Warning: Archimedes is not yet live and therefore the offerings described in this document are not accessible to users yet. Do not fall for scams!
Summary:
3CRV/lvUSD Liquidity Pool
Our 3CRV/lvUSD Liquidity Pool on Curve.fi is the lifeblood of our Protocol. It supplies the much needed Liquidity to lend to our Leverage Takers (Borrowers) when they open a leveraged position.
- 3CRV are the USDT, USDC, DAI stablecoins in the pool
- lvUSD represents Archimedes leverage token. Learn more here
Liquidity Providers (Lenders) deposit 3CRV stablecoin funds (USDT, USDC, DAI) to this pool and in return they receive a top-of-market APY. That liquidity is then used in the following way:
- When 3CRV in the Pool is in excess, Archimedes can then increase it’s ‘Leverage Cap’, making new leverage available.
- This allows Leverage Takers (Borrowers) to then borrow the new available liquidity/leverage to open a leveraged position.
- Once a Leverage Taker opens a leveraged position, lvUSD is ‘minted’ and swapped in our liquidity pool for 3CRV, which is then swapped for OUSD to open the position for the user.
This new available leverage is limited to maintain the pool balance.
Why Provide Liquidity to Archimedes?
At Archimedes we are committed to providing Liquidity Providers, regardless of position size, with:
- Top-of-Market APY
- Diversified returns
- Low Risk/Reward
- Ability to ‘Set and Forget’
Most Curve pools are unable to absorb a lot of liquidity without harming the APY due to fixed CRV emissions. Archimedes’ Liquidity Pool is different as its APY is primarily achieved with dynamic emission rewards from our native ARCH token and on a lesser scale the standard Curve pool CRV rewards.
Providing liquidity to our 3CRV/lvUSD Pool has 4 key benefits that we discuss here in this article.
1. ‘Top of Market’ APY
Providing an attractive and APY for our 3CRV/lvUSD Liquidity Pool is essential for our Protocol and Ecosystem to succeed. To achieve this we took the following approach with our liquidity pool’s rewarding:
- Dynamic Pool Emissions - We designed an Emissions approach to avoid overinflated rewards for our Liquidity Pool which traditionally harms the sustainability of the token and protocol. We use an innovative and Dynamic Emission Schedule:
- We identify a desired market leading Pool APY
- We only use the required amount of ARCH tokens for rewards to achieve this APY
- This is dynamic and changes constantly based on ARCH price, Supply and Desired APY
- Year 1 Pool Rewards are limited to 0.3% - 6.7% of total ARCH supply.
- ARCH Token Utility - Our native token is used for pool rewards and it has utility, which means its value comes from ‘Real Activity’. Leverage Takers (Borrowers) can only open a leverage position by purchasing access to Leverage (lvUSD) with our native ARCH token. This leverage fee ensures a high demand for ARCH tokens which in turn ensures the value for our 3CRV/lvUSD Pool Liquidity Providers that are rewarded in ARCH tokens. Learn about ARCH token here.
2. Diversified Returns
Current Pool incentives consist of our native ARCH token. To further promote a healthy Ecosystem, Archimedes is planning to implement a system to distribute a diversified APY from ‘Real Yield’. The protocol currently collects 3 types of fees which are sent to the Archimedes Treasury and contribute to reward the 3CRV/lvUSD Liquidity Providers:
- Leverage Fee
- Origination Fee
- Performance Fee
Fees are collected in both ARCH tokens and the Collateral Asset (OUSD) to further diversify the Protocol’s Treasury. Learn more about our Fee Structure here.
The ‘Leverage Fee’ is paid in ARCH tokens by Leverage Takers during our ‘Leverage Round’. This ‘Leverage Round’ acts like a Dutch Auction (we call it here G(r)eek Auction) where the price of Leverage (lvUSD) lowers over time until it is all acquired or it hits a bottom price, whichever happens first. This promotes market price discovery and maximizes the value of our ARCH token which is sue to pay for Leverage (lvUSD). Learn more about the Auction here.
Leverage Takers (Borrowers) are required to pay the Leverage Fee and Origination Fee upfront when opening a position. This helps to increase the protocol's revenue and treasury used to reward Liquidity Providers.
3. Low Risk/Reward
Archimedes has incorporated many risk mitigation mechanisms to its Protocol and Ecosystem. Here is a brief overview of those. Such as:
- Curve Pool Imbalance Risk Mitigation
- Underlying Assets Risk Mitigation
- Smart Contract Risk Mitigation
You can read more about these Risks and how Archimedes mitigates them here
As Archimedes adds more collateral asset options to our Leverage Takers, it will help ensure that the Curve pool is diversified across different types of assets. Currently, we use only OUSD as collateral but we will be adding many more after launch. Check out our Product Roadmap
4. Set and Forget
We know how important it is for Liquidity Providers to be able to “Set and Forget” their capital while knowing they have the ability to make an attractive APY. Our attractive APY removes the need for Liquidity Providers to continuously move capital and chase ever changing APY’s in other pools.
Also, there is no ‘locked period’ or any other type of restrictions. You can deposit and withdraw your liquidity in our pool at any time.
Our pool does not rely on CRV emissions and therefore can support large positions, removing the need for Liquidity Providers to split larger funds across different pools.
Monitor the Pool: You can monitor balances and health of the 3CRV/lvUSD Pool on our Dune Dashboard here.
Archimedes is an experimental protocol and carries significant risks: Smart contract risk, economic model risk, risk that the assets Archimedes introduces and many other types of known and unknown risks.
Archimedes' team never provides investment advice. This article is NOT financial advice. DYOR.
Participate at your own risk.