💵 archUSD: How Does the Dollar of the Arch Ecosystem Work? Developed by Arch Network, archUSD is more than just a stablecoin. It is the core unit of account and settlement for the ecosystem's lending infrastructure. So, what makes archUSD different? 👇 🪙 1. Every archUSD is backed by a real dollar. archUSD is backed 1:1 by USDC reserves held in custody through BitGo and Copper. In other words, the system doesn't create dollars out of thin air by using volatile assets as collateral. The dollar arrives first, and then archUSD is minted against it. 🔐 2. This is not a debt-generation mechanism. In many DeFi protocols, users deposit collateral and borrow newly minted stablecoins against it. archUSD works differently: • It doesn't create debt against a volatile asset. • There is no collateralized debt position (CDP) mechanism. • It represents an existing dollar in digital form. ₿ 3. Bitcoin is the collateral, archUSD is the unit of debt. In Arch Prime, users deposit their Bitcoin as collateral. However, their debt is not denominated in Bitcoin. It is calculated in archUSD. This distinction is important: Bitcoin secures the account, while archUSD is the currency in which the account borrows. ⚙️ 4. How does the liquidation mechanism work? When Bitcoin collateral is liquidated: 1️⃣ Bitcoin is sold. 2️⃣ The proceeds are received as USDC in the reserve account. 3️⃣ archUSD is minted against the incoming reserves. 4️⃣ The lending pool is repaid in archUSD. The critical detail: Dollars arrive first. Tokens are minted afterward. 📈 5. Does holding archUSD generate yield? No. archUSD is not a yield-bearing instrument. The treasury yield generated by the reserves accrues to Arch Network and its token. archUSD holders do not directly receive this yield. For those seeking dollar-denominated returns, there is a separate product called Prime Dollar. ⚠️ 6. What are the risks? 1:1 reserve backing does not guarantee that archUSD will always trade at $1. Some key risks include: • USDC losing its peg. • Custody-related issues involving BitGo or Copper. • Delays or restrictions in accessing reserves. • Insufficient market liquidity. These are all important risks to consider. 🎯 The Bottom Line archUSD follows a straightforward model: Bitcoin serves as collateral, loans are denominated in archUSD, and the ecosystem's dollar unit is backed by real USDC reserves. Arch Network is not simply creating another stablecoin. It is building a common unit of account and settlement for Bitcoin-based lending infrastructure. Real dollar reserves. Bitcoin collateral. On-chain lending infrastructure. archUSD is a key piece in understanding the financial architecture of the Arch ecosystem. #ArchNetwork #ArchPrime #archUSD #Bitcoin #DeFi #Stablecoin #BTCFi @Arch @Arch_Prime