Arrakis Finance review

2022 has not exactly been a good year for many DeFi protocols. So, it comes as a huge surprise when we see a project’s TVL grow by over 50% in the last 30 days. Arakis Finance, a practically unheard-of project, has racked up over $1 billion in TVL. These figures are hugely impressive.

The overall DeFi TVL fell 51% from $224 billion on April 1st to $109 billion on May 30th. But, Arrakis Finance has fared better than nearly all significant DeFi projects. From the beginning of 2022 until June, the TVL increased 680%.

Arrakis Finance defines itself as ” Web3’s liquidity layer, which at its core acts as a decentralized market-making platform, enabling projects to create deep liquidity for their tokens on decentralized exchanges.”

Arrakis Finance Aims to Solve DeFi Problems

The DeFi platform is a response to the issues that many web3 projects are now facing:

  1. Next-generation AMMs such as Uniswap v3 offer significant liquidity efficiency. But these often result in further complexity and risk to LPs.
  2. The multi-chain ecosystem increased liquidity fragmentation and made managing liquidity significantly more expensive.
  3. Projects are compelled to devote unnecessarily much time and money to difficult subjects like active liquidity management and cross-chain liquidity provision.

Moreover, Arrakis, formerly G-UNI, has worked towards addressing these problems since its debut. The protocol has shown extraordinary growth on all imaginable metrics. Arrakis Finance accounts for a huge part of the liquidity on Uniswap v3.

A quote from the project’s co-founder, Ari Rodriguez, sums up Arrakis’s mission. He said, ” Arakis aims to become the liquidity layer of Web3 by creating a common platform where market makers and projects can collaborate to create a deep liquid market for their tokens. Projects will no longer have to deal with the intricacies of the underlying AMM, and their liquidity can be increased.”

Arrakis Vaults

Prominent DeFi projects such as Frax, Aave, MakerDAO, Olympus Pro, Synthetix, and many others have embraced Arrakis vaults since the release of its v1 version. Arrakis Vaults provide one of the greatest collateral/liquidity positions for many of these protocols. From all indications, Arrakis is an interesting project.

According to documents from the platform, passively holding an ERC-20 LP token in Arrakis vaults exposes an LP to the basic automated strategy effectively. This promotes bottom-up innovations in liquidity aggregation, like those seen on Uniswap v2 type AMMs (Liquidity Mining, Protocol Owned Liquidity, and LP tokens as collateral), in more effective but also more intricate markets like Uniswap v3.

Moreover, Arrakis paves the way for a fresh field of decentralized market innovation with the potential for tokenized products like:

  • Sophisticated multi-positions on concentrated AMMs
  • Cross-AMM positions
  • Liquidity as a Service Strategies
  • Cross-chain strategies
  • Auto-Hedged delta-neutral LP positions
  • LP positions coupled with lending/borrowing or options markets
  • Cross-chain strategies

The protocol’s ultimate goal is to bring together, develop, and maintain the best practices for providing effective DEX liquidity that is publicly available to anyone and easily integrated with the rest of DeFi. This way, Arrakis promotes deeper and more reliable liquidity for a variety of projects and use cases across the web3 ecosystem.

The $SPICE Token

Arrakis utilizes the $SPICE token to help it achieve its goal of decentralization. The token’s function is to enhance the Arrakis protocol with transparent governance and new incentive mechanisms. $SPICE will serve as the native governance token for Arrakis and will work similarly to the CRV token in the Curve ecosystem.

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