Breakdown

Collateral Deposit: Users deposit native assets like Aptos, Sui, and MOVE as collateral in the Arche system. These assets will be staked through liquid staking providers on the Movement chain.

Minting MSD: Once users deposit their staked assets, they may issue MSD, the native stablecoin of Arche Protocol. MSD is fully backed by the deposited collateral and pegged at a 1:1 ratio to USD.

Yield Generation from Collateral: The collateral deposited in the form of native assets or staked assets generate staking rewards. These rewards are split between the protocol's reserves and user incentives, helping maintain liquidity and operational stability.

Depositing MSD: After minting MSD, users have the option to stake it. Staking MSD offers additional yield, further increasing the protocol's overall capital efficiency. The yield generated is fed into the Protocol Revenue Pool.

Revenue and Reserve Mechanism: Staking rewards from the collateral flow into the Protocol Revenue Pool, which then distributes part of the yield to users staking MSD. A portion is retained to bolster the protocol's reserves.

Liquidation Mechanism: If the value of the collateral drops below a certain threshold, the system automatically triggers liquidation to ensure the protocol remains solvent. The Liquidation Pool is set up to absorb and redistribute the assets in case of defaults or bad debts.