> For the complete documentation index, see [llms.txt](https://arcafinance.gitbook.io/arcafinance-docs/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://arcafinance.gitbook.io/arcafinance-docs/protocol/protocol-overview.md).

# Protocol Overview

<figure><img src="/files/dw7CKSVV2geiwhkAr6te" alt=""><figcaption></figcaption></figure>

## System Architecture

*arca Finance functions as a non-custodial yield farming vault built on Dexes, integrating with their DLMM and CL infrastructure to automate liquidity provision for all pools. The arca Finance protocol acts like a market maker, deploying part in automated strategies and the other part in reserves.*

* *arca Finance Automated Strategies → Executes strategies, rebalances positions, and auto-compounds rewards across Dexes on Sei.*
* *arca Finance Managed Reserves → AI agents adjust Idle capital ratio to market conditions, minimizing IL compared to traditional ALMs*
* *arca Finance Contracts: Secure smart contracts managing deposits, withdrawals, fee distribution, and reward distribution*

***

## Integration with Dragonswap

*arca Finance leverages existing infrastructure from Dexes on Sei:*

* <mark style="background-color:$primary;">Dragonswap:</mark> *Concentrated Liquidity (CL) pools and trading incentives*
* *Future governance mechanisms*&#x20;

***