Introduction

The advent of DeFi has spurred the creation of innovative stablecoin solutions that maintain stability while unlocking capital efficiency in the crypto markets. Arche Protocol is designed to serve as the cornerstone of liquidity, scalability, and reliability within the Movement blockchain and the broader Move ecosystem.

Stablecoins play a vital role in DeFi, offering a safe harbor from market volatility and acting as key units of account in on-chain transactions. However, existing stablecoin designs—especially those that rely on centralized collateral or volatile mechanisms—face limitations in terms of transparency, decentralization, and market resilience.

The need for a truly decentralized and transparent stablecoin, which supports emerging blockchains like Movement, is more critical than ever.

This is where Arche Protocol comes in.

Motivation

The decision to employ a Collateralized Debt Position (CDP) model for the first phase of Arche Protocol stems from the proven success of this design in the DeFi ecosystem. Unlike algorithmic stablecoins that are prone to de-pegging or highly centralized stablecoins subject to regulatory scrutiny, CDP-based stablecoins offer an ideal balance between decentralization, stability, and transparency.

Arche Protocol allows users to deposit crypto-assets— from native crypto-assets, such as MOVE, SUI, APT, to liquid staking tokens (LSTs) like vSui, stAptos, and staked MOVE—as collateral, providing robust and decentralized backing for MSD, our native stablecoin. This collateralization model ensures the value of MSD remains stable, even in periods of heightened market volatility.

The second phase of Arche Protocol employs delta-neutral hedging strategies, maximizing yield for users while maintaining stability, creating a risk-managed environment that appeals to both retail and institutional users. The combination of staking rewards from LSTs and hedging strategies for market-neutral positions ensures the long-term health of the protocol, making Arche a sustainable, yield-bearing stablecoin.