Let's dive into current problems and ways of solving them

What problems Arcanum solves

The number of ETFs in the TradiFi world is growing every year; now there are more than 7 thousands of them, and the volume of their total assets exceeds 9 trillion US dollars.

However, by now the ETF as a financial tool hasn't found its place in the DeFi arena and crypto in general. We see only a few products released by centralized institutional players which are greatly limited to be accessed by the retail users.

Surprisingly few attempts to create truly decentralized ETFs can be explained by the complexity of sustaining the ETFs price on the volatile crypto market. We do not claim absolute correctness of our approach, but DeFiโ€™s capabilities enable us to create a decentralized, permissionless indexes protocol with farming and trading opportunities where every ETF is managed by the DAO.

The ultimate goal of Arcanum is to provide greater asset management opportunities for users and expand the frontiers of DeFi through employing the best TradiFi concepts for the benefit of decentralized web.

Arcanum is highly scalable and establishes an explicit framework through its protocol to set up new pools and thus issue ETFs which by itself makes the space diverse and more accessible.

Arcanum aims to bring explicit value to the DeFi space due to:

Low-fee swaps

Arcanum enables extremely cheap swaps beneficial for arbitrageurs and traders in the ecosystem.

New derivatives market

Arcanum creates a new derivatives market around Arbitrum altcoin tokens. With the Arcanumโ€™s growth, all the underlying assets get greater exposure and traction too - anyd listing case on a DEX or CEX for an ETF is followed by increased volume and additional user base for the respective index tokens.

Unsurpassed innovation

Arcanum brings innovative solutions to Arbitrum that combine new DeFi primitives, expansion into new markets and utility to a different asset type. This can potentially attract more retail users and institutional players.

Decentralized ETF are capable of filling the missing piece of the DeFi investment landscape without the need for regulators who may take another decade before giving a crypto index fund the green light to trade on a regulated exchange.

The whole point of the decentralized ETF is it gives access to investors who canโ€™t (because of regulations, mandates, etc.) or wonโ€™t (because itโ€™s hard, different, scary) access all these tokens.

Diversification and risk management

ETFs offer a number of advantages over investing in individual DeFi tokens. This means that you are not exposed to the risk of any single DeFi token. Speaking of protecting investors, DeFi index funds are instrumental in reducing risk. They allow investors to hold a group of diverse tokens and get exposure to a broad array of assets, representing a sector or a theme. Thatโ€™s far less risky than actively trading between positions and picking winners and losers.

Crypto sectors' dynamic reflection

Thematic / ecosystem-based ETFs allow investors to express a targeted view on dynamic sectors that are leading the way in crypto like infrastructure, DeFi, stablecoins, NFTs, AI and more.

As an example:

  • A stablecoin ETF due to oneclick diversification into a basket of dollar-pegged assets enables users to hedge against depegging of one stablecoin,

  • A yield ETF allows to diversify between different crypto yield generation tokens and get a passive management:supply in one click, algorithmic management maximizing the risk/yield ratio

Arcanum protocol roadmap

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