Frequently Asked Questions
A margin account is a user-owned proxy contract that holds the borrower's initial deposited collateral and the borrowed margin. The margin accounts enable the on-chain pricing of any combination of different types of assets in a single base currency and hold, manage and liquidate user collateral for margin positions. They are non-custodial and allow its owner to actively manage the collateral held by the margin account.
No, never. The protocol is fully permisionless, non-custodial and open.
Borrowers 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 on-chain native margin in the most capital efficient way.
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 margin account. On top of this, we deployed the contracts on Optimism L2 to provide users with more gas savings.
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 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.
Limit orders are coming soon to Arcadia. Arcadia is the only leveraged decentralized margin account that will allow users to place limit orders. This is made possible through our Vaults, which can accept Uniswap V3 liquidity pool (LP) tokens as collateral.
To execute a limit order, a trader has to mint a single-sided LP token with all of their liquidity in one "tick". This process may sound complex, but our front-end abstracts it entirely for ease of use.
A 7.5% liquidation fee, a portion of which goes towards the actor initiating the liquidation.
A fee on realized interests of up to 0.5%.
A 0.1% origination fee when funds are borrowed.
Swapping assets within the vault includes a swap fee of up to 0.1%.
The active management of collateralized assets in Arcadia refers to a user's ability to use the assets held by the account as if they were in the user's own wallet (stake, withdraw, swap, claim, vote). Assets can be actively managed even when these assets are used as collateral to back debt. In other words, an Arcadia margin account is similar to a smart contract wallet, where a user can use both their own assets and credit to perform actions on-chain.
At the smart contract level, the actions work in a similar fashion to how flash loans work, with the difference that we expand the scope of it to introduce ‘Flash Withdrawals,’ a novel type of financial transaction only available on blockchains, and we make it available for all users through our dApp. For example, in one single transaction a user could:
- Withdraw any asset from their margin account (flash withdrawals).
- Borrow as much assets as they want (flash loans).
- Use both the withdrawn assets and the borrowed funds in a permissionless way in other DeFi protocols.
The only requirement is that at the end of the transaction the whole margin account is brought back to a healthy state: 1) The recipient token(s) that result from your interactions are allowed in the protocol as collateral and deposited back; 2) Their resulting value covers all debt.
We rely on MEV bots and keeper networks to liquidate unhealthy margin accounts. Anyone can start the liquidation process of a margin 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. The whole account including all its assets are auctioned for a constantly decreasing price, and the first buyer that steps in ends the auction and buys the whole account.