If you've journeyed with us since our v1 days, you'll remember our initial traction with leverage on stablecoins. Now, in v2, leverage remains at our core and it's evolved based on the invaluable lessons from our early days. Our primary drive? Sustainability.
With our revamped v2, we've crafted a leverage model that benefits everyone in the ecosystem. Liquidity Providers (LP), Leverage Takers (LT), and the Protocol all without relying completely on ARCH token emissions. Users can expect top of market yields and returns in the assets that they care about.
At its core, leverage in Archimedes allows users to amplify their potential returns. This is achieved by borrowing assets to increase the size of their position. How do we ensure this system is sustainable and beneficial for all?
1. Depositing Assets: As an LP, you deposit your WBTC into the WBTC/lvBTC Curve pool (this will take many forms in the future as we expand to new chains 😉) . This pool acts as the primary reservoir of funds that will be borrowed and leveraged by LTs.
2. Earning Yields: In return for your deposit, you are paid for providing this liquidity and facilitating other users to borrow WBTC. Depositors will be paid out from the yield and fees generated by the LTs who are leveraging the assets provided. More on this later.
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As a leverage taker, you are borrowing the lent asset and swapping (if necessary) to the other assets needed to deposit into the strategy of your choice. For example, if you’re interested in leveraging a position in the ETH/alETH strategy, you will be borrowing WBTC and swapping this for ETH / alETH. This effectively opens a short position on WBTC and a long position on ETH/alETH.
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1. Providing Collateral: Before you can leverage, you need to provide collateral in the form of ETH, WETH, USDC, or WBTC. This collateral is then multiplied by the multiplier you select to calculate the exact amount of assets you will be borrowing.
2. Borrowing and Earning: Once your collateral amount and multiplier are chosen, your borrow amount will show right above the Approve button. These borrowed assets will then be deposited into the specific strategy the user has chosen to leverage.