What’s with all the magic?

Alchemix is a platform providing self-paying, non-liquidating loans to users, and with V2 around the corner it’s bound to turn heads this year.

They allow users to get advances on their yield by minting a synthetic version of collateral up front using various mechanisms to peg the synthetic token to the deposited asset. Collateral earns yield in Yearn vaults, with the profits going towards paying off your own debt. A true defi enabled product, with the flexibility to borrow against DAI and ETH without the downside.

When Alchemix harvests the yield, they take a 10% cut sent directly to the treasury, in addition to affiliate fees for adding TVL to Yearn. As of Dec 21, those vaults contained over 100K ETH and 437M DAI deposited through the Alchemix platform.

That’s a serious chunk of change, with APYs of 4.736% and 4.354%, respectively.

What’s to come?

Alchemix V2 is just around the corner, expected to be deployed early this year (Jan or Feb).

Along with that we can expect new collateral types including staked Ether (stEth), wrapped Bitcoin (wBTC), and both USDC and USDT, among possible others. There’s a possibility we may see the ability to zap alUSD directly into USDC within a single transaction.

Who doesn’t love the option to borrow risk free against even more collateral types, but.. why would we use this when we can generate much higher yields using newer defi strategies? (No offense yearn lovers.)

Don’t worry defi degen, V2 will allow you to choose where your collateral is deployed to tune the balance between risk and reward. So you can take advantage of all those juicy defi returns and pay back the loan faster than ever, without any worry of liquidation.

Don’t stress about gas fees either, as they’ve noted significant focus on adding functionality across chains for cheaper and more flexible transactions.

You can check out the full roadmap from the team here. 👇🏻

But wait, there’s more..

All of those new fancy yield strategies with a diversity of collateral backings will still have the same 10% fee applied to harvests.

This time around the 10% fee will be filling the bags of all the ALCX stakers, as they roll out the new DAO governance structure.

Staking ALCX into the DAO, will begin accruing Voting Points (VP). The longer you’re staked, the more VP you will accrue. 

When users engage in using their VP, they will begin earning a cash flow. The more VP a user uses, the more their cash flow reward weight is boosted in the system, much like how the Curve protocol boosts rewards for veCRV stakers. It pays more to participate.

Final thoughts

Alchemix has some exciting new developments coming in the next few months, and with more modular framework we can expect them to continue to add pieces like lego bricks over the course of the year.

I believe this all is the magic ingredient to accelerate usage of Alchemix by not only individuals, but treasuries as well.

With the being said, I have loaded my positions on ALCX before the official V2 release and staked those tokens on Tokemak to generate some APY while we wait.

This is not financial advice, but this is my highest conviction play since entering into Web3 a short time ago.

I’ve learned a lot already, and Alchemix appears to be a true DeFi enabled strategy not possible within traditional finance. That alone is bullish to me!

I’ll continue to document my journey and learnings here as we move through this space together, I would love any feedback.

Be good to yourself and be good to each other, wagmi.