Introducing $ARTHX

ARTHX is a unique speculative coin that will stabilize ARTH

In this medium article, we are extremely excited to announce $ARTHX (ARTH Shares), one of the building blocks of ARTH 2.0.

We learn more about ARTHX, what makes it valuable, how the token sale will be conducted, and understand how ARTHX makes ARTH stable.

How $ARTHX works?

The stabilizing mechanism within ARTH 2.0 has a few upgrades.

When ARTH is trading above the target price (1$), arbitrageurs will buy ARTHX to mint ARTH and sell the ARTH in the open market to realize a profit. Hence, bringing the price of ARTH down to the 1$ mark.‌

When ARTH is trading below the GMU (1$), arbitrageurs will purchase ARTH from the open market and then redeem/burn the ARTH to get back the underlying collateral along with some ARTHX which is sold off in the market to realize a profit. Hence increasing the supply of ARTH to meet the actual demand for it.

Holding ARTHX is a valuable opportunity because of the following:

1. Limited sale of ARTHX based on a bonding curve
2. Buyback & burns conducted by the protocol for ARTHX holders.
3. Platform fees distributed as revenue for ARTHX holders
4. Exclusive MAHA staking pool for ARTHX holders.

ARTHX will not only absorb all the volatility away from ARTH, but it will also have long-term deflationary pressure on ARTHX.

Bonding Curve Based Sale for ARTHX

The starting price of ARTHX is set at 1 ARTHX = 10,000 ARTH. This means that initially there is a circulating supply of 2,200 ARTHX given, the circulating supply of ARTH is 22 mn at the time of writing.

However, the price of ARTHX at the very beginning is determined by a bonding curve that gives a discount to users who redeem ARTH for ARTHX earlier. The discount can be as high as 30%.

The bonding curve is based on two factors.

1. How much ARTH is in circulation?
2. How much collateral value has been locked in?

The bonding curve shows the discount a user receives. The discount exponentially decreases based on how much collateral is backed into the protocol.

To get hold of ARTHX, users need to either:

1. Redeem their ARTH for a 100% backing of ARTHX (Reducing the supply of ARTH)
2. Deposit collateral into ARTH and receive 103% back in ARTHX (Increasing the collateral value that is locked in)

There will be no pre-mine, no team-mine, no VC, or private sale for ARTHX. The initial holders of ARTHX will most likely be the largest holders of ARTHX for the long term.

Buybacks and Burn for ARTHX

ARTHX in the long term will have strong deflationary pressure that’ll make it an attractive proposition for new token holders.

A screenshot showing the protocol buying back USDT for ARTHX

The protocol issues buybacks for ARTHX if any of the underlying collateral backing ARTH becomes overvalued. This means that the excess collateral (in the screenshot, over 342k worth of USDT) is exchanged for an equal amount of ARTHX at the current market price.

Since ARTH at the very beginning will be backed by stable (USDT, USDC, DAI) and volatile (ETH, WBTC, MAHA) collaterals; this means that there can be very frequent buybacks for ARTHX that can happen in the protocol.

Platform fees for ARTHX

Aside from buybacks, the ARTHX holders also earn platform fees in each of the 6 collateral tokens.

Every action within the ARTH protocol will charge a 0.1% transaction fee in the underlying collateral. This means that ARTHX holders will earn fees in ETH, USDT, USDC, DAI, WBTC, and MAHA.

Exclusive Staking Pools for ARTHX

At launch, there will be an exclusive MAHA staking pool for ARTHX holders of over 25,000 MAHA (this amount can be changed depending on market feedback).

Staking pools are vested for periods of 1 month all the way up to 3 years. Users who stake for longer periods of time will earn more rewards than those who stake for shorter periods of time.

Users who stake in the staking pools also earn platform fees in any of the 5 collaterals as mentioned above.

Will ARTHX ever be over-mined?

ARTHX is minted when people redeem their ARTH for collateral, or when the protocol needs more collateral to support the peg. This means that there could be a possibility where ARTHX could get over minted if there is a spike in any of the activities above.

This is something that other fractional reserve stablecoins have failed to address, However ARTH 2.0 is well secured from such events. ie the protocol will:

1. Have a very high collateralization ratio (around 97–100%), minimizing the downside collateral risk to ARTHX holders.
2. Use of more stable collaterals (at launch the protocol will support DAI, USDC & USDT)

Risks for ARTHX holders

While there are many potential benefits in interacting with ARTH 2.0 and holding ARTHX, there are also risks that come along with the benefits. The risks have been outlined below:

• ARTHX can witness sell pressure when the market turns bear. When the market turns into a bear market, the net value of the underlying collateral decreases; the protocol then buys collateral in return for a discount in ARTHX to support the peg. This ARTHX is sold by arbitrageurs to keep ARTH stable and realize a profit. (To tackle this, the protocol will limit the collateralization ratio to not go below 97%, meaning ARTHX’s exposure to such an event will only be 3% worth of the total ARTH supply).
• ARTHX is a relatively new concept and can have undiscovered economic flaws.
• While ARTHX will be thoroughly audited and tested before launch, the protocol may enter unknown bugs/issues, either small or big.

Concluding Thoughts

As a community, we have achieved a lot in the previous few months. Not only have we learned during this time, but have also failed. But what will never change is our willingness to continuously improve and fight again. ARTH 2.0 is based on our experimentation and lessons, a well-planned protocol designed to fight depreciation. It’s a stablecoin, that will serve its purpose today, tomorrow, and in the coming future.

With that being said, the coming weeks will see a ton of new releases, from the Gitbooks to the Beta launch, to the actual product launch. We are as excited as you are!

About MahaDAO

MahaDAO is a community-powered, decentralized autonomous organization on a mission to empower billions to preserve their purchasing power through the world’s first valuecoin, ARTH.

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