Protected Single Pools
Protected Single PoolsOverviewDepositing into a StrategySharesStep 1: Navigate to the Strategies PageStep 2: Select Your Desired StrategyStep 3: Open a PositionStep 4: Deposit Your AssetsWithdrawing from a StrategyStep 1: Navigate to the Strategies PageStep 2: Identify the Strategy to Withdraw fromStep 3: Manage Your PositionStep 4: Withdraw Your AssetsTaking LeverageRisksGeneral RisksBeta Pool RisksGuardrailsRisk 1: Significant Impermanent LossRisk 2: Depegging EventsRisk 3: Price DivergenceHealth ChecksPool BalancePool AllocationStrategy SelectionAPYTVLRiskPerformance FeesClaiming RewardsFrequently Asked Questions (FAQs)
Archimedes is launching Protected Single Pools as the first step towards Omnipools and Archimedes’s new sustainable leverage product. Our official roadmap can be found here.
The Protected Single Pool is a specialized contract that wraps around an existing yield-bearing pool contract, such as a Convex boosted pool. This wrapping contract introduces 'guardrails'; these are protective measures designed to mitigate the risk of significant impermanent loss, which can occur during volatile market conditions or if the pegged value of assets in the pool diverges significantly. These guardrails act as a safety mechanism, protecting your investment from extreme comparative asset value fluctuations.
⚠️ Warning: We do not protect against single asset value fluctuation such as ETH decreases in price due to market conditions. Crypto assets are risky, invest at your own risk.
Depositing into a Strategy
Users can directly deposit their assets into Protected Single Pools. The kind of asset you can deposit depends on the main asset of the pool you're investing in. For instance, if you're investing in the alETH strategy, you can deposit either ETH or wrapped ETH. Please note that at this time, the protocol is designed to accept deposits of main asset types like ETH, wrapped ETH, and does not include the underlying protocol tokens of the strategy like alETH, msETH, or pETH.
When you're preparing to deposit your collateral, the user interface will clearly indicate which types of assets are acceptable for deposit.
When entering the amount of collateral you would like to deposit, the UI will dynamically update to account for this number. Underneath the ‘Deposit’ field, you will see the following text “=X.XX Shares”. This number represents your share of the vault youre depositing into.
INSERT GRAPHIC HERE
This graphic should show what happens when a user deposits ETH into an ETH strategy.
- Deposits 10 ETH
- Goes into ETH Vault that had 90 ETH and is now 100 ETH
- Shows the 100 shares in a vault
- Show that 10 of the shares belongs to the user that just deposited
Step 1: Navigate to the Strategies Page
Start by visiting the Archimedes Strategies Page on the platform. This page provides a comprehensive list of all active strategies available for investment.
Fig n. Strategies page UI that displays 3 ETH strategies and the “Suggest Strategy” card
Step 2: Select Your Desired Strategy
Each strategy represents a different pool. Review the details of each strategy to understand the potential returns and risks. Select the strategy that aligns with your investment goals.
Step 3: Open a Position
Once you've chosen a strategy, locate the 'Open Position' button associated with that pool and click on it.
Step 4: Deposit Your Assets
After clicking 'Open Position', you'll be directed to a dedicated page for the chosen strategy. Here, you can manage your investment in the strategy. To deposit your assets, enter the amount you wish to deposit, approve, and execute the transaction.
Remember, the type of assets you can deposit depends on the main asset of the pool you're investing in. The user interface will clearly indicate which types of assets are acceptable for deposit.
Withdrawing from a Strategy
Step 1: Navigate to the Strategies Page
Updated Dashboard page COMING SOON
Start by visiting the Archimedes Strategies Page on the platform. This page provides a comprehensive list of all active strategies. To provide visibility into which strategies youre invested in, the button thata previously showed “Open Positon” will say “Manage”.
Step 2: Identify the Strategy to Withdraw from
Each strategy represents a different pool. Locate the strategy from which you wish to withdraw your assets.
Step 3: Manage Your Position
Once you've chosen the strategy, locate the 'Manage’' button associated with that pool and click on it.
Step 4: Withdraw Your Assets
After clicking 'Manage’', you'll be directed to a dedicated page for the chosen strategy. Here, you can manage your investment in the strategy ro navigate ‘Back’ to the strategy page to select a different position. To withdraw your assets, enter the amount you wish to withdraw and confirm the transaction. The same collateral you deposited will be available for withdrawal.
Remember, the withdrawal process may take some time to complete, depending on the network congestion at the time.
Users have the option, in the future, to take leverage when depositing into the Protected Single Pool. This involves borrowing funds to increase the size of their deposit and potentially boost their returns. However, taking leverage also increases risk, and users should be aware of this before choosing to take leverage. More information on taking leverage can be found in the upcoming leverage document.
Smart contracts are always a risk with any protocol and Archimedes is no exception to this. The risk lies in Archimedes guardrail contract, the boosted yield protocol’s contracts, and the underlying protocol of the original pool’s contract. Impermanent loss is always a risk. Although Archimedes strives to protect you from this, the ‘guardrail’ algorithm acts as a stop-loss rather than a risk mitigation system. For example, if a pool depegs by 15%, Archimedes might exit you with a 5% loss but it will still be a realized loss. We are unable to predict the price movement of strategies underlying assets and only protect you when assets fluctuation drastically. The goal is to protect users from dramatic price changes and large risk.
Beta Pool Risks
Beta Pools on Archimedes will be unaudited smart contracts. This means they are high risk of exploitation, and a high chance that funds might be lost. Archimedes always develops with security in mind and follows all best practices possible and we prove that with extensive auditing. Beta pools simply have not gone through this auditing process yet therefore cannot be deemed ‘safe’.
The Protected Single Pool employs a system of 'guardrails' to protect your investments. These guardrails are designed to mitigate various risks associated with yield farming such as depegging and significant impermanent loss, . Here's a closer look at each risk and how the guardrails work to protect your assets:
Risk 1: Significant Impermanent Loss
Impermanent loss is a risk associated with providing liquidity in pools of assets. It occurs when the price ratio of the assets in the pool diverges significantly from the initial ratio when the deposit was made.
Guardrail: If the price ratio of the assets in the pool starts to deviate significantly, the Protected Single Pool will trigger an automatic withdrawal into the primary asset of the pool. All assets and pools are different therefore the guardrail might be different depending on the strategy. For example This mechanism helps to protect users from significant impermanent loss due to price volatility. Note that you can still incur impermanent loss but the guardrail will define that amount. Think of this as a Stop-Loss on the underlying liquidity pool.
Risk 2: Depegging Events
Depegging events occur when a stablecoin or a pegged asset loses its peg to the asset it's supposed to represent, leading to significant price volatility. Examples of “pegged” assets would be Lido’s stETH which should very closely represent the same USD price of ETH. This is particularly relevant for strategies with similar asset pairs like ETH/alETH or USDC/eUSD.
Guardrail: The Protected Single Pool monitors the value of each asset in the strategy. If it detects a significant deviation from the primary asset’s value, it will automatically withdraw the funds into the primary asset, protecting your investment.
Risk 3: Price Divergence
Price divergence can occur in pools with different types of assets, such as USDC/LDO. While one asset (e.g., USDC) may remain stable, the other asset (e.g., LDO) could significantly increase or decrease in value.
Guardrail: The Protected Single Pool monitors the weight of the assets in the pool. If it detects a significant divergence in weight, it will automatically adjust the position to minimize potential losses.
To protect users from depegging or any of the above mentioned risks, Archimedes has an algorithmic health check that polls the health of the underlying assets within a strategies liquidity pool.
Each pool will have its own thresholds based on the assets the pool is comprised of. For beta, the threshold for a 50/50 pool will be a 20%+ depeg of an asset or pool imbalance. For example, if ETH (50%) / alETH (50%) falls to ETH (69.99%) / alETH (30.01%), all funds in the pool will be withdrawn back to the ETH vault and wait for the pool to rebalance.
When depositing to underlying liquidity pools within a strategy, the algorithm makes sure that Archimedes funds do not make up more than 33% of the total value locked within the pool.
For example: Archimedes provides 100 ETH to the ETH / pETH pool. After the deposit, there are 1000 ETH and 1000 pETH in the pool. This means Archimedes pool ownership is 10% of the total value locked within the pool. Iif the pool balance changes to around 300 ETH / 1700 pETH, the algorithm withdraws ETH from the pool to meet the <33% health criteria.
When withdrawing ETH to reach sub 33% ownership, the algorithim withdraw enough ETH to brings the Archimedes pool ownership down to 20%.
Graphic to come
Strategies that Archimedes builds on top of are chosen based on a number of factors including APY, TVL, and risk. The goal is to select strategies that offer the best potential returns while minimizing risk.
The APY for the strategy must make sense based on the risk profile of the strategy. For example, if there is a DOGE / PEPE pool earning 4% APY, it would not make sense to add this as a strategy since the underlying assets are very high risk with extra reward.
Ideally the underlying liquidity pool, to become a strategy, needs as much TVL as possible. The more TVL the more efficient the market, the safer it is for users and Archimedes, and the less of an impact Archimedes has on the pool when depositing or withdrawing. The Minimum TVL considered for these selections was $1.0m.
For beta strategies, risk is mainly arbitrary and based roughly on time since launch, doxxed team, TVL, protocol authority, history, and relationships with related asset protocols. The Protocols Archimedes deploys on top of also have their own extensive risk frameworks that vet each protocol before agreeing to deploy a pool for them.
This will be more clearly defined going forward
Users also have the opportunity to submit their favorite protocols and liquidity pools for consideration. To submit a strategy suggestion, fill out the strategy submission form on the Archimedes platform.
Submitted strategies will be put into ideation and go through the Archimedes governance process. More information on the governance process can be found here.
Archimedes receives revenue through a Performance Fee. This fee is taken for protecting and auto-compounding users positions. When claiming rewards from an underlying liquidity pool within a strategy, Archimedes siphons 10% of the rewards into the treasury. This fee is subject to change in the future based on governance proposals, the 10% is the initial decided upon value. After the fee is taken, the remaining rewards are then redeposited into the strategy to compound.
FutureValue = Principal*(1+(Rewards - Fees)/N)(N*Time)
N = number of times compounded yearly
As a user, you do not need to claim rewards as Arhcimedes automatically claims them for you, removes a small fee, and compounds the rest. On Ethereum Mainnet, gas can add up fast so rewards are checked every day to make sure gas price is <1% of the total rewards claimable. If gas will be >1% of total rewards, nothing will be claimed or compounded.
Therefore, as a user deposited into a strategy on ETH mainnet, you might not see rewards accrued on your dashboard until they have been claimed by the algorithm.
Rewards are only reflected on “My Dashboard” when claimed from the underlying strategy.
Frequently Asked Questions (FAQs)
- What is a Guarded Single Pool? A Guarded Single Pool is a wrapper on top of a yield-bearing pool contract that has built-in guardrails to protect against significant impermanent loss.
- How do I deposit into a Protected Single Pool? You can deposit your assets directly into the Protected Single Pool via the Strategies Page. The assets you need to deposit will depend on the requirements of the underlying yield-bearing pool.
- Can I take leverage when depositing into a Protected Single Pool? Yes, you can choose to take leverage when depositing into a Protected Single Pool. This involves borrowing funds from Arhcimedes ‘Earn’ vaults to increase the size of your deposit. However, taking leverage also increases risk. For more information about leverage, you can check out the Leverage Docs.