Aark Digital is a derivatives decentralized exchange built on Arbitrum. The testnet was launched in April 2023, and its open beta service started in July 2023. ^[1][2]

Overview

In the Aark ecosystem, liquidity providers contribute capital to form a pool that traders can utilize, generating fees. Traders execute trades against this pool, and Market Makers help manage risk for Liquidity Providers by capitalizing on arbitrage opportunities. ^[1]

In September 2023, Aark Digital introduced USDCoin Gas Payment. Traders have the option to enroll in Aark Digital's USDC Gas Payment program, which allows them to conduct trades without the need to cover Ethereum gas fees or obtain multiple wallet signatures. This process enables traders to access a Trading User Experience (UX) similar to that of a centralized exchange (CEX) with a single signature. ^[3]

From May 1st to May 26th, 2023, Aark launched its first meme contest called "The Great Thread & Meme War" with two sectors: Twitter Thread (with 10 winners) and Meme (with 20 winners). A total of 1,000 USDC was allocated in prizes. To participate, users needed to post their content on Twitter, tagging @Aark_digital, and then submit the link for each item through the designated Discord channels, using the hashtags #Memes for Memes and #Share-tweets for Twitter Threads.^[6]

Architecture

Aark Digital Liquidity Pool (ALP)

Aark Digital introduced the single-sided LP feature, which allows liquidity providers to use assets like stETH, BTC, USDC, and others for liquidity provision without needing exposure to a variety of assets. Aark Digital also offers a Leveraged LP option, enabling liquidity providers to increase the size of their LP positions and potentially earn a higher APR, of up to 5x. ^[1]

Aark Digital's Liquidity Pool is stated in USDC. When users open an LP position, the value of their position is denominated in USD balance, indicating their share in the Virtual USD pool at Aark Digital. Virtual USD is a collateralized debt position pegged to USDC. ^[1]

The pool's value is affected by trading fees and traders' Profit and Loss (PnL). When a trader incurs a loss, it increases the pool and the LP's USD balance, while a profit payout decreases it. ^[1]

To provide liquidity, users need to deposit assets as collateral to open their LP position. These collaterals are displayed in their LP account as a USD balance, determined by the weight ratio. Users can deposit any whitelisted assets of their choice as collateral and have the opportunity to earn profits while holding onto these assets. They also have the option to optimize their earnings and achieve delta-neutral positions by depositing a single asset at a time. ^[1]

Nitro LP

Nitro LP is an event for early users interested in providing liquidity to the ALP. By participating in Nitro LP, users can optimize their leverage ratio and obtain rewards designated for each tier, such as LP Rebates and Airdrops. ^[1][4]

Users earn 50% of the total trading fees as rewards for providing liquidity to the ALP. Nitro LP provides additional rebates to Liquidity Providers, in addition to the original LP yields. These rebates are sourced from the remaining 50% of trading fees. Consequently, for the Degen Tier LP, the rebate amounts to 80% of the 50% trading fees. ^[4]

Parallel Market Maker (PMM)

Parallel Market Maker is a new AMM architecture that mirrors actual liquidity data from order books of major centralized exchanges, helping to reduce the price impact on traders. This enables arbitrage opportunities across over 300 pairs, including assets in the Super Long Tail category. ^[5]

AARK Token

AARK is the fee-earning governance ERC-20 token of Aark Digital, and its total supply is 100,000, 000. Token stakers receive a portion of 40% of the fees generated within the protocol. Additionally, they acquire escrowed tokens, establishing a passive income stream. For traders, staking AARK provides access to discounted fees. Similarly, LPs can enhance their leverage by staking AARK, thereby potentially increasing their returns. ^[7][8]

AARK allocation is as follows: ^[3]

• Genesis Incentives (4%): For community members contributing in the early stages of Aark Digital. Used for rewards like Early Bird ALP and Point Mining.
• Community Rewards (31%): Allocated for community-driven activities such as Trade Mining, Token Staking, and Early Incentives. Also covers rewards for community contributions.
• Early Investors (16.3%): Reserved for participants in the Seed investment round.
• Future Investors (4.7%): Set aside for potential fundraising in additional investment rounds.
• Team (20%): Reserved for the Aark Digital core team.
• Ecosystem (17%): Allocated for various purposes within the Aark Digital ecosystem, including Testnet Airdrops, rewarding future contributors, partnerships, marketing campaigns, providing liquidity, and DEX LP Rewards.
• Core Contributors (4%): Assigned to individuals/entities actively supporting Aark Digital in its initial phase.
• Advisors (3%): Distributed as rewards for those providing guidance and catalyzing growth in various areas like investments, partnerships, community, and business.

Utility

The AARK token in Aark Digital has three primary utilities: ^[7]

1. Fee Distribution: AARK stakers receive a share of 40% of the trading fees on Aark Digital. Of this, 50% goes to Liquidity Providers (LPs), and 10% is allocated to the Ecosystem. These fees are earned in the form of USDC.
2. Rewards Options for Stakers: Stakers of AARK have two choices for rewards - compounding and claiming. Compounding involves staking pending Multiplier Points and Escrowed AARK (esAARK) rewards. Higher Multiplier Points lead to enhanced rewards. Claiming immediately transfers pending esAARK and rewards to your wallet.
3. Utility of esAARK: esAARK can be utilized in two ways. Firstly, it can be staked to earn rewards on a 1:1 basis with the standard AARK. Secondly, it can be vested for AARK over a one-year period, during which esAARK is converted into AARK on a pro-rata per-block basis. It's important to note that esAARK is non-transferable.

Additionally, AARK serves as the governance token of Aark Digital. Once the DAO is launched, it allows for improvement proposals regarding various parameters (like liquidation threshold, Ecosystem allocation, rewards, fee structure, audits, etc.) and the introduction of new products and features (such as perpetual options, NFTs, listings perps, spot, RWA, multichain, and order book).

Furthermore, AARK can be staked by traders to receive tiered fee discounts.

Airdrop

An airdrop was planned to be launched during the open beta period for those who participated as early liquidity providers. In total, there are 500,000 AARK tokens allocated for distribution. By participating as an early and consistent Liquidity Provider, users have the opportunity to earn APRs exceeding 90% solely through the token rewards they receive. ^[8]

Funding

In July 2023, Aark Digital closed its seed round with Delphi Digital leading, alongside participation from OKX Ventures, Big Brain Holdings, and Keyrock. ^[9]

Partnerships

Aark Digital x Keyrock

Keyrock is a digital asset market maker. The company is present in more than 85 centralized and decentralized platforms offering services such as on-chain liquidity provision, market making, OTC trading, and venture investments. The key components of this partnership include on-chain market making, initial liquidity bootstrapping, and financial expertise and insights. ^[10]