How can I earn money with ARTH Loans?

Although, the primary use case of ARTH Loans is not generating revenue, instead it is for users to take out seamless loans in a stable valuecoin, that is resistant to inflation. DeFi users, however, can generate revenue via:
  • Liquidating low CR% loans
  • Depositing ARTH valuecoin to the Stability Pool to earn liquidation rewards. Stability Pools always gives a net positive reward overtime.
  • Participate in various staking/LP pools with partner projects and earn rewards in MAHA and partner tokens.

Pre-requisites for taking out a loan?

  • A metamask wallet
  • Collaterals in the form of WETH, WMATIC, DAI
Please note: If you are familiar with only the ETH chain, you will have to bridge your tokens to Matic. This can be done simply with a few web searches. Here is the bridge link: https://wallet.matic.network/bridge/

Pre-requisites for becoming a Stability Provider?

To become a Stability Provider, you need ARTH valuecoin.
$ARTH can be borrowed by putting in collateral in the form of opening a loan position. Alternatively, you can also buy $ARTH from the open market directly from a DEX like Dfyn.

What is the gas fee compensation?

To make liquidations profitable, the borrower needs to keep away a gas fee compensation at the time of borrowing ARTH. The current gas fee compensation is 5 ARTH or $10. This is significantly lower than the average gas fees on the ETH chain. Hence, Polygon Network.

What is the minimum requirement to create a loan position?

A borrower can only take out a loan, by creating a debt position of not less than 250 ARTH or $500.

Stability Pool

Whenever a loan position is liquidated, the collateral used to fund the loan (at 110%), is returned to the Stability Pool. Stability Providers always remain in a safe and net positive position.
Liquidations happen below 110% Collateralization Ratio. Let's take a situation where:
  • Current ARTH Pooled in the stability pool: $1,000,000 or 500,000 ARTH (1 $ARTH = 2 USD)
  • You deposit $100,000 or 50,000 ARTH
  • Thus, you have a 10% stake in the Stability Pool
  • A loan position of $200,000 gets liquidated at 109% collateral Ratio
  • Collateral liquidated = Loan taken out * CR% / Current Price of collateral ($200,000*109%/3000) = 72.66 WETH
What do you pay:
  • Given that your pool share is 10%, your ARTH deposit will go down by 10% (the ARTH you added into the Stability Pool is used to settle the debt into the system) of the liquidated debt
    • Total Debt to be settled = 200,000 USD
    • Your Debt Share = 10%
    • Your Debt share = 20,000 USD (10% of Total Debt)
    • Your initial ARTH position: 100,000 USD
    • Your new ARTH position: 80,000 USD (Initial Position - Your Debt Share) .
  • In return, you will gain 10% of the liquidated collateral(72.66 WETH), i.e. 7.26 WETH, which is currently worth $21,780(Current WETH price: $3000). Your net gain from the liquidation is $1,780 USD
  • In return, you will gain 10% of the liquidated collateral(72.66 WETH), i.e. 7.26 WETH, which is currently worth $21,780(Current WETH price: $3000). Your net gain from the liquidation is $1,780 USD
Note that depositors can immediately withdraw the collateral received from liquidations and sell it to reduce their exposure to a volatile asset like ETH, if the USD value of ETH is expected to decrease.


Who can liquidate a loan position?

Almost anybody can liquidate a loan position.
The requirement to liquidate a loan position is simply:
Current Collateralization Ratio < Minimum Collateralization Ratio
Minimum Collateralization Ratio in Normal mode: 110% Minimum Collateralization Ratio in Recovery mode: 150%
For every liquidation, the liquidator will have to pay gas fees. To make sure, liquidations are profitable, a significant gas fee is kept aside at the time of borrowing a loan.
Currently, the gas fee compensation is set at 5 ARTH or $10 acc to the current GMU of $2.

Recovery Mode

What is the collateralization ratio in Recovery Mode?

The CR in Recovery Mode is 150%. While the CR in normal mode is 110%.
Yes. While the redemption fee remains the same, the borrowing fee is changed to 0% to encourage borrowing in the system.
As a borrower, simply increasing your collateral ratio to >150% will protect you from any liquidations. Thus, you will have to either a) add more collateral or b) repay some debt

Can I be liquidated if my collateral ratio is below 150% in Recovery Mode?

If you have any further questions, you'd like us to answer
Last modified 3mo ago