Archimedes Leverage Engine — Comparing Existing Solutions

  • The lender risks the collateral value falling faster than they can liquidate the collateral to cover the borrowers debt.
  1. Archimedes then swaps lvUSD for OUSD corresponding to the amount of leverage desired, through the OUSD/lvUSD Curve pool.
  2. The OUSD is then wrapped into an NFT representing the user’s leveraged OUSD strategy and minted to the borrower.
  1. If lvUSD loses its peg. This would look like an imbalanced Curve pool where there is too much or too little lvUSD relative to the other asset pair. Archimedes solves for this by carefully managing the amount of leverage available to its users. When the price lvUSD is above $1, Archimedes increases the leverage cap which increases the amount of lvUSD in the pool, restoring the peg. Similarly, when lvUSD is trading below $1, there is a strong incentive for the borrower to close their position as they can essentially purchase lvUSD for less than $1 and use it to repay $1’s worth of debt.

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