‘Our goal is to be a vertically integrated DeFi hub that serves all your liquidity needs’ —…

Ömür Çataltepe
2021-06-13 21:31:10

‘Our goal is to be a vertically integrated DeFi hub that serves all your liquidity needs’ — Interview with Philip Desmedt


Stacks ecosystem is rapidly growing. Especially in May, elite Bitcoin startups have started to be supported by Stacks Accelerator.

In this article, I interviewed Philip Desmedt about Arkadiko, a stablecoin built on Stacks for Joinfreehold’s Behind the Scenes series!

Stacks Accelerator invests in outstanding startup teams building on the Stacks Blockchain. There is another program for supporting open-source startups. The Stacks Open Internet Foundation’s grant program supports projects that serve user-owned internet mission.

The Arkadiko Protocol is one of the great startups supported by the Stacks Foundation!

I tried to ask all the potential questions you might wonder. If you have other questions, please send an email about that to Philip.

If the hyperlink doesn’t work, you can email philip.desmedt@gmail.com!

Ömür: Tell me about yourself

Philip Desmedt: I’m Philip, one of the founders of Arkadiko. In the past, I was CTO and co-founder of an HR tech SaaS company which we sold in 2019…

I’ve been in Bitcoin since 2013 and was excited to see Stacks launch on mainnet in January of this year.

We are a team of 4 people today and are all focused on DeFi, so getting traction for DeFi on Stacks is one of Arkadiko’s main priorities.

Ömür: What is Arkadiko?

Philip Desmedt: Arkadiko is a decentralized, non-custodial liquidity protocol where users can collateralize their assets and mint a stablecoin called xUSD. This enables lenders to gain increased liquidity in the form of a soft-pegged US dollar stablecoin, while maintaining original asset exposure.

“Our goal is to be a vertically integrated DeFi hub that serves all your liquidity needs, whether it’s minting a stablecoin, lending, borrowing or swapping tokens.”

Sounds exciting, isn’t it?

Ömür: What problems are you aiming to solve?

Philip Desmedt: Arkadiko is built on the Stacks blockchain and is a first-of-its-kind initiative to bootstrap a flourishing Stacks DeFi ecosystem. Our primary objectives are:

  1. Increase utility and efficiency of assets on the Stacks blockchain
  2. Establish xUSD as the decentralized, asset-backed stablecoin of Stacks.
  3. Kickstart Decentralized Finance on Stacks by providing an essential DeFi building block.

Ömür: How will you solve the problems?

Philip Desmedt: We focus on building the infrastructure that is needed to build other (DeFi) applications. This starts with our stablecoin xUSD. More specifically, applications that need stable value can start integrating xUSD to enable trading, lending, swapping, prediction markets, gaming, gambling, e-commerce, etc.

Ömür: Which point of Arkadiko will serve the User-Owned Internet mission?

Philip Desmedt: We allow people to use and leverage their assets by minting stablecoins against them. They never give up control or custody of these assets, but lock them in smart contracts. As a result, Arkadiko is a completely non-custodial and permissionless smart contract-based system without a middle man.

Ömür: What kind of risks can exist in Arkadiko?

Philip Desmedt:

Risk 1:

As with any borrowing smart contract, liquidations can occur. Liquidations may occur when the value of STX drops to a predetermined price point. Basically, the collateral isn’t enough to cover your debt anymore. Your liquidation price will be shown before opening an Arkadiko vault. The price of STX will be fetched from the Arkadiko on-chain oracle. When your vault gets liquidated, an auction will be started to sell off your STX collateral in exchange for the amount of xUSD that you minted, plus a penalty. The above risk is mitigated by the fact that your STX are stacked in PoX and thus are interest-bearing. This will help your collateralization level to stay stable through minor price changes.

Risk 2:

Arkadiko uses smart contracts written in Clarity, so like with any other DeFi protocol, there are chances of smart contract bugs and exploits. However, we have rigorous security audits pending before going live on mainnet so worry not!

Ömür: Is there any earn-a-yield model for stackers?

Philip Desmedt: Yes, there are several ways that stackers can earn yield.

  • We build upon PoX. This means that any STX you deposit as collateral in an Arkadiko Vault will automatically be stacked for you.
  • We introduce a token called DIKO. DIKO is the Arkadiko governance token, which represents the cash flows of the Arkadiko protocol, included but not limited to stability fees and borrowing/lending commission fees. The main function of the DIKO token is to stake it in Arkadiko to obtain stDIKO tokens, which have several benefits. First, stDIKO can be used to participate in governance voting to change collateral type parameters such as liquidation penalties, stability fees and debt ceilings. Second, Arkadiko will buy up DIKO tokens from the open market using xUSD revenue from stability fees and burn the DIKO. We’re not saying DIKO has value… but there might an incentive to HODL.

Oh… and once Liquidity Provider (LP) tokens through Automated Market Makers (AMMs) hit on Stacks, you will be able to stake your DIKO/xUSD LP tokens as well, so no need to choose between one or the other.

Many thanks to Philip Desmedt for accompanying our interview.