LPing for Serious People

Arcadia Finance
4 min readMar 2, 2023

Call to Action

If you’re looking to LP in Arcadia’s launch and plan to allocate at least $25,000, we want to know. We will be providing personalized onboarding, access to a closed group of Arcadia LPs for ongoing communications with the core team and other high net worth liquidity providers, early access to all our audit reports, a special role in our Discord, a genesis margin account, and more.

If this sounds interesting, please reach out on telegram.

The protocol

Arcadia is a permisionless margin protocol on Ethereum and Optimism that allow users to borrow up to 10x more capital than they put in and use the value of their deposited assets and the borrowed capital to permisionlessly interact with any other defi protocol, all while retaining full ownership of their assets.

Arcadia protocol features a number of innovations in DeFi, including flash withdrawals, permisionless automated asset management, upgradable proxy contracts, multi-tranche pools, and more. For more information, read our documentation.

Why Arcadia is the best place for lenders to passively earn yield in DeFi?

  • Arcadia provides lenders passive exposure to DeFi yields at a competitive risk-adjusted rate of return.
  • Liquidity providers get a Yield bearing token that can be used as collateral in the wider ecosystem (e.g. not siloed).
  • Arcadia liquidity providers get real yield by accruing a percentage of the protocol’s liquidation fees for providing liquidity to our pools.
  • Liquidity providers can choose their own risk/payoff exposure for providing liquidity thanks to our novel risk tranche pool model. Learn more here
  • Arcadia’s permisionless architecture creates many opportunities for borrowers to use margin, which means that borrowers can do more with their money so LPs can have better yields than in other lending pools.
  • Collateral in an Arcadia margin account is fully isolated from the lending pools and other user’s margin accounts.
  • Arcadia has been audited by top security firms and is designed with verification logic to programmatically perform health checks when debt is issued against the assets in a borrower’s margin account. This means that the protocol is built to protect lenders from defaults by making sure that all open margin accounts from borrowers always have enough assets to cover open liabilities.

Where does yield come from?

  • Arcadia works as a two-sided marketplace. On one side, lenders deposit their funds into a lending pool. On the other side borrowers, using an Arcadia margin account, put up collateral and can borrow up to 10x more capital than they put in from the lending pool. Borrowers can use both their collateral assets and the borrowed capital to leverage long/short tokens and/or deploy their capital in other protocols.
  • Borrowers pay an interest to lenders for accessing capital from the liquidity pool. This interest fee paid by borrowers is the ‘yield’ lenders earn from providing liquidity into an Arcadia pool.
  • If there is more people that want to borrow than people that want to supply liquidity, Arcadia lenders earn a higher return on their capital.
  • So how do we make sure that lenders can sustainably earn higher return on their capital compared to providing liquidity in other protocols? Because Arcadia is built to be permisionless and fully composable, the opportunities for borrowers to deploy their borrowed capital are almost limitless. They can, for example, borrow from Arcadia to go long/short with leverage, hedge, yield farm with leverage, LPing with leverage, etc. This, in turn, creates sustainable demand for borrowing and is what makes Arcadia an attractive place for lenders to passively earn high DeFi yields by providing liquidity in our pools.

Overview of the Launch Plan

Arcadia will be launching in 2 phases: One phase for LPs (Lenders) — starting March 7th. One phase for borrowers (leverage takers) — starting March 13th. We’re launching on Ethereum and Optimism.

  • March 7th: we will open up our lending pools so only Lenders will be able to interact with the protocol.
  • March 7th to March 9th: only Degenscore Beacons + core team will be able to provide liquidity in our pools.
  • March 9th to March 13th: only people that have signed up to our waitlist (aka the OGs) will be able to provide liquidity in our pools using the wallet address we whitelisted from their waitlist application.
  • At launch, we will have a total cap of $500,000 per lending pool. Initially, wETH and USDC will be available for lending. Lending caps will gradually increase over the next several days as we hit the limit.
  • Important to note is that during this process Lenders will NOT be subject to any capital lockups. You will be able to deposit and withdraw as desired.
  • After this process, we will begin to gradually open up our pools to the public.
  • March 14th: The second phase will begin. We will open up the borrow side of the protocol.


The Arcadia protocol has been audited by top security firms including Nethermind (Aave, Argent, ZKlend, among others) and Solidity Finance (Yuga Labs, Dopex, among others). Our smart contracts have 100% test coverage in Foundry, which you can find here.

Some other risk measures we’re taking:

  • Asset allow-list
  • Flash loan resistant pricing logic
  • Supply and borrow caps
  • Two audits prior to launch
  • 24-month security partnership for new pricing modules post-launch
  • 100% test coverage in Foundry
  • Bug bounty program after going live
  • Multiple decentralized data providers
  • Fail-safes implemented
  • Best-in-class risk parameters

Connect with us

Twitter: https://twitter.com/ArcadiaFi

Website: https://arcadia.finance/

Docs: https://docs.arcadia.finance/