How To: A Guide to Collateralizing stETH with ARCx
In this guide, we walk you through how to navigate ARCx, mint STABLEx using stETH, and how to earn additional rewards using ARCx LP tokens.
Lido’s stETH is a liquid staking solution for Ethereum staking rewards. stETH has grown rapidly since its December launch and currently represents more than $300m+ with 180,000+ ETH staked in contracts. A key component of stETH is the wider integration and use-cases across DeFi allowing for additional yields and liquidity benefits for holders. When properly integrated, stETH will represent a fully-liquid, yield-bearing Ethereum with wide applicability across the Ethereum DeFi ecosystem.
In order to improve the productivity and liquidity of stETH across the Ethereum space, Lido has integrated with ARCx. Through the use of ARCx, users will be able to use stETH as collateral to mint STABLEx, further improving the composability surrounding staked Ethereum.
The Lido DAO has committed to allocating 100,000 LDO tokens for the first month of this initiative whilst ARCx will be allocating 125 ARCX tokens (1.25% of total token supply). The estimated APY will not be live in the ARCx interface until March 9th, at which point this post will be updated.
Additionally, Lido’s LDO token will be allocated to reward users who mint STABLEx and provide additional STABLEx liquidity through ARCx’s farming infrastructure. ARCx has committed to allocate their own native governance token - ARCX - to encourage further stETH adoption.
The process of collateralising stETH using ARCx is as follows:
- Deposit stETH and mint STABLEx.
- Provide STABLEx liquidity alongside USDC/USDT/DAI to a Curve Metapool.
- Stake Curve Metapool LP tokens to earn LDO and ARCx rewards.
Please note, you MUST stake your Curve Metapool LP tokens in order to earn LDO and ARCx, you cannot simply provide STABLEx liquidity! Users have to mint their STABLEx and provide them as liquidity along with 3pool LP tokens to the Metapool. Please note that closing your position or reducing your minted STABLEx can result in your ARCx and LDO rewards being slashed by a bot.
What is ARCx?
ARCx is a synthetic asset protocol that unlocks the liquidity of your interest bearing assets through the ARCx stablecoin STABLEx.
Users can provide their interest bearing assets as collateral and borrow STABLEx tokens (ARCx’s native stablecoin). The current interest bearing assets that are supported are yUSD, ibETH, xSUSHI, cUSDC, imUSD and now StETH.
Step 1. Minting STABLEx using stETH
ARCx allows you to mint STABLEx tokens by providing stETH as collateral. This effectively means that you are borrowing STABLEx tokens whilst your stETH is staked, and in cases where your health factor falls below a certain level, you will get liquidated and lose a portion of your staked tokens.
Using your stETH on ARCx requires you to wrap your stETH using the Lido wrapper. Doing so alters the rebasing mechanism of your stETH so that, instead of receiving rewards through a daily supply rebase, your earned rewards will be realised when you unwrap your stETH.
- Visit stake.lido.fi/wrap to wrap your stETH tokens.
- Visit app.arcx.money/mint.
- Connect your Ethereum wallet.
- Choose the amount of wstETH to deposit, as well as the utilisation ratio percentage. A higher utilisation ratio allows users to borrow more STABLEx tokens, but also exposes the user to higher liquidation risk.
- Press ‘Mint’ and confirm the transaction using your Ethereum wallet.
A number of terms exist which need clarification. These are displayed on the minting menu.
- Current Price: The current price of one stETH.
- Collateral Ratio: The proportion of collateral value / loan amount.
- Minimum Ratio: The minimum collateral ratio needed to execute the loan.
- Liquidation Price: Price of stETH at which you will face liquidation penalty.
- Liquidation Penalty: The size of the penalty in case of a liquidation.
- Interest Rate: The interest cost associated with minting STABLEx.
Step 2. Add STABLEx To Curve Metapool
The STABLEx tokens which are minted from your stETH can be provided to a Curve Metapool together with USDC/USDT/DAI for additional yields and liquidity benefits.
To stake your STABLEx tokens in a Curve Metapool, visit app.arcx.money/exchange. The process for staking your STABLEx is as follows:
- Navigate to the ‘Deposit’ tab in the top right corner.
- Choose the amount of STABLEx to deposit.
- Choose the amount of secondary tokens to deposit into the Curve pool. Your options are USDT, DAI or USDC.
- Confirm the expected output - balance and max slippage - and press deposit once ready.
- Confirm the transaction in your Etherem wallet.
On app.arcx.money/farms you should be able to see the total expected yield from ARCx and LIDO tokens.
Please note the ARCx APY is based on the assumption of a $65m Fully Diluted Valuation and could be subject to change when the ARCx token is liquid in the coming weeks.
Step 3. Staking LP Tokens in Reward Contact
Users can stake their Curve LP tokens to earn additional LDO and ARCx tokens allocated by the respective DAOs. The Lido DAO has committed to allocating 100,000 LDO tokens for the first month of this initiative whilst ARCx will be allocating 125 ARCX tokens.
The estimated APY will not be live in the ARCx interface until March 9th, at which point this post will be updated.
To access the reward contract, navigate to app.arcx.money/farms. Here you are able to see the corresponding amount of LP tokens you have staked, as well as the tokens you are earning, and the end date of the program.
The rewards contract address is available at: etherscan.io/address/0x8F1155447Ee97b5Ae147a01a5c420B0FDDF0370D
Please note that ARCx tokens are not claimable until the token goes live and LDO rewards will not be claimable for the first few days as a security measure.
Check loan status
Users can check on their loans in the ARCx vaults. Here, users will be able to see the amount of collateral they have deposited, the collateral ratio of their loan, their status (risk level of loan), and the amount of STABLEx they have borrowed.
Where to get stETH