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Traders access margin to trade spot with leverage
The value proposition for traders is simple: trade with leverage on existing Decentralised Exchanges (DEXs), use advanced order types and cross-margining, while remaining completely self-custodial.
Centralized exchanges (CEXs) dominate the crypto trading market, but they are not transparent or trustless, which leaves users vulnerable to security breaches and lack of control over their assets. Decentralised Exchanges (DEXs), like Uniswap and Curve, offer trustless trading and have deep liquidity, but they are limited in their trading capabilities. They do not provide leverage to trade, cross-margin capabilities or advanced order types.
Arcadia allows traders to trade with leverage on the most liquid DEXs and with the best execution, providing the most secure and advanced trading experience available. To be able to trade, the user must first open a margin account and deposit assets into the account.
A trader wants to build a leveraged ETH long position against the dollar (USDC).
- 1.The trader opens an Arcadia margin account and deposits $10 000 worth of ETH into the account.
- 2.The trader borrows $40 000 USDC from the LP pool, which is deposited into the margin account.
- 3.The trader swaps the USDC to ETH using our Trade tab.
- 4.The trader has now ETH with a total value of $50 000 in the margin account and a debt of $40 000 USDC. He managed to take a 5x leveraged long ETH position against USDC.
Arcadia is the only leveraged decentralized margin account that allows traders to place limit orders. This is made possible through our margin accounts, which can accept Uniswap V3 liquidity pool (LP) tokens as collateral.
Behind the scenes, the way Arcadia executes a limit order is by minting 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. For the trader, executing a limit order in Arcadia is a single click.
The total value of assets in an Arcadia margin account are available to trade (initial collateral + borrowed funds). The borrowed and traded assets are deposited back into the margin account and are factored in when calculating the overall collateral value of the margin account. This means that the positive P&L of trades can offset any losing trades (cross-margin).
Arcadia is not a DEX. Arcadia does not need its own order book or trading environment. We are integrated with existing DEXs, like Uniswap or Curve, and compose their smart contracts within the Arcadia protocol. This allows Arcadia to offer its users access to a range of DEXs without having to develop and maintain its own trading environment. Also, not having our own orderbook allows us to execute every swap via the most liquid DEX achieving the lowest slippage for each trade.
While perp protocols are siloed and leverage can only be used for speculation or hedging, Arcadia enables users to use leverage across the broader DeFi ecosystem. So it’s not only margin trading, but lending, farming, governance, etc, with leveraged assets.
Also, a perp is a derivative contract and besides the additional price risk that the mark price deviates from the spot price, users lose rights to the underlying token's utility. Arcadia users, by contrast, truly hold the asset they trade. This is particularly important for tokens with some form of utility (voting, liquid staking tokens, yield, etc). With Arcadia the asset owner is fully entitled to any yields, airdrops etc, while a perp contract holder is not. This means that users can still vote, stake, earn yield, and claim airdrops while holding and borrowing against the underlying asset in Arcadia.
Finally, because spot DEXs are permissionless and execute atomically, Arcadia can route transactions over multiple pairs/DEXs and achieve deeper liquidity for certain pairs than perp exchanges, and in some cases, better execution than CEXs, like Binance.