What is ‘Taking Leverage’?
Simply put, by providing Collateral you can then borrow multiple times the Collateral amount by paying an ARCH token fee to access Leverage. Here is a hypothetical Archimedes example:
- You open a position with Archimedes that has 10,000 OUSD as Collateral
- You can borrow x10 times that collateral amount.
- So, now your Total Position Value is roughly 100,000 OUSD
- This means you now earn OUSD’s base interest on the Total Position of 100,000 yield barring OUSD
What is the Underlying Asset/Collateral?
The types of assets that Archimedes leverages are called Yield-bearing stablecoins.
What are “Yield-bearing stablecoins”?
“Yield-bearing stablecoins” have the following characteristics:
- Pegged 1:1 to the USD (and in the future BTC, ETH, etc…)
- Natively appreciating: the stablecoins protocol team runs a strategy that generates yield for the stablecoin holders
- No negative yield scenario: When everything works, these stablecoin yields are always above 0% APY