account consists of two steps: registration and activation. During registration, the Asset Manager becomes the owner of the Margin Account. Activation occurs when funds are transferred from the liquidity pool to the Margin Account. During activation, it is essential that the Asset Manager provides a sufficient balance to avoid immediate liquidation. Arkis Risk Management system validates the correctness of the registration flow and ensures that there is enough collateral to support the borrower’s requested amount. If these conditions are not met, the system will revert the registration, return the collateral to the Asset Manager, and immediately close the Margin Account.

Is Arkis centralised?

No, the Arkis Protocol is decentralized; however, it includes a centralized Risk Management system. The role of this system is to protect Liquidity Providers' capital and ensure that the Asset Manager maintains a sufficient balance to repay the borrowed amount along with the agreed interest. The risk assessment process involves intensive computation, including evaluating the available liquidity in the underlying market, performing price discovery, stress testing the borrower’s portfolio, and more. Arkis' Risk Management system operates 24/7/365 to assess all open Margin Accounts and proactively mitigate risks.

What are the functions performed by the Risk Management system?

The entire Arkis DMA is controlled by the respective owners; however, there are two functions that are managed directly by Arkis Risk Management: close and liquidate. During liquidation, the borrower's portfolio is swapped into the borrowed asset, which may require several attempts before the target asset is fully recovered. The close function ensures that the borrower’s portfolio is safe to close and not at risk of liquidation.

Additionally, the second step of fund allocation is also executed directly by Arkis Risk Management.