What is Arcanum?

Arcanum is a next-generation decentralized finance protocol designed to overcome the core limitations of traditional Automated Market Makers (AMMs). Conventional platforms suffer from high price impact on large trades, capital inefficiency, and impermanent loss. Arcanum addresses these challenges with its novel Target-Weight Market Maker (TWMM) engine. This architecture fundamentally reframes liquidity provision as active portfolio management, assigning each asset a specific target weight within the pool. By utilizing external oracle prices for trade execution, Arcanum eliminates the direct correlation between trade size and slippage, enabling highly efficient trades.

Most on-chain LP positions are unprofitable due to the inherent inefficiencies of traditional AMMs. Arcanum confronts this reality head-on. Our Target-Weight Market Maker is engineered to tackle the root causes—Impermanent Loss, LVR, and capital inefficiency. Our mission is to make providing liquidity on-chain easy, accessible, and finally, profitable.

The core of Arcanum's innovation lies in its dynamic, deviation-based fee model. Every trade is evaluated against its effect on the pool's balance: transactions that push an asset away from its target weight incur a deviation fee, while those that restore balance are rewarded with a cashback. This creates a powerful, self-regulating ecosystem where market participants are economically incentivised to maintain the pool's equilibrium. The result is a drastically more capital-efficient market that offers performance comparable to traditional AMMs with a fraction of the liquidity, while providing liquidity providers with a flexible and powerful tool for managing risk and mitigating impermanent loss.

Design Philosophy: A Professional-First AMM

Consequently, Arcanum does not aim to compete directly with user-facing swap aggregators. While a basic swapping interface is provided for demonstration, our primary role is to be a source of deep, efficient liquidity for other protocols to build upon.

Arcanum is architected with a "pool-first" philosophy, prioritising the health, efficiency, and stability of its liquidity pools. This design leads to a symbiotic relationship between two key user groups: professional traders and liquidity providers.

Professional Traders as Primary Liquidity Consumers:

The protocol is primarily designed to serve as a highly efficient backend liquidity source for sophisticated and automated market participants. Our target traders include:

• MEV Searchers

• Arbitrageurs

• Solvers and other professional trading entities

This focus is a direct result of Arcanum's core architecture, which relies on high-frequency oracle price feeds. Effectively trading with the protocol requires the ability to process this real-time data, making it inherently better suited for automated systems that can operate with precision and speed.

Regular Users as Liquidity Providers:

The crucial role for the everyday user within the Arcanum ecosystem is that of a liquidity provider (LP). By depositing assets into Arcanum pools, users can participate in a sophisticated, actively managed portfolio strategy. This allows them to earn fees generated from the high-volume, professional trading activity that the protocol is designed to attract. In this way, Arcanum empowers regular users to put their capital to work efficiently, benefiting from a market structure that might otherwise be inaccessible.

Long-Term Vision: The Revenue-Driven AO

Efficiency is not born from decentralization, but from autonomy. We reject the notion that leaderless organization are inherently effective. Instead, we believe in building autonomous systems that leverage the tools of decentralization to achieve a specific goal. This creates organisations that are not only trustworthy but powerfully efficient.

Arcanum's tokenomics are designed around a powerful concept: 100% of protocol revenue is used to directly support the protocol token's value, creating a perpetually strengthening floor price.

This establishes a self-reinforcing flywheel. As the protocol generates revenue, the token becomes stronger. A stronger token can then be used more effectively as a tool—through strategic incentives and other mechanisms—to attract more liquidity and volume, thus generating even more revenue.

The ultimate evolution of Arcanum is to become an autonomous organisation with a single, clear mandate: to strategically manage incentives and expand protocol features in order to maximise its own revenue-generating capabilities.