The following are some of our most common Leverage Taker questions:
Is my position “Locked” for the lifetime of the position?
No. You can close the position at any time (as long as there are enough funds to repay the debt). If you don’t manually close the position it will unwind itself naturally after the lifetime period and the funds can be claimed from the platform after that date.
What happens if OUSD losses peg?
We currently do not have liquidations. We are working hard to align the incentives of all parties and move away from predatory revenue models.
Here is how it works:
If the OUSD peg drops below $1 to a value where Borrowers do not have enough OUSD to pay their leveraged debt, this would typically cause a liquidation of the users’ collateral. In this scenario Archimedes will instead lock the users position until there is enough OUSD to pay the debt (either by OUSD regaining its peg or by the position earning more yield over time)
Furthermore, if the user’s position is locked and they still want to exit, they have the option to trade their position NFT in an NFT marketplace, such as OpenSea.
This non-liquidation approach may change over time and it may vary depending on the type of asset the user provides as collateral. The team will clearly outline these changes or differences to its users should they occur so that users can asses the risk / reward properly.
Why do users need to pay upfront for access to leverage?
Leverage is the act of borrowing funds. The person that lends the funds expects some compensation for lending. In our case, our Curve Pool Liquidity Providers are the lenders and the upfront payment is the source of their APY.
From a Leverage Taker’s perspective, it also gives predictability on the cost basis. It removes the need for a variable interest rate on the loan.
What happens to the NFT after the position unwinds?
Once the position unwinds (expires or the user manually closes it) and the funds are claimed we burn the NFT.
Will I lose my funds if I don’t redeem them before the position expires?
No. Your funds will be there indefinitely and ready for you to claim whenever you’re ready to do so. You simply connect your wallet that contains the position NFT, claim the funds, and Archimedes will transfer the funds to your wallet.
How are you different from other lending and borrowing protocols?
No variable costs: Borrowers pay all position costs upfront. This helps to removes the uncertainty of future fees and allows user to project their risk accordingly
The position is assigned to an NFT and not the user's wallet address: This allows users to freely trade the position on NFT marketplaces.
Original protocol and real/doxxed team: Archimedes is an original protocol. We are not a fork of any existing one.
Diversification: As we grow, we will support more protocols, increasing diversification. We envision a basket of yield-bearing stablecoins that is relatively low risk and high yield.
Risk mitigation, with a focus on quality: We mitigate risk by performing extensive due diligence and only supporting over collateralized blue chip yield bearing stablecoins (such as OUSD). Additionally, we take steps to maintain peg and pool liquidity:
Carefully regulate the leverage cap: When we allocate more leverage it is always a small percentage of the total 3CRV in the pool
Treasury: The Archimedes Treasury can be used to replenish liquidity in our pool
Aligned incentives with users: Unlike other protocols we do not charge liquidation fees. In fact, currently we do not have a liquidation mechanism.
How does the leveraged position change over time?
The basis APY from the underlying collateral asset (eg. OUSD) will fluctuate, which will then affect the leveraged APY.
What wallets do you support?
Currently we only support Metamask
It’s important to note that there are many different Metamask plugins and alternatives. While some work well, others are known to break. We try to test our platform with the most common compatible Metamask plugins but we can not guarantee 100% coverage.
Therefore, we advise users to only use the original Metamask with our platform. If you have used an alternative Metamask plugin and are having any issues, we recommend switching to the original Metamask. If needed you can transfer your position NFT to a Metamask wallet and manage or close it from there.
For a Step by step guide to opening and closing a position please click 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.