Arcus Lets Traders Use Stock Tokens and WETH as Collateral for Perpetual Futures

Arcus opens collateral option to large traders first

Arcus has started allowing traders to use nine stock and ETF tokens plus wrapped Ether (WETH) as collateral for perpetual futures. A perpetual future is a contract that tracks an asset's price without an expiry date.

The feature was announced on Oct. 19 and is in early access. It is limited at first to traders with more than $25 million in Arcus trading volume. Other traders are expected to get access automatically in the coming weeks, according to the platform.

Arcus was launched by dYdX Labs with Robinhood Crypto and combines tokenized stock trading with perpetuals on Robinhood Chain.

Which assets can be used

• ETF tokens: SPY and QQQ.
• Stock tokens: Apple (AAPL), Microsoft (MSFT), Alphabet (GOOGL), Amazon (AMZN), Nvidia (NVDA), Meta Platforms (META) and Tesla (TSLA).
• One crypto asset: wrapped Ether (WETH), an Ethereum-based token that represents Ether.

The point is to let a trader hold a spot token and use it to back an offsetting short position, without selling the token first. A short position profits when the price falls.

How the USDG loans work

Previously, Arcus perpetuals needed margin in USDG, the protocol's settlement stablecoin. A stablecoin is a crypto token designed to hold a steady value.

Under the new system, traders move eligible holdings into their perpetuals accounts without converting them. Deposited USDG is used first. If more margin is needed, a USDG loan is created automatically and secured by the tokens.

According to Arcus's documentation, these loans only support cross-margin positions, where all positions in an account share the same collateral. Borrowed USDG cannot be withdrawn or moved to an isolated position. Interest on the loan is variable and builds up while the loan is outstanding.

All ten assets have a 50% initial loan-to-value ratio. That means each dollar of collateral supports up to fifty cents of borrowing for margin. Arcus notes this is borrowing capacity, not the maximum size of a leveraged perpetual position.

Hedging and basis trades

A trader could hold SPY tokens and use them to back a short SPY perpetual as a hedge. A basis trade works in a similar way, pairing a token holding with an opposing perpetual position, usually to seek funding payments.

The change removes the need to supply separate USDG margin, but the loan adds interest costs. Arcus also notes that a hedge may not fully offset losses.

Deposit caps and liquidation rules

Arcus's live lending parameters showed non-USDG deposit limits of $20,000 per account and $2 million across the platform, plus a $10,000 per-account borrowing cap.

The collateral feed also showed platform-wide supply caps of 10,000 token units for each eligible stock or ETF token and 1,000 WETH, sitting alongside the dollar limits.

All ten assets carried a 60% maintenance loan-to-value ratio in the feed. On the maintenance side, Arcus compares maintenance-margin needs plus losses against that collateral-based capacity. Breaching maintenance capacity or the per-account loan limit triggers liquidation, according to its documentation.

Arcus said liquidation cancels open orders and closes perpetual positions first. Collateral is sold only to cover any remaining shortfall, with the live parameters crediting those sales at 99% of mark price. Falling collateral values and losses on perpetuals can both push an account toward liquidation.

Who can trade and what happens to debt

Arcus's terms bar perpetual trading by users in the U.S., Canada and the United Kingdom, among other restricted jurisdictions.

Closing a position does not erase debt from realized losses, fees or interest. Any remaining loan must be repaid through USDG deposits, later trading profits or collateral sales, according to the platform.

What is confirmed

Arcus announced the multi-asset collateral feature on Oct. 19 and confirmed early access for traders with over $25 million in trading volume. The eligible assets, the 50% initial loan-to-value ratio, the 60% maintenance ratio, the deposit and borrowing caps, the liquidation process and the jurisdiction restrictions all come from Arcus's announcement, documentation, live parameters and terms.

What is still unclear

The exact timing for wider access is not specified. Arcus said only that other traders are due to receive access automatically in the coming weeks. The live parameters and caps cited are the values shown at the time of reporting and could change.

Why it matters

Using stock and ETF tokens as loan collateral lets traders keep those holdings while still posting margin for perpetual trades. That reduces the need to convert assets into USDG first, but it also adds loan interest and liquidation risk if collateral values fall or perpetual positions lose money.

Sources

• The Defiant