Liquidity Provision and Incentives

Liquidity is crucial for the efficient operation of lending pools. The Arca Chain platform uses incentives based on liquidity preference theory to encourage users to provide liquidity to the lending pools.

• Liquidity Incentives: Liquidity providers receive interest and additional ARCA rewards by depositing assets into the lending pools. This mechanism strengthens users' preference for liquidity, ensuring the lending pools are well-funded, consistent with liquidity preference theory.

• Liquidity Mining: The platform introduces a mechanism to encourage users to lock assets and participate in liquidity mining. This mechanism boosts overall liquidity and participation on the platform, consistent with supply and demand theory.

• Dynamic Rate Adjustment: The platform dynamically adjusts lending rates based on market supply and demand, ensuring the stability of the lending pools. The dynamic rate adjustment mechanism is based on Keynesian monetary demand theory, optimizing the balance between supply and demand for funds.