@ArchimedesFi Fix Rate borrowing + undercollateralized leverage & $ARCH token to capture value?
@CurveFinance @OriginProtocol
πIn this thread
1) What is it
2) How does it work
3) Lambro thoughts on protocol dynamics
4) How i would play it
$crv $ousd #defi
@CurveFinance @OriginProtocol
πIn this thread
1) What is it
2) How does it work
3) Lambro thoughts on protocol dynamics
4) How i would play it
$crv $ousd #defi
unrolled here for u
2lambroz.substack.com
2lambroz.substack.com
πTLDR
ArchimedesFi allows farmers to bid at a fixed cost to leverage on yield bearing stablecoin n lenders to lend money to leverage farmers
The $ARCH token is design to be more sustainable with a dynamic emission + constant buy pressure from borrows to βbidβ leverage capacity
ArchimedesFi allows farmers to bid at a fixed cost to leverage on yield bearing stablecoin n lenders to lend money to leverage farmers
The $ARCH token is design to be more sustainable with a dynamic emission + constant buy pressure from borrows to βbidβ leverage capacity
πWhat is & How does ArchimedesFi work
It is a lending &borrowing platform built on top AMMs with goals to allowing leverage up to 10x yield
There is 2 core parties in Archimedes
πΉLenders is referred as Liquidity Providers (LP)
πΉBorrowers is referred as Leverager Takers (LT)
It is a lending &borrowing platform built on top AMMs with goals to allowing leverage up to 10x yield
There is 2 core parties in Archimedes
πΉLenders is referred as Liquidity Providers (LP)
πΉBorrowers is referred as Leverager Takers (LT)
πΉLenders (LP)
LP provide asset to 3CRV/lvUSD pool and receive interest which the protocol pays out in
- $ARCH tokens
- Stablecoins
LP provide asset to 3CRV/lvUSD pool and receive interest which the protocol pays out in
- $ARCH tokens
- Stablecoins
πΉBorrowers (LT)
LT borrow from these pools to create a leverage position from whitelisted yield-bearing stablecoin (starting with $OUSD) @OriginProtocol
LT borrow from these pools to create a leverage position from whitelisted yield-bearing stablecoin (starting with $OUSD) @OriginProtocol
πHow does ArchimedesFi enabled Fix lending?
Introducing "Leverage round"
Leverage round is available when the LP pool (3CRV/lvUSD) TVL is increased to a set amount.
Introducing "Leverage round"
Leverage round is available when the LP pool (3CRV/lvUSD) TVL is increased to a set amount.
Whenever a LT opens a position the price (lvUSD) will be higher and lower in price over the proceeding days until all the leverage is acquired. A bit like a dutch auction, and these auction will be done using $ARCH
E.g.
When a leverage round starts,
assume 1 $ARCH = 150 lvUSD
Depending on the rate of of the auction you can buy more and more lvUSD with 1ARCH
13:00 1$ARCH = 150lvUSD
14:00 1$ARCH = 160lvUSD
15:00 1$ARCH = 170lvUSD
When a leverage round starts,
assume 1 $ARCH = 150 lvUSD
Depending on the rate of of the auction you can buy more and more lvUSD with 1ARCH
13:00 1$ARCH = 150lvUSD
14:00 1$ARCH = 160lvUSD
15:00 1$ARCH = 170lvUSD
This way LT will buy βleverage powerβ (lvUSD) at the rate they prefer until the it has sold out itβs leverage capacity at the price they want.
ποΈYou can imagine $ARCH as their tickets to buy leverage capacity.
ποΈYou can imagine $ARCH as their tickets to buy leverage capacity.
πWhy would LP provide liquidity & the difference?
πΉSustainable yield coming from
-Protocol fees including
-0.5% origination fee,
-30%performance fee on position gain
-Buy power for ARCH to βbidβ/ buy leverage power
-Protocol Dynamic emission + partner incentives
πΉSustainable yield coming from
-Protocol fees including
-0.5% origination fee,
-30%performance fee on position gain
-Buy power for ARCH to βbidβ/ buy leverage power
-Protocol Dynamic emission + partner incentives
πΉWhat is dynamic emission?
To avoid over inflating the token archimedes team introduced a dynamic emission to keep the APY in a specific range.
To avoid over inflating the token archimedes team introduced a dynamic emission to keep the APY in a specific range.
There are 3 key element that determines its APY
- Target APY
- Target TVL
- Benchmark ARCH price
Every 2 weeks the protocol calculates the ARCH emission with a a formula of
Biweekly Emission =
(βtarget TVLβ * βTarget APYβ/ 26) * (1/ βBenchmark ARCH Priceβ)
- Target APY
- Target TVL
- Benchmark ARCH price
Every 2 weeks the protocol calculates the ARCH emission with a a formula of
Biweekly Emission =
(βtarget TVLβ * βTarget APYβ/ 26) * (1/ βBenchmark ARCH Priceβ)
Each year there is a set of minimum & maximum emissions to avoid edge cases.
πWhy would LT borrow with Archimedes?
πΉPredictable fee model
with the βbiddingβ auction model, LT will know their leverage cost
πΉPredictable fee model
with the βbiddingβ auction model, LT will know their leverage cost
πΉTradability - Archimedes package position as an NFT, LT can trade it on NFT marketplaces for easy exit or potentially more composability in the future with other protocols.
In short, if you have strong conviction on a strategy APY why not leverage up it with fix cost?
In short, if you have strong conviction on a strategy APY why not leverage up it with fix cost?
πTokenomics (subject to change)
Total Fixed Supply: 100,000,000 ARCH.
Total Fixed Supply: 100,000,000 ARCH.
πSummary, thoughts & prediction
This is an interesting protocol with lots of moving parts, essentially it uses βauctionβ & βdynamic emissionβ as a novel way to maintain $ARCH token price. ARCH price will be based on revenue/demand + a speculation of the market.
This is an interesting protocol with lots of moving parts, essentially it uses βauctionβ & βdynamic emissionβ as a novel way to maintain $ARCH token price. ARCH price will be based on revenue/demand + a speculation of the market.
πΉMy thinking model of βfairβ pricing of $ARCH
Hard demand to use auction = how good is the underlying apy, how much lvUSD is available to auction, how much $ARCH is circulating
Hard demand to use auction = how good is the underlying apy, how much lvUSD is available to auction, how much $ARCH is circulating
Meaning i have to monitor
π€ 3CRV/lvUSD + relationship of how much archimedesfi team for lvUSD available to auction
π€OUSD (first yield bearing stablecoin) current APY & premium for future APY
π€Circulating $ARCH supply & upcoming emission based on dynamic emission
π€ 3CRV/lvUSD + relationship of how much archimedesfi team for lvUSD available to auction
π€OUSD (first yield bearing stablecoin) current APY & premium for future APY
π€Circulating $ARCH supply & upcoming emission based on dynamic emission
πΉAction
I personally won't go in $ARCH yet as I feel like I haven't fully understood the protocols but this is very interesting to follow. Iβd keenly keep a close eye on what the βcostβ to fix borrowing on OUSD & the relationship to its apy for first action first.
I personally won't go in $ARCH yet as I feel like I haven't fully understood the protocols but this is very interesting to follow. Iβd keenly keep a close eye on what the βcostβ to fix borrowing on OUSD & the relationship to its apy for first action first.
One thing I am not very comfortable with is the tokenomics βsubject to changeβ on gitbook & no clear indication on the fix emission yet.
I really love to pick @newmichwill @mrblocktw the curve big brains thoughts on this protocol specially my summary & prediction
Thanks for reading
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2lambroz.substack.com
2lambroz.substack.com
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