The Evolution of ARTH, The Next Phase

In this article, we document our learnings for ARTH and what we have in store for the next version of ARTH

In this article, we lay down the design decisions that we’ve made for redirecting $ARTH and why we believe $ARTH is going to be the most efficient and decentralized stablecoin out there.

Collateralization Ratio

The first point to address is $ARTH’s collateralization ratio. Our decision to keep $ARTH over-collateralized stems from the issues that have arisen from the previous models of $ARTH, where it was both under-collateralized and partially collateralized.

Being over-collateralized comes with the advantage of assuring stability to the peg (in the situations such as a bank run) but forgoes the ability to scale or become capital efficient. (eg: DAI, LUSD, RAI, etc..)

Being partially collateralized or under-collateralized comes with the ability to scale but runs the risk of a bank run. (eg: Basis Cash, ESD/DSD, Iron Finance, Terra UST, etc..)

Nothing changes for $ARTH. $ARTH's collateralization ratio (110–150%) is perfect and will remain the same.

Collateral Choice

ARTH on the Polygon chain is currently collateralized by the following assets - $MATIC, $USDC, $USDT, and $DAI. ARTH on the BSC chain is collateralized using $BNB and $MAHA as collateral.

Given that the Ethereum chain is the most decentralized and liquid amongst all the networks, most efforts will go towards growing $ARTH on the Ethereum chain.

All $ARTH deployments on other chains (Polygon and BSC) will essentially move to become a bridged version of $ARTH on ETH.

$ARTH on the Ethereum chain previously had $FXS and $ETH as collateral. $FXS will be removed and only $ETH will be used as collateral.

In short, $ARTH will only be backed by ETH and minted/burnt on the Ethereum chain.

Oracles

Oracles are the most common attack vector for hackers looking to manipulate $ARTH. The ideal oracle should be flash loan resistant, decentralized, and should handle black swan events efficiently.

Recently in the month of May, $ARTH suffered an attack from such an incident where an attacker was able to manipulate the oracles for one of the underlying collaterals (specifically the $MAHA price-feed which was supplied by UMB protocol).

https://medium.com/umbrella-network/post-mortem-chain-exploit-2022-05-08-6007801b321d

However, changing oracle providers to a more well-known provider like Chainlink is simply not enough.

https://beincrypto.com/venus-protocol-loses-11m-chainlink-suspension-luna-price-oracle/

In an incident involving Venus protocol, Chainlink oracles failed to update the price feeds of one of its assets causing Venus protocol to lose close to 12mn$ in assets.

The ideal architecture is one that is a mix of at least two decentralized oracle providers such that counter-party risk is minimized and appropriately distributed.

Moving forward, $ARTH will use at least two different oracles to provide the collateral price.

An oracle architecture similar to that of Liquidity protocol (link) will be used where two oracle providers (such as Chainlink and Teller) will work together to give a unified price feed.

Governance

The $ARTH valuecoin cannot function without a decentralized governing body. This is where $MAHA comes in. With our upcoming release of the governance portal, all and any upgrades to $ARTH will now have to be voted upon by the $MAHA holders.

This means $MAHA holders for the first time, will get full control of the $ARTH valuecoin. Proposals will be declared, voted upon, and passed via the governance portal in a democratic manner.

Every proposal that will make changes to the $ARTH valuecoin will go through a 7-day voting period, which will further

The governance portal gov.mahadao.com is scheduled for an upgrade soon and all features will go live in due time.

Incentives

Instead of directly setting up rewards for liquidity mining, MahaDAO will be focusing on bribes to attract other DeFi protocol users to $ARTH.

Here's an article that covers the rise in DeFi bribes and how they will play a crucial role in the growth of any DeFi protocol.

https://decrypt.co/90276/defi-bribes-are-on-the-rise

Moving forward, bribes will play a major part in growing the $ARTH valuecoin. MahaDAO will constantly set up bribes to attract higher APY for $ARTH-focused pools.

Not just that, the introduction of gauges on our governance site will also let users vote on which pools receive MAHA tokens as incentives.

Yield Farming, coupled with the right incentives through bribes and gauges will be the final piece in the jigsaw to give ARTH a new direction to thrive.

https://www.coindesk.com/markets/2021/11/03/a-look-into-curves-ecosystem-defis-centerpiece/

Final words: Design principles for $ARTH

All the points mentioned above are the reasons why we've designed $ARTH to cater to as many of the points above as possible.

ARTH is the first cryptocurrency that is an all-weather stablecoin. It fulfills the above criteria by the following means:

Decentralized and with intrinsic value: $ARTH is backed by highly liquid cryptocurrency collateral ($ETH, $BNB, $MATIC) and is decentralized with a governance token $MAHA.
Scalable & Liquid: $ARTH’s capital efficiency is based on that of Liquity.org and has most of its liquidity implemented on Curve
Black-swan resistant:$ARTH’s backing model is over-collateralized which means it is not susceptible to bank runs and the smart contracts ensure that it remains stable even during the worst market conditions.
Preserve purchasing power: $ARTH’s peg has been designed to appreciate in a bull market but remains stable in a bear market. A decentralized peg such as this allows $ARTH to maintain its 100% backing but at the same time appreciate its purchasing value over time.
Focus on Ethereum: $ARTH's liquidity will be centered around Ethereum going forwards. All business development and marketing activities will be geared toward the Ethereum chain.

Concluding Thoughts

As we conclude this article, we know that we are on a long journey to make ARTH perfect. We know that we are in the right direction and have a lot of hard work to do. And we are ready for it. We are ready to strive, struggle and fight. All this is to make sure we are growing. Every day, every week, every month. Continuously. Relentlessly.

Here is the ARTH address on the Ethereum chain: https://etherscan.io/address/0x8cc0f052fff7ead7f2edcccac895502e884a8a71

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