Frequently Asked Questions

What is the current status of Arcadia?

Arcadia is now live on Base. You can try it out here

What is Arcadia?

Arcadia is a two-sided marketplace connecting Lenders with Arcadia Account users (often referred to as Strategy users).

Lenders act like banks. They generate passive income without selling their assets for loaning out assets. Lend out assets are borrowed by Strategy users as a form of leverage to boost their returns.

Strategy users deposit their assets into sophisticated leveraged and delta-neutral strategies that beat staking APRs via an Arcadia Account.

What is an Arcadia Account?

An Account is a user-owned smart contract that holds user's initial deposited collateral and the borrowed funds. An Account can execute logic—swap, borrow, stake, withdraw, repay. Users are able to use their Account to interact with third-party protocols just like they would do with their normal wallet with the difference that the assets within an Account can be used even when they serve as collateral to back debt. The Account holds, manages and liquidates user collateral.

Does Arcadia custody assets?

No, never. The protocol is fully permisionless, non-custodial and open.

Has Arcadia been audited?

The Arcadia protocol has been audited by top security firms including Nethermind, Trust Securities, Renascence (Bytes032/HollaDieWaldfee/MiloTruck), Pashov Group and Sherlock.

How does Arcadia minimize smart contract risk?

We use industry best practices and tooling and strive to have 100% test coverage of our code. Our smart contracts are publicly open. We have performed six security audits prior to launch, and have an extensive set of Foundry (fuzzed) tests available here and here. We also have circuit breakers in place that can detect suspicious contract deployments and transactions. In the event of suspicious activity, an automated pause mechanism is set up minimizing the risk of exploits.

Where does the leverage for Strategy users come from?

Farmers and traders can tap into Arcadia's lending pools to access leverage. The protocol works as a two-sided marketplace connecting users who want to put their idle capital to work by providing liquidity in our pools and earning a passive APY for doing so with users who want capital efficient leverage to boost their financial positions via Arcadia Strategies.

Are gas fees expensive?

We’ve implemented a variety of gas optimization strategies to make the protocol as gas efficient as possible. To put this in perspective, whereas deploying a MakerDAO vault will cost users ~600k gas, users will only pay ~270k gas to open an Arcadia Account. On top of this, we will deploy the contracts on Base L2 to provide users with more gas savings.

Would Arcadia need to have its own trading environment and order book?

No, Arcadia does not need its own order book or trading environment. Since Arcadia is composable we are automatically integrated with existing DEXs, like Uniswap, Aerodrome or Curve. This allows Arcadia to offer its users access to a range of DEXs without having to develop and maintain its own trading environment.

What are the fees I pay?

The Arcadia Protocol itself does not charge any fees. However, there are number of fees paid by Strategy users directly to the Lenders. These include:

  • A 7% liquidation fee, a portion of which goes towards:

    • the actor initiating the liquidation;

    • the actor that ends the liquidation;

    • the leftover majority goes directly to Lenders.

  • An interest rate fee paid by Strategy users to Lenders.

In both instances, the fees are paid directly to Lenders, not to Arcadia.

Swapping assets within an Account includes a swap fee of up to 0.1%.

How do liquidations work?

We rely on MEV bots and keeper networks to liquidate unhealthy Accounts. Anyone can start the liquidation process of an Account when the health factor drops below the liquidation threshold. In return, the liquidator who starts the process receives a percentage of the recovered funds after the auction is finished.

The liquidation itself is carried out using a Gradual Dutch Auction. Arcadia V2 introduces partial liquidations, where a liquidator can liquidate a portion of the collateral held by an Account. This allow liquidators to liquidate Accounts with a health factor below the liquidation threshold without having to liquidate the whole Account.

How can I get involved?

The best way to get involved is to join our Discord.

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