Dev Update #3

August was a month with some vacations for our team members. I don’t think you are reading this update because you want to receive travel tips though, so luckily we also made nice progress on our code-base! (If I’m wrong and you do want to know the best spots in Greece, Zanzibar or Turkey, send us a dm!).

Team updates

Before we dive into the technicalities, some important team updates:

Jasper, Co-Founder and CTO of Arcadia, happily married his high-school sweetheart last month. So if you haven’t done yet, send him your felicitations (or condolences).

Secondly, Ali joined our team in August to further speed up development.

Protocol Design

As we mentioned in our dev update last month, we came up with some changes in our protocol architecture. The aim of this was to more clearly separate Arcadia Vaults from Arcadia Lending and to make our Vaults even more composable with other financial products. While in our last update it were just fancy plans and words, this month we coded it into reality.

In Arcadia Lending, we implemented lending pools with different risk tranches. As such LPs with different risk tolerances can provide liquidity in the same lending pool. Deeper liquidity is beneficial for borrowers (they can borrow more without impacting interest rates too much) and results in an overall more stable protocol.

Secondly, we made the interface between the Arcadia Vaults and Arcadia Lending more generic. Any financial product that requires users to cover open positions with collateral, can now leverage Arcadia Vaults (for pricing, asset management, risk management and liquidation).

The finalization of the ERC-3475 and ERC-3525 standards this month is already a good indication that the next generation of DeFi primitives are being built. With Arcadia we are ready to capture these new markets!

Refactoring

Less fancy but equally important is to clean up and refactor code-bases as the need arises. We challenge you to give us a better activity than rewriting >10 000 lines of Solidity tests on a hot summer month!

In our posts and documentation we always mention Arcadia Vaults and Arcadia Lending are two separate applications, but until recently, you could find the contracts for both in the same Github repo.

Today, we are proud to announce that that is no longer the case! We now have a separate repo for Arcadia-Vaults and for Arcadia-Lending. Don’t forget to star both of them if you want to follow our progress!

Risk modeling

As a recent example with a lending protocol showed, risk assessment of the assets used as collateral and well thought-out processes on how to handle undesired market situations is of prime importance.

We continue developing our risk models and have made good progress on this. We are currently working towards an on-chain model of a so-called ‘dampening factor,’ a factor that makes it beneficial for the borrower when certain assets are put together in the same Arcadia Vault. For example, when assets that are uncorrelated or inversely correlated are put together in a Vault, the volatility of the total value of the Vault will be less than the weighted average of the individual assets.

In August we have been in touch with a number of highly regarded research firms that could help us in modeling the economics of our protocol. We will keep our community updated on this front.

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That’s it for this month. Stay tuned for a next update!