From top to bottom, Aark’s architecture, or Aark-itecture, is full of unprecedented innovations DeFi has been eagerly anticipating.
The perpetual trading landscape is primed for disruption. Aark emerges as the vanguard, pioneering a novel Perps 2.0 architecture that transcends the limitations of its legacy counterparts. For traders seeking unparalleled efficiency, maximized profitability, and an intuitive user experience, Aark's innovative approach represents a paradigm shift.
Built from the ground up, Aark's proprietary code base stands untainted by pre-existing protocols; we have not a single line of code forked from counterparts. This meticulous dedication has culminated in an exemplary security posture, earning a perfect 10/10 score from industry-leading auditors Hacken and Secure3.
Choose ANY asset in DeFi, earn yields
Aarkitecture allows for a hyper-diverse set of assets for liquidity provision. Beginning from the basic assets such as ETH, ARB, stablecoins, Aark is the first perp DEX that allows for LST and RWA for LP, enabling dual yields. These account for around half of the entire DeFi TVL.
Innovation doesn’t stop here: Aark-itecture has the capability to broaden its horizons to include LP tokens. Uniswap v2 LP tokens, Uniswap v3 NFT positions, Curve USDC-USDT pool tokens, or any other tradable asset with liquidity can be added to the Aark pool to generate yields. This includes aUSD tokens and Aave USDC pool tokens, which users receive upon lending to Aave. These categories make up approximately half of the DeFi space.
This revolutionary feature can also enable AARK-ETH Uniswap v2 LP token as collateral, strongly incentivizing users to provide liquidity for AARK on DEXs without separate token incentives.
Any asset that’s looking for additional yields on DeFi? Aarkitecture is ready.
Higher APR for LP; More liquidity for trader
With 5x leveraged LP, LPs can earn 5x higher APR. The increased LP amount in turn provides more depth for traders. Leveraged LP is fee-free.
Traditional leveraged yield farming protocols, which borrow from lending pools, saw lending rates skyrocket. The Aarkitecture design removes uncertainty from cost.
Leveraged LP can be understood as an LP version of perpetuals:
As such, the following can be said about leveraged LP:
RMM enhances trading experience
RMM (Reflective Market Maker) utilizes oracles to retrieve order book data from CEXs. For example, RMM retrieves data on the amount of liquidity in Binance’s ARB-PERP market and simulates the same liquidity on to Aark’s pool. As a result, traders can experience a price impact/slippage the same as trading on Binance.
If a token has sufficient liquidity on a verified exchange, RMM ensures that Aark’s markets are as liquid as the most liquid exchange.
Please refer to our simulation results to better understand how we designed this algorithm to be safe.
RMM not only enhances the trader’s liquidity, but also maximizes the scope. Because RMM retrieves liquidity data from other exchanges, Aark is capable of simulating liquidity from all 205 perp markets currently available on Binance. If any other CEX/DEX provides trading for a high-demand token, Aark is capable of being one of the first to list it.
Scalability makes pool safer + profitable
Aark can scale 16x more than Perps 1.0 DEXs.
In the case of legacy GMX, the pool counterparties the entire OI. For Aark, the longs-shorts counterparty each other, and only the surplus is counterpartied by the pool.
As such, in a long 53: short 47 OI, the long 47 counterparties short 47. Only the surplus 6 is counterpartied by the pool. This has three effects:
No more baskets
Aark-itecture allows for users to deposit any single asset they want into AALP to earn yields. Users may also opt for multiple assets, in any ratio they desire.
Despite diverse user segments, legacy perp DEXs only allow LP in the form of baskets or a handful of stablecoins. In the case of baskets, not only are users forced the exposure to unwanted assets, but also limited choices due to the inability for the basket to comprise too much diversity.
Currently, single-sided LP is limited to Vertex, Gains(only DAI) and Hyperliquid(only USDC) among industry leaders. Gains is the only pool-DEX that has this differentiation but is limited to DAI. Aark is the sole single-sided LP with hyper-diversity that is able to meet diversified user needs.
Balanced OI enables delta-neutral LP
Skewness measures the imbalance between long-short OI. If long:short OI ratio is 60:40, skewness is 20. Aark-itecture places a cap to this skewness. The cap is calculated by multiple factors, including the size of the liquidity pool, marketcap of the token, and size of simulated liquidity.
In an example case, if SOL rises rapidly and all the shorts are liquidated, the OI may be heavily skewed towards longs. If the streak continues more opportunistic traders will be opening longs, making the majority of SOL traders profitable while the pool will continue to lose. Thus, in a volatile market, LPs may leave due to such instability, reducing liquidity for traders and exacerbating volatility.
This is where the skewness cap comes in. If the SOL market has a skewness cap of 20 with a long-short OI ratio at 60:40, traders will not be able to open additional long positions until the skewness is balanced out. This provides time for arbitrageurs to open short positions to earn funding fees while also ensuring that the pool be exposed to less directional long exposure, or in other words, delta-neutral.
Provide onchain arbitrage opportunities
Aark introduces price discovery similar to CEXs: the mark price is the unique trade price on Aark. The advantage of this is that, with a unique price, arbitrageurs can exploit opportunities between Aark and any other exchange. Such arbitrage opportunities help keep the OI balanced and the pool to be less directionally exposed.
Oracle-based DEXs inherently lack price discovery. To price assets, they create an index that aggregates prices from other exchanges. The downside is that it is exposed to oracle manipulations as seen in the case of GMX’s AVAX hack. This limits exchanges from providing various trading markets.
No more JIT manipulations
JIT(Just In Time) liquidity manipulates a pool-based market by enabling opportunistic LPs to earn fees without taking on potential risks or costs. In the case of Uniswap v3, JITs have diverted yields that mid/long-term LPs would otherwise have received. JITs have also been active even on perpetual exchanges where fundings are usually paid out every 1 or 8 hours.
To remove any such misappropriation, Aark-itecture implements Streaming Funding Fees where fundings are paid out every block. This ensures that LPs receive every penny in exchange for their liquidity provision.