Dev Update #1

It’s been a while since we did our last development update, so let’s dive into some of the progress we made last month!

Team expansion

We continued growing and expanding our team. Last week, Zeki joined us on our mission to bring generalized collateral management to web3. Zeki has a background in software development, focusing on machine learning applications and data magic. He has been involved in building out real-life (????) blockchain communities, spreading the good web3 vibes all around. At Arcadia, his initial focus will be on full-stack blockchain developments towards our testnet launch, shifting towards developing risk models for our mainnet protocol later on. Say hi!

Paper Trading Game

As we hinted in one of our previous articles, we want our upcoming launch on testnet to be attractive and fun for our users. While we believe lending protocols are very useful, we doubt that taking out fake loans on a testnet can be categorized as “attractive and fun”. So we decided to add a secret ingredient that instantly turns any boring task into something fun: Competition!! Yay!

We will introduce Arcadia Finance’s lending protocol as a paper trading competition on testnet. After walking through a small step-by-step guide on how to use our platform, each user starts with an initial vault with a paper value of $1M.

To participate in the competition, users can trade assets and take out loans to leverage their positions.

We build a custom “Tokenshop” on testnet to mock an exchange. Here, users can trade their initial (paper) USD for a series of popular (paper) tokens (ERC20, ERC721 and ERC1155!!). As explained in a previous article, by using Arcadia’s lending logic, users can build leveraged positions or even short certain tokens.

The competition will last for one month, and the owners of the top vaults will off course be rewarded 😮.

For the paper trading competition, the goal is to use most of the pricing, factory and vault logic we have written for our core-lending platform. We had to make a few small changes though. To keep it very transparent which functionalities are changed and which are native to the lending protocol, all Paper-Trading-Contracts inherit from the Core-Lending contracts, and override those functions where functionalities have to be tweaked. To give an example, deploying a new Vault is identical in both applications, except that you start with $1M worth of test-assets in the Paper-Trading-Vaults:

Upon launch on testnet, we’ll update you with a more detailed list of which functionalities have small tweaks in them to accommodate the paper trading game.


This month we started working on implementing the front-end. At this point we have most of the essential components of the dapp working functionally, but the designs are yet to be finalized.

A challenge in any decentralized app is not only the interaction with the smart contracts, but also to ensure the entire experience runs smoothly without loading-times that remind us of dial-up internet. Since you can’t run before you learn how to walk, we decided to first implement every functional component of the application and optimize the architecture. Improving the user-experience and prettifying the app will be done as a second step the coming weeks.

As an example, you can see a screenshot of the current version of the Tokenshop. It’s still missing certain features and has a rather bland look, but the interactions work and you can actually buy and sell assets within your Vault!


As you can see in the previous paragraph, the web-app is nicely taking shape, but there is still some work to do on the design. While certain minimalists might prefer the black-and-white look, we prefer a bit more color!

For the general design of the web-app and our lending page, we are working together with a great designer. While still a draft sketch, we can already share some first iterations, let us know what you think about it! Next up are new, custom illustrations.


Did the oracle tell Morpheus the future? We don’t know, and yes, Matrix references are always a good idea to dox your age. On top of handpicking a selection of memes and article writing at Arcadia, we are at the stage where our testnet protocol needs information from outside the blockchain. Until now, simple mocked oracles with singular values were used. This was solely done to prevent it becoming a bottleneck during tests and local deployments. With the team’s expansion, we are working on a more sophisticated oracle system.

As most of you are aware, from the early days of DeFi on, price-feeds have always been a vulnerability to protocols. Recently, the Luna-Terra aftermath made it clear that even for our testnet launch, we need to be able to provide a reliable oracle. It was always in our to-do list to add failsafes for when oracles do not behave as expected, so we decided to prioritize the oracle system for the testnet launch. The first step was to improve singular value responses. We are working towards our testnet oracle backend system, where we will be able to provide the mainnet prices of assets to our testnet price-feeds. On top of it, we do a few sanity checks for each of our price-feeds:

  • Check that the oracle updates every x minutes. If the last update was too far in the past, an emergency procedure is started.
  • Check that the oracle price is between a minimal and maximal accepted price as defined in the aggregator.
  • The emergency procedure includes e.g. that users cannot take on additional debt based on value coming from an asset for which the oracle behaves undesired.

We are still working on more failsafe mechanisms to deal with extreme volatility.

Security Audit

Apart from extensively testing and reviewing our code ourselves, we also started a security audit of the core lending contracts by an external security firm.

Not because we do not believe in our own capabilities, but as a “””great””” man once said:

“It is not a world of OR, it is a world of AND!”

— Smets, 2022

The audit results should be coming in starting next week. After implementing the auditors feedback, the audit will be published for all to see.

Open Positions

Are you a student looking to land an internship in Web3 (or you know someone)?

Then check out the two open internships we have:

That was it for this month! As the testnet launch is nearing, we will provide another update entirely dedicated to it, with more information on how you can participate, and win!



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Arcadia Finance

Arcadia Finance


Building infrastructure to solve collateral fragmentation and illiquidity for all types of assets on Ethereum and beyond.