Soft-Peg Stability

KYC’d users who can mint and redeem arcUSD, can take advantage of price dislocations across arcUSD secondary markets to realize a profit. arcUSD can always be minted and redeemed for 1 USDC (when coverage ratio is at or above 100%), so when its price differs from this value, arbitrageurs can come in to profit from the price divergence restoring the peg.

As arcUSD liquidity expands to trade on multiple chains and decentralized exchanges. Users can monitor the markets to conduct the arbitrage, when this is possible.

When arcUSD < USDC

When arcUSD is worth LESS than USDC on a secondary market, rather than minting on Arcana, a user could:

1. Buy 1 arcUSD for 0.95 USDC on a DEX

2. Redeem 1 arcUSD from Arcana receiving 1 USDC (note that this only applies when arcUSD coverage ratio is 100% or above.)

3. Profit from the price divergence until the peg is restored

When arcUSD > USDC

When arcUSD is worth MORE than USDC on a secondary market, rather than on Arcana, a user could:

1. Mint 1 arcUSD using 1 USDC from Arcana

2. Sell 1 arcUSD on a DEX for 1.05 USDC

3. Profit from the price divergence until the peg is restored