Introduction
As the decentralized finance (DeFi) ecosystem matures, new platforms emerge that challenge traditional finance and continually redefine the DeFi landscape itself.
Arkis is such a platform, offering undercollateralized leverage that enables advanced investment strategies with significant potential returns. This article provides an overview of the various use cases for Arkis, catering specifically to institutional investors and professional asset managers.
Overview of Use Cases
Arkis leverage is characterized by its flexibility, cross-margining, and the array of strategies it enables. From leveraged long and short positions to pairs trading, liquid staking derivatives (LSD), leveraged yield farming, and delta-hedged pools, Arkis provides the necessary infrastructure and capital for sophisticated DeFi trading.
Leveraged Long
A leveraged long position is one of the simplest ways institutional investors can utilize Arkis. In this case, an investor borrows funds from Arkis to purchase a token they believe has high price increase potential. If the investor’s prediction holds true, they stand to gain multiplied returns due to the leverage.
This is a powerful tool for capitalizing on bullish market sentiments and is a significant improvement over conventional overcollateralized lending protocols, as Arkis allows up to 5x leverage.
Opening Leveraged Short
With Arkis, opening a leveraged short position is straightforward and potentially more lucrative than with other DeFi platforms like AAVE or Compound. Here, you use a stablecoin, like USDT, as collateral to borrow a token, such as ETH, and immediately sell it for USDT. Any subsequent decrease in ETH’s price relative to USDT is beneficial as you’ll spend less USDT to repurchase the ETH you owe, allowing you to profit from the price drop.
Arkis’s advantage lies in its ability to facilitate up to 5x leverage, compared to the overcollateralized limitations of other protocols.
Pairs/Spread Trading
Arkis’s portfolio margin approach introduces a revolutionary solution for pairs or spreads trading.
Take, for example, an investor who expects the price ratio between ETH and wETH to converge. They could take a long position on ETH and short wETH, but traditional platforms, like AAVE, only evaluate each position individually, potentially leading to premature liquidation. Arkis, however, aggregates profits and losses at a portfolio level, preventing unnecessary liquidations and optimizing profits.
Liquid Staking Derivatives (LSD)
LSD, one of the largest crypto narratives in 2023, presents an appealing use case for Arkis.
By leveraging the deposited ETH into an LSD protocol, like Lido or FRAX, investors can significantly increase their annual percentage yield (APY), pushing returns from a typical 4–7% up to 15–20%.
Leveraged Yield Farming
Arkis shines in the realm of leveraged yield farming as well. Traditional DeFi strategies, such as depositing stablecoins into Curve and boosting LP rewards with Convex, often yield modest returns.
By providing leverage on stablecoins, Arkis can supercharge returns, enabling investors to potentially earn up to 10–12% on their stablecoin holdings.
Delta-Hedged Pools
Delta-hedged pools are widely adopted by hedge funds in the DeFi space.
The idea is to hedge LP exchange rate risk/Impermanent Loss by taking a short position. However, the drawback of hedging LP with short perpetual futures or lending protocols is the need for more information about long exposure in Uniswap LP, which can lead to undesired liquidation. A
Arkis addresses this by locking all positions and collateral in a smart contract, aggregating total portfolio profit and loss. This mitigates exchange rate risk and allows investors to boost their total APY by taking up to 5x leverage.
Implications for Institutional Investors
The launch of Arkis marks a significant turning point for both the DeFi landscape and institutional investors. By providing leverage powered by cross-margining across protocols and chains, Arkis expands the range of options available to institutional investors, allowing them to engage with DeFi in more complex and potentially profitable ways.
This development has profound implications for the adoption and evolution of DeFi. As these sophisticated tools and strategies become more commonplace, DeFi becomes increasingly attractive to institutional investors. This increased interest and participation could lead to a significant influx of capital into the DeFi ecosystem, driving its growth and maturity.
Moreover, the innovative features of Arkis, like the portfolio margin approach and leveraged yield farming, set new standards for DeFi platforms. As a result, it is likely to spur a wave of innovation as other platforms strive to match or exceed these capabilities, accelerating the pace of evolution in the DeFi space.
For institutional investors, the benefits are clear. Arkis’s offerings allow institutions to diversify their portfolios and engage in previously difficult or impossible strategies within the DeFi space. This expands their potential for profit and opens up new avenues for portfolio optimization.
In essence, Arkis kickstarts a maturing DeFi ecosystem, one that is increasingly sophisticated, versatile, and appealing to institutional investors. As more institutional investors enter the space and more platforms strive to match the innovation set forth by Arkis, the future of DeFi appears brighter than ever.
Takeaway
In an ever-evolving DeFi landscape, Arkis emerges as a versatile and powerful tool for institutional investors. By pioneering the portfolio margin approach and providing capital for leveraged long and short positions, spread trading, liquid staking derivatives, leveraged yield farming, and delta-hedged pools, Arkis facilitates a new generation of investment strategies. Moreover, its ability to provide up to 5x leverage gives investors an upper hand in capitalizing on market movements and maximizing returns.
The true power of Arkis lies not just in the individual strategies it enables but in how these strategies can be combined and optimized at the portfolio level.
The aggregation of profits and losses across a portfolio minimizes the risk of premature liquidations and allows for more nuanced and dynamic investment strategies. By unlocking these capabilities, Arkis is leading the charge in the next wave of DeFi innovation, offering institutional investors a robust platform for maximizing their DeFi potential.
About Arkis
Arkis — DeFi Prime Broker offers multichain, undercollateralized leverage powered by portfolio margin. Author Oleksandr Proskurin is the Co-founder and Chief Product Officer.
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