DeFi Guide: Arkadiko self-repaying loans with stSTX

Introduction:

Arkadiko offers self-repaying loans by collateralizing STX tokens and minting USDA stablecoins. It has been one of the first DeFi protocols on Stacks, and new opportunities are emerging within Arkadiko by using stSTX.

For the Stacking DAO community, Arkadiko presents an exciting opportunity to leverage their stSTX tokens and unlock the potential of stablecoin liquidity within Stacks DeFi ecosystem.

Using stSTX on Arkadiko to Mint USDA:

Minting USDA stablecoins on Arkadiko is a seamless process that allows for stacking DAO users. Here’s how to get started:

• Connect Your Wallet: Head over to the Arkadiko and connect your wallet containing your stSTX tokens
• Choose stSTX vault: In the Borrow section, select the stSTX vault option
• Select Your Collateral: Choose the stSTX amount to be used as collateral for minting USDA stablecoins
• Specify the Amount: Enter the desired amount of USDA you wish to mint
• Confirm and Execute Review the transaction details and confirm the minting process to finalize the transaction

Understanding Liquidation Ratio, Stability Fee & Liquidation Penalty

To ensure the stability of your position, it’s essential to understand key metrics such as:

Liquidation Ratio: This represents the minimum collateralization ratio (collateral to debt) required to prevent the liquidation of your stSTX position.

If your collateralization ratio is below 140%, your position will be liquidated. In this case, the collateral is the stSTX position value, while the debt is the USDA-minted value.

Stability Fee: The stability fee is the interest rate charged on the outstanding debt so on the USDA minted.

Liquidation Penalty: If your collateral falls below the liquidation ratio, a 10% penalty may be applied to your stSTX collateral.

Leveraging USDA in Other DeFi Protocols:

The possibilities are many once USDA stablecoins have been successfully minted on Arkadiko using your stSTX collateral. Stacking DAO users can:

• Provide liquidity to pool pairs on decentralized exchanges like Bitflow
• Lock USDA LP pairs to earn additional rewards
• In the future, USDA maybe be used as collateral for borrowing assets in lending platforms to unlock further DeFi strategies and opportunities

Conclusion:

With Arkadiko, Stacking DAO users can harness the power of their stSTX tokens to access stablecoin liquidity and explore diverse DeFi applications within the Stacks ecosystem and beyond.

By minting USDA stablecoins, users showcase the Stacking DAO impact on DeFi growth and how it unlocks new yield opportunities.

As Arkadiko continues to innovate and evolve, Stacking DAO users can look forward to an exciting journey of unlocking new DeFi strategies and opportunities while staying connected to the thriving Stacks ecosystem.

Stacking DAO Details:

‍Mint stSTX today and earn up to 10% yield on your STX: https://app.stackingdao.com/

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