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Arkadiko: Self-Repaying Loans And Unlocking Bitcoin DeFi Through Stacks
by Ethan Tan on November 18, 2021
Bitcoin DeFi continues rising as the Stacks Ecosystem sees Arkadiko (DIKO) quickly amass over $30M TVL within 24 hours of launch and now sits at $50M. The launch was one of the community's most anticipated as Arkadiko leverages the unique relationship between Stacks and Bitcoin to deliver core Bitcoin DeFi building blocks as well as a novel new product to its users: self-repaying loans.

The Arkadiko team recently shared their vision of moving Web3 forward by building DeFi on Bitcoin. To make self-repaying loans, as well as future products possible, Arkadiko has built key infrastructure that will play a major role in Bitcoin DeFi's continued emergence via Stacks, including a stablecoin, yield-earning opportunities, and a DAO.

The highly anticipated launch was phenomenal as Arkadiko immediately saw users interacting with the protocol to collateralize STX tokens to mint USDA, swap Stacks native digital assets, provide liquidity in pools, and stake Arkadiko's governance token, DIKO.
By creating a decentralized stablecoin (USDA), Arkadiko increases the utility and efficiency of assets on the Stacks ecosystem as users can collateralize their tokens (e.g., STX) for USDA and move them without volatility, providing more flexibility in the market.

To power the self-repaying loans, Arkadiko leverages Stacks' unique consensus mechanism, Proof-of-Transfer, in their design. This allows for any collateralized STX to benefit from Stacking yield, which offers a yield higher than the loan interest rate, effectively making it a self-repaying loan.

Arkadiko is also the first major Stacks Ecosystem project to launch as Decentralized Autonomous Organization (DAO). Through their DAO, the community can participate in the future direction of the protocol through its governance token DIKO which enables Arkadikans to vote on various improvement proposals, incentive mechanisms, and more.

As DeFi is still a nascent industry, it is important to know that it has risks. We've seen products and services on every protocol come under attack throughout the years and Bitcoin DeFi will surely experience similar as it grows. Arkadiko's team faced this right away, as nan attacked drained a portion of one of their liquidity pools (STX-USDA). The team acted swiftly, and with Clarity and their community's incredible support, plugged the exploit. A full breakdown was shared by the team here.

To celebrate all this success Arkadiko just launched their contributor's program where they will have:
  1. Regular office hours with core contributors on tokenomics, building protocols, and more.
  2. Supporting teams on applying to Stacks Accelerator
  3. Help with fundraising from investors who are already invested in USDA
  4. DIKO & STX grants
If you'd like to participate or contribute, the team invites you to join them on Discord.

Arkadiko's launch is not only exciting for the products it enables but because it represents both the growing Bitcoin DeFi movement as well as the potential to redefine the whole of DeFi, entirely. An era of DeFi on the most battle-tested, valuable, and held network is upon us. Stackers are ready, are you?
Ethan is an avid Stacks Community Member; he began his career in corporate finance covering the technology sector, which led him to crypto—currently, he spends most of his time tinkering new Defi products.