Arkis Overview
A short overview of Arkis's key mechanics
Intended User Base
As we explore the functionalities and offerings of the Arkis Protocol, it's important to identify and understand the key roles and participants within the DeFi trading ecosystem.
Asset Managers
The primary users of Arkis Protocol are Asset Managers. These individuals or entities seek to leverage undercollateralized borrowing options to maximize capital efficiency for their trading strategies. Such strategies might include opening leveraged positions in liquidity pools, executing leveraged trades (both long and short), and hedging exposure. The core objective for Asset Managers is to optimize the return on investment capital through efficient, swift, and high-yield strategies.
Arkis service offerings are used by:
DeFi Hedge Funds who are willing to collateralize their on-chain positions, take leveraged exposure in DeFi protocols, LRTs and other primitives.
Delta-neutral yield farming hedge funds hedge their directional risk using perpetual futures on CeFi and DeFi exchanges.
Liquidity Providers
The provision of leverage to Asset Managers necessitates a source of capital fulfilled by Liquidity Providers. Liquidity providers (Lenders) typically seek a stable return on their assets, such as tokens or stablecoins, by offering them the ability to leverage traders. They contribute their capital to liquidity pools, which in turn facilitates the leverage provided to traders.
Key Mechanics
The Arkis Protocol and Margin Engine
The Arkis Protocol and its accompanying Arkis Margin Engine are designed to facilitate the seamless provision of leverage between Liquidity Providers and Asset Managers. This coordination ensures that:
Asset Managers have access to on-chain, undercollateralized leverage for their trading assets, enhancing their ability to execute diverse trading strategies across different blockchain ecosystems.
Safety of Liquidity Providers' Funds is a priority, with mechanisms such as proper liquidation processes in place to protect the capital provided by Lenders. As both collateral and borrowed assets stay within Arkis Margin Account (smart contract), Lenders see this type of lending as over-collateralized. At the same time, Asset Managers enjoy the benefits of leveraged trading.
Interest for Liquidity Providers: By contributing their capital to liquidity pools, Liquidity Providers not only facilitate leverage trading but also earn interest on their investments.
Fee Structure: The Arkis Protocol generates revenue through the fees collected from the spread between lending and borrowing APY.
Security
Arkis has been audited twice:
By Quantstamp in December 2023 (link)
By Trail of Bits in November 2024 (link coming soon)
Last updated
