Dev Update #5

The last dev update was already a while ago and a lot has happened since, so time to jump into a brand new Dev update!

Protocol Launch

We are excited to announce that our protocol is on schedule for its official launch in February! This is a significant milestone for us and the result of months of hard work and dedication by the entire Arcadia team. We have made significant progress in both the development and testing of the protocol, and we are now ready to share it with the world.

As part of our launch, we are opening up registration for early access to the protocol. Interested users can sign up now via a link on our website to be one of the first to access and test the protocol when it goes live: https://arcadia.finance/signup

Risk Model

Over the past month, we’ve been focused on significantly enhancing the risk model of our protocol. We understand the importance of having a robust mathematical foundation for our collateral and liquidation parameters. We developed a simulation engine that allows us to test the protocol using historical data as if the protocol was live back then. Additionally, we’ve been creating a module to automatically generate synthetic data for various assets under different market conditions, taking into account their volatilities and correlations. This gives us a more comprehensive understanding of the protocol’s performance in different scenarios and enables us to further refine and strengthen our risk model. In an upcoming post, we’ll provide more detailed information about our methodology and findings.

Smart Contracts

Interest rate module

We have completed the implementation of our risk curves, which are now aligned with industry standards. The interest rate paid by borrowers will depend on the usage (borrowed liquidity divided by total liquidity) of the Liquidity Pool, with each pool having an optimal interest rate around the optimal usage. If the interest rate is above the optimal usage, interests rise rapidly. Conversely, if it’s below the optimal usage, interests drop gradually.

Managing margin accounts

Users who want to borrow or repay (to trade on margin) will need to have an Arcadia Vault with collateral to back their margined positions. The entire flows for opening/closing margin accounts, or increasing/decreasing margined positions, have been formalized, and all error and edge cases are now properly handled.

Refactor Risk parameters

We have also made some improvements by moving the management of risk parameters to the level of pricing modules, rather than the Main Registry. This makes the protocol more flexible to handle more complex assets, such as Uniswap V3 LP-tokens while still maintaining our high security standards. This allows different IDs of the same Contract address to have different risk factors, which in turn depend on the risk factors of the underlying assets.

Active asset manager

Assets in an Arcadia Vault are not locked or idle. We have implemented an active asset manager, which enables users to actively manage (swap, stake, etc) assets in their vault, as long as the Vault remains healthy at the end of the transaction. The active manager is customizable, so that users can implement their own (untrusted) asset management interconnectors, while still ensuring the safety of the overall protocol. The design pattern is similar to how flash loans work. More on this later.

Test Coverage:

Great improvements were made to increase the overall test coverage of the protocol. A few tests are still missing for the Liquidator and Vault, but this will be covered in the coming weeks.

Dapp

Over the past month we have been reimplementing and refactoring big chunks of what used to be the paper trading dapp (rinkeby testers will remember this). We added the Earn page which will be where Liquidity Providers interact with the protocol. We also added the UI for depositing and withdrawing assets as collateral to your margin account and a few other components. These are all not in their final version yet but we wanted to give you a sneak peak anyway.

That was it for now, see you next update!