Introduction

Artichoke is a native-based liquidity provision protocol built on the Arbitrum One blockchain. Unlike many other protocols, Artichoke provides a one-sided liquidity layer to any token on top of any well-known decentralized exchange.

Not sure what that means? Me neither! Took a look at their docs and managed to confuse myself even more. That is why Loso sat down with the team for an AMA. In this AMA we have 0xCXXVIII and Lysis from the Artichoke team. Loso allows them to introduce Artichoke and explain how it works, so you don’t have to feel like the confused math lady meme.

Lets get down to business and learn more about Artichoke Finance.

AMA

Loso: GM guys. First and foremost, congrats on your launch. Loving the nitro pool on Camelot. How's everyone doing today?

0xCXXVIII: Thanks sir! Doing good, can't complain. [Coming off of] a really good launch and looking forward to what's next.

Lysis: Thanks! We're very happy with the launch and support we got from the Modular team throughout the whole process. Looking forward to an exciting week!

Loso: Nice guys, great to hear. To get things started, how did Artichoke come to be? What was the inspiration behind it and what are you guys looking to solve?

0xCXXVIII: So, the Artichoke protocol come into our mind back in last years Devcon Bogotá. We've met with a bunch of builders that were (and still are) building interesting stuff and haven't got the chance to make their native tokens well known due to lack of liquidity.

Same happened to us at ETH Denver when we met the Modular team. It was quite shocking to us to see a top-notch product without the traction it deserved. I mean, it's all about liquidity in this game... And we're happy to bring a solution that will try help newer projects to improve their liquidity without compromising their treasuries.

Loso: I love that. definitely an issue for protocols looking to grow. From experience I know that larger institutional players like a fund may not be able to enter a position even if they like it due to liquidity constraints. Entering a newer protocol in size without much liquidity would have you pushing up price significantly, taking away from the opportunity the investor may see in growth.

So please correct me if im wrong, but essentially the platform allows a project to source liquidity for their LP position by only using their native tokens. Could you explain how this process works and all the parties involved?

0xCXXVIII: That's correct. Artichoke basically offers single-sided LP provision for high quality projects with low liquidity. We are using an omnipool approach that works on top of AMMs such as Uniswap or Camelot. The main idea is that projects could lend their treasury tokens to USDC providers and provide them with high APY returns on their stablecoins.

Lets say you are a liquidity provider and want to stake 100 USDC on the CHOKE/USDC LP. You have to stake your stablecoins on a lending smart contract, and the protocol will lend you the same amount of CHOKE token for a fixed period of time without you having to buy them.

Loso: Love the concept. I know that other protocols such as Arrakis finance have products that allow for single sided LP from protcools, however in that approach they use a v3 position. That inherently creates sell pressure on their token as they put up a sell wall to raise cash and balance out the LP. Great approach here.

0xCXXVIII: Yeah. We have a controversial perspective from Uni-v3 to be honest. I think you need to start a LP with a bunch of liquidity in order to get proper price action on your asset. It could work on the long-term, but it's still experimental for us. It would be easier to build a layer on top of v2 AMMs.

Loso: As for USDC lenders, what are their risks associated in lending here. From a quick glance, it seems like it can be present in the fact that the project's token could sell off. Skewing the pool to have more tokens than ETH/USDC. Is that an accurate assumption?

0xCXXVIII: Indeed it is. That's our main issue to solve: the whitelisting of newer projects. The huge problem here is that the projects sell their treasury tokens and attack Artichoke's LP. That's why we're using a governance approach in order to do all the proper due diligence and research for whitelisting tokens.

Regardless, we're using thresholds for X% drops on liquidity providers positions that will execute if this happens (unfortunately we cannot know how humans will interact).

Loso: Perfect. Such an approach could weed out many of the bad actors. On the flip side, as an investor this could be a great way to accrue tokens through incentivization early on for a protocol I may like. A different approach to what we see today for early investors. It can also introduce a new way for protocols to have their "sale" while generating liquidity. A win-win for both sides.

As a lender, what are my constraints around my position? When can I remove liquidity and what would I receive in that case? Would it be USDC strictly, or would I remove my share in the LP?

0xCXXVIII: As a USDC lender you'll have to choose the amount of time you'll be lending the assets. We cannot use the lock-less approach as this can turn into a flashloan attack on the protocol. Your position will have a start and ending time, and the fees you're earning are going to be on USDC or the native token (on a v2 you could choose both). On the other hand, there will be a CHOKE boost for some protocols so lenders are going to receive them as well.

Loso: Great approach there. The incentivization from both the protocol launching and $CHOKE will certainly bring a lot of eyes your way.

Shifting to the $CHOKE token, how did you guys approach your recently closed public sale?

0xCXXVIII: To be honest, we were quite hesitant on doing a public sale. We saw many protocols made huge public sales without a cap, and that unfortunately makes it easier for early buyers to dump on later ones. And of course the huge responsibility of having a huge "unnecessary" treasury. We decided to go with the humbler approach: raise what we actually need to build and to make a healthier LP for buyers and sellers to participate.

As Lysis stated, we used Modular's infra for this. They have a tier-based system that actually works and makes holder distribution fair for everyone.

Loso: Love that. In looking at the 40% allocation for LP growth, is that for $CHOKE specific LPs, or is it for the LPs you will assist in launching?

0xCXXVIII: The LP allocation is quite controversial as well. One may think that it's quite a lot of tokens for this matter, but $CHOKE tokens for liquidity provision are going to be needed for both: own LP growth and newer token LP boosts.

Loso: Nice. I don't see that as controversial personally. More of a bootstrapping the protocol budget. Those that support the protocol early on should be compensated to do so.

0xCXXVIII: It will be hard at start. We need to attract USDC liquidity providers

Loso: How does the protocol generate fees and to where do these fees accrue if they are generated at start?

0xCXXVIII: So revenue generated for the protocol is quite straight forward: At first, every LP that is actually providing liquidity is going to be paying fees for closing and claiming a position. On the other hand, newer projects that are willing to be whitelisted on the platform need a minimum amount of staked $CHOKE to whitelist their token. And, of course, Protocol-Owned LP positions on DEXes pay out yield. Overall, the fees that are generated within the platform rely on the CHOKE token.

Loso: Do you guys have a fee structure down at the moment in terms of how much each of the sides is charged? Or will that be coming soon?

0xCXXVIII: We're still figuring this out. We don't want to have higher first at start, and they can vary through time as the protocol liquidity grows. We will announce with more detail soon.

Loso: Great. Looking forward to this launch. To wrap things up I want to ask about security. How are you guys going about security for the protocol. As there are many moving parts, what steps are you taking to let investors know the risks in place and that the contracts are safe.

0xCXXVIII: That's a great question. This kind of protocols require to be as safe as possible. One of our devs is specialized in smart contract security and that's our main concern at the moment. Regardless, we're using Code4rena for public audits before launch. We're also using a considerable % of our treasury for a continuum bounty program. We cannot afford having an attack on the protocol.

Loso: Agreed. Glad you guys are taking that approach as I'm sure all of the users of the platform will too. It's been a pleasure speaking with you guys. I certainly appreciate your time and I'm sure the greater community will too. Before we end, is there anything you'd like to say with regards to the protocol that the community may not know?

0xCXXVIII: Thanks for your time guys! Great questions and really happy to share with your community. Maybe Lysis wants to spoil something for the community beforehand ;)

Lysis: It's been a great AMA, amazing questions! Not surprising coming from the Primapes gang, you guys know your DeFi. We'd like to invite everyone to share their feedback on the protocol in our Community Telegram and get involved in the early stages of Artichoke!

Whether it's about documentation, design, partnership suggestions or community building - we're always looking for input and ways to improve.

If there are projects on Arbitrum interested in our service, get in touch via Twitter DM or Telegram!