Arc Finance

Building a seamless multi-chain LaaS (Liquidity as a Service) protocol.

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Inspiration

We draw inspiration from Liquidity Mining which has been an invaluable resource and has been extremely successful in bootstrapping liquidity during the early stages of DeFi’s short history. It was and is an important stepping stone for the movement, leading to an explosion of product creation and the onboarding of millions of users. However the standing up liquidity for a new project is costly and inefficient. We saw the opportunity in improving the liquidity mining and we decided to decouple projects from the permanent reliance on external liquidity by creating a new mechanism called (AUM) Automated Unlocking Mechanism to promote protocol owned liquidity.

What it does

Arc Finance is a decentralized exchange for users to achieve the ultimate value of Trade to Earn through the Liquidity Premium Pool (LPP), we have introduced a new incentive scheme, we wanted to incentivize liquidity providers without the need of issuing new tokens or creating a bubble effect, our model not only solving the issue of inflation caused by bootstrapping LP, but through depositing the native token of the project we effectively remove them from the circulating supply so fewer tokens can be sold which is beneficial for the project.

Arc Finance incentive scheme works this way, users will deposit the project tokens and mint a completely new token called r token that it’s price is higher 2 to 3 times than the original asset, the price of r token is determined by supply and demand, and it’s not effected by any external macro economic effect. Why the price of r token is higher the answer as the circulation of r-token is greatly deflated, the price of r-token will be higher than the price of token.

R token will be used to direct liquidity to the project, using AUM automated unlocking mechanism which is an improved version of AMM we will lock the r tokens, users will then need to unlock their r tokens to make profit, to unlock their tokens they need to provide liquidity to ( r-token-usdt) and stake, unlocking speed is related to the unlocking speed of r-token and the proportion of staked LPs. For example, if the personal unlocking speed is ‘r1’, the individual staked LP is ‘LP1’, and the total staked LP is ‘LP’:

The more users stake and provide liquidity the faster the unlocking speed would be, the idea is the bring more participants into the network conduct more transactions and connect users which DeFi 2.0 is all about.

As for decoupling projects from the permanent reliance on external liquidity, we decided to charge a fee for every transaction using AUM mechanism where we take 50% from 3% tax rebate and add it to the liquditiy pool, the more transaction will be on the platform, the more liquidity will be added to the pool and the proejct will not be dependent 100% on liquidity providers which we call a protocol owned liquidity.

Challenges we ran into

Originally, we wanted to improve the AMM Automated Market Maker mechanisms, which proved to be a challenge at the beginning of the project and led to the development of our AUM Automated Unlocking Mechanism to improve the whole process of liquidity mining. Then we faced a problem regarding the formula to calculate the unlocking speed. Since we rely on the unlock speed to drive liquidity, we decided to add the tax rebate so we could direct liquidity from both transaction fees and the r-token unlock process.

We also wanted to reward liquidity providers and attract long-term participants. But without the need to issue tokens and create a bubble effect, we thought about how we could still protect the project side, add value to their tokens, and keep the incentive system running.

The third challenge has been to educate users as to the benefits and use cases of the Arc Finance system, a necessary and time consuming process where we have been conducting many AMAs with other communities and hosting weekly chats for our 100K+ followers.

Accomplishments that we're proud of

The first achievement we are proud of, is the product we have built and the vision we are heading towards, improving DeFi ecosystem and solving the drawback of DeFi1.0 will unlock a lot of possibilities for the decentralized finance world, and invite more users to join and benefit from it.

The second achievement is ou community, we are very grateful for the community we have built, due to the market conditions we had to postpone all the of important events, however during all these times the community always been supportive and kept believing in our mission.

The third achievement is passing the cultDAO proposal by 92% votes. Cultdao is a completely decentralized funding mechanism that allows everybody to contribute novel solutions. So we are proud that the community of cultDAO choose our project do be listed in their platform.

What's next for Arc Finance

To optimize the trading experience within the platform and help users to achieve high liquidity depth, we will provide a simple way to transfer tokens across chains different chains, so users will cross different liquidity pools from chain to chain seamlessly.

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