Understanding the lending Mechanism at Archimedes
Disclaimer: Certain statements in this document constitute forward-looking statements. Such forward-looking statements, including the intended actions and performance objectives of the Company, involve known and unknown risks, uncertainties, and other important factors that could cause the actual results of the Company to differ materially from any future results expressed or implied by such forward-looking statements. Accordingly, readers should not place undue reliance on forward-looking statements. No representation or warranty is made as to future performance or such forward-looking statements.
Archimedes is a DeFi platform that enables people to lend and borrow their crypto assets without having to go through a centralized intermediary. When they lend, they earn interest; when they borrow, they can earn by creating leveraged positions.
How Does Lending Work on Archimedes?
Archimedes creates a Curve pool to attract liquidity providers:
- 3CRV/lvUSD
- lvUSD/ARCH
We’re adding other pools in the future, for example:
- ETH/lvETH
- sBTC/lvBTC
These Curve Pools offer APY that are higher than the ordinary Curve Pools as this yield will be generated not just from the CRV emissions but also from the native activities.
Archimedes will put the money received from the lenders to work to create a native APY.
Is the Native APY Generated by Archimedes Sustainable?
It sure is! We all know that Curve has been the most preferred platform among investors. The majority of investors and projects are fighting to invest in Curve against the bonus received from the emissions of CRV tokens. The competition is fierce, the numbers of investors are increasing rapidly, and the platform is getting crowded. Hence, the bonuses are reduced and APY is going down.
While Curve has huge liquidity sitting idle, we thought of using this idle liquidity, putting it at work, and thus benefiting the investors with higher APY. So, by investing in the Curve pools created by Archimedes, investors and lenders have more chances to get higher returns.
Let’s understand how!
As of today, Curve has around $6B of liquidity and around $200M of trade volume which means the vast majority of liquidity on Curve is idle. So, current CRV emissions and price will put an upper limit on Curve at $6B.
On the other hand, Archimedes’ Curve pools generate higher APY through native activities of the liquidity.
- Non-Archimedes pools still get enough liquidity to thrive with the APY generated from CRV emissions.
- As CRV emission is a supporting buffer, it will help enhance returns and offer headroom for all protocols.
- CRV emission can support a certain amount of idle liquidity, the remaining liquidity will go to the Archimedes pool (for example 3CRV/lvUSD pool). Archimedes will lend this liquidity to borrowers/leverage takers (LTs) who will let them pay interest to the investors.
- To borrow this liquidity, borrowers have to put their assets on collateral. And then, they can use this idle liquidity to take leverage on assets.
- We create their leveraged positions on a meta-vault like OUSD.
For example: Say OUSD offers 12% APY. So, user chose 4x leverage, the LTs get 48% APY before fees. Isn’t that great?
- Then, we wrap their position with an NFT to allow them to trade and generate more profits without unwinding the position.
- Archimedes will then collect a portion of our ongoing revenue to distribute across the Liquidity Providers.
So, what about ARCH/lvUSD and why not ARCH/ETH or ARCH/3CRV? The short answer is that it helps stabilize the 3CRV/lvUSD pool. It shifts some deppeg pressure from 3CRV/lvUSD pool to ARCH/lvUSD pool. Since ARCH isn’t a stablecoin it has lesser effect on ARCH/lvUSD pool.
Is It Safe to Invest in Archimedes?
Archimedes is a doxxed team of technology, business, and finance professionals that strongly believes in the opportunity DeFi brings to the world and we are proud to be part of it.
Additionally, our product is built on a very solid basis — transparent, backed by collateral, and engineered to generate higher returns while mitigating a lot of the existing risks of the current DeFi ecosystem. On top of it, we focus more on quality rather than quantity.
We mitigate your risk by supporting over collateralized tokens only. Additionally, it is highly likely that you won’t get locked in the pool:
- We carefully regulate the leverage cap. When we allocate more leverage it is always a small percentage of the total 3CRV in the pool.
- We control the on-going fees leverage takers pay. We can incentivize leverage takers to close a position.
- We also have a treasury that we can use to replenish liquidity in our pool.
- We are working hard to create partnerships with large LPs to commit to provide liquidity to our pool.
As we grow, we will support more protocols similar to OUSD to increase opportunities for diversification. Thus, you are basically investing in a blue-chip index of the best stablecoin meta vaults and you will be able to diversify your risk.
Archimedes — The Future Plans
We’re planning to launch our platform soon. We are also performing a security audit before the launch to ensure technology risks are mitigated.
As a fully doxxed team, we are open and transparent with our community formed of smart, engaged people. We ask them for input and feedback and that way we boost our strengths even further.
Additionally, we’re planning to introduce “Timelock” smart contracts to allow for seamless and fair governance. And that way we build transparency and the trust we need to succeed.
We want you to support us in our journey ahead. Let’s connect together and bring the DeFi revolution we need today! To stay tuned with our project’s updates and announcements, join us here –
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