Archimedes Finance is soon launching its new, unique overcollateralized lending and borrowing marketplace on Ethereum mainnet, shortly after announcing its $4.9M in seed fundraise led by Hack VC. Archimedes will be launching its Liquidity pool on Curve on February 14 and its Leverage Engine on February 20.
The Archimedes protocol attracts capital by offering long-lasting higher APY than similar projects. Archimedes utilizes innovative mechanisms, such as a dynamic token emission rate, real yield, and representing a leveraged position of up to 10x on yield-bearing tokens with a tradeable NFT, featuring one of the most favorable risk to reward strategies in DeFi: stablecoins.
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Lenders: Sustainable Top-of-Market Yields
For lenders (liquidity providers or LPs), the Archimedes platform was built to provide sustainable, top-of-market APY. To achieve this, Archimedes overcomes the issue of unsustainable tokenomics and rewards as more liquidity enters a pool.
Through its Dynamic Emission rate Archimedes has created a tokenomic structure that ensures its utility token, ARCH, does not suffer from the same overinflation problem that many other DeFi platforms face. Additionally, its approach to pay lenders with fees generated from borrowers (Real Yield), combined with the Dynamic Emission, is designed to ensure sustainable market-leading rewards.
Archimedes accepts funds from LPs in the form of USDC, USDT, or DAI deposited to its 3CRV / lvUSD liquidity pool on Curve, the Decentralized Exchange and AMM with the most stablecoin liquidity on Ethereum. Like ARCH, lvUSD is another digital token minted by Archimedes and is the “oil” of the Archimedes Leverage Engine.
Borrowers: Up to 10x Leverage on Stablecoins Without Liquidation Mechanism
For borrowers (leverage takers or LTs), the Archimedes platform provides the most advantageous risk-reward relationship via its up-to-10x-leverage strategy on yield-generating stablecoins, while choosing to not liquidate users in the first version. The protocol also solves the incentive misalignment issue common in most existing leverage protocols, and the high risk of leverage built on non-stable assets. Archimedes is designed to bring in revenue for LPs from transparent fees on relatively lower risk products, not from taking funds from leveraged users by liquidating them.
Borrowers wishing to take up to 10x leverage on their potential stablecoin yields can buy the leverage through Archimedes’ novel auction mechanism, which aims at finding a fair price. I.e., how much leverage should 1 ARCH token be able to buy.
Every time Archimedes makes more leverage available, there will be an auction process for Archimedes to sell and leverage takers to buy access to leverage. At every round of leverage, a pre-set starting price declines at a certain rate periodically, allowing users to buy leverage once they judge the price as being fair. However, since leverage is scarce, users willing to pay more for Archimedes’ leverage are more likely to secure a position in a specific round.
According to Oz Rabinovitch, the CEO of Archimedes Finance: “At Archimedes, we’re committed to solving key user issues in crypto by bringing sustainability and transparency. Lenders provide liquidity to get top of market sustainable yields and can then set and forget. Borrowers then borrow the funds from lenders to build leverage positions up to 10x on battle-tested yield-bearing stablecoins without the need to monitor for liquidations. We then wrap the borrower’s leveraged position as an NFT. We’re building something really special and spearheading mass adoption in DeFi.”
According to Tomer Mayara, the CTO of Archimedes Finance: “The yields that are generated on our platform come from real activity and from sustainable utility token emissions, not from CRV or governance token emissions that cause yields to quickly drop. Our lending and borrowing market built on top of the leading AMMs is designed to generate long lasting sustainable yields. Also, borrower positions are tradable as NFTs, which means holders can generate even higher returns by trading desirable positions with others in the open market.”
Archimedes uses an automated Leverage Engine that takes care of the capital management and deployment for both sides. It also uses only blue chip and battle-tested appreciating stablecoins (starting with OUSD) to generate Real Yield for lenders and a relatively low risk leverage for borrowers, while securing long-term TVL for protocol partners.
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