Thread by @0xRafi

1/ $ALCX @AlchemixFi (alchemix.fi)
This one most of you already know, but their product is so unique and there’s so much bullish stuff coming for Alchemix that it still deserves a thread. Because come on, loans that repay themselves! What’s not to love about this?

2/ To put it in more accurate terms, $ALCX actually gives you an advance on the future yields on your deposits. So imagine depositing funds in a @iearnfinance vault, but instead of seeing your yield returns grow over time, receiving an advance on these yields right away.

3/ Alchemix does this precisely by depositing funds on yearn vaults, so that these funds can generate yield, and by minting a synthetic stable coin alUSD that users receive in exchange of their deposits, and that represent the advance on future yield.

4/ So a user can deposit 1000 $DAI as collateral into an Alchemix vault and receive 500 $alUSD in exchange, and as the 1000 deposited $DAI generates yield, this yield automatically repays the 500 $alUSD debt. Hence, the “debt that repays itself” part.

5/ As yield on the deposited funds progressively repays the $alUSD debt, the underlying $DAI gets progressively unlocked. Alternatively, at any time the user can repay the outstanding debt with either $alUSD or with $DAI and unlock all remaining collateral.

6/ And the beauty of it is that because you are depositing a stable coin as collateral and getting a loan in another stable coin, there is no risk of liquidation. Once $ALCX V2 is released in a few months, similar solutions will be available for alETH and alBTC.

7/ The potential use cases of this solution are endless but to list a few, you could:

>Deposit $DAI and use the $alUSD received to speculate on altcoins, without putting your initial $DAI at risk (yield earned will eventually repay your debt and you’ll get your $DAI back)

8/
>Deposit $DAI, receive $alUSD, trade it for $DAI, get more $alUSD, and keep compounding the yield returns until the collateral value gets too diluted.

>Deposit $DAI, get $alUSD and cash out from crypto with this $alUSD to buy real world stuff with the money.

9/ To illustrate that last point; you could deposit $100,000 in DAI, receive $50,000 in $alUSD, cash it out to fiat ($alUSD -> DAI -> USD) and buy a $50,000 car. You would basically buy a car with a loan that repays itself over the coming years. Just let that sink in…

10/ The main missing piece of the puzzle here is how the $alUSD synthetic stable coin maintains its peg. It does so thanks to Alchemix’s Transmuter, where as a last line of defense you can always redeem $alUSD for $DAI on a 1:1 peg.

11/ Users that purchase or receive $alUSD anywhere in the open market can deposit it in the Transmuter, and as yield on Alchemix vaults come in over time, the user’s account is progressively credited with $DAI and the corresponding $alUSD is burned.

12/So if $alUSD ever trades under the peg in the open market (you can trade $alUSD for other stables through crv.finance) this creates an arbitrage opportunity for buying $alUSD under its peg in the open market, and redeem it for $DAI on a 1:1 basis via the Transmuter

13/ $ALCX is the platform’s governance token, which gives holders voting rights through governance over the direction of the protocol and use of the treasury. Voting is currently done through Snapshot but will eventually transition into a full on-chain governance.

14/ And according to the team, after this fully on-chain Alchemix DAO is implemented, $ALCX token will become the DAO’s staking token and will earn a share of the platform’s fee revenues. Currently $ALCX takes a 10% fee on yields generated over deposits.

15/The supply of $ALCX is not capped, but the supply emission curve is well defined. Taking the planned supply after 3 years as a basis, 15% of supply goes to the DAO treasury, 5% for bug bounties reserves and 80% for staking and liquidity farming. Below is the 3 y emission curve

16/ Current circulating supply is 120k $ALCX which puts circulating market cap at $180M. Farming rewards started at 22,244 $ALCX distributed on week 1 (last week of February) and will slowly decrease by 130 $ALCX per week over the next 3 years or so.

17/ 20% of these rewards go to an exclusive team staking pool, and the remaining 80% are split as follows:
- 18% for alUSD3CRV-f LP tokens, helping ensure liquidity and peg stability for $alUSD
- 60% for $ALCX/ETH SLP tokens
- 2% for staking $alUSD
- 20% for staking $ALCX token

18/ To be clear, this supply emissions schedule means that inflation is very high at the moment. However this inflation is going back to $ALCX and $alUSD liquidity providers and stakers. So, if you have $ALCX just sitting in your wallet, you’re doing it wrong...

19/ The team, including @scupytrooples, @thetechn0cratic, @derivative_dr, @snape88, and @_Shameless_Plug is anon, but they have been such a strong presence in the DeFi space and they have delivered an amazing product, that there is no doubt that they are here to stay.

20/ In terms of roadmap, Alchemix V2, which is expected to go live within 2 - 4 months will offer more al assets, like $alETH and $alBTC, and will support multi collateral $alUSD ($USDC, $USDT and $sUSD to be supported soon in addition to $DAI).

21/ The team also mentions that V2 will become more composable through the use of modules and will expand the product line-up, but details are a closely guarded secret. Not to mention the revenue stream to $ALCX holders once Alchemix DAO is live.

22/ With a truly innovative product that is already working amazingly, a pipeline full to the brim with major developments, and in the meantime great yield farming rewards, it’s hard not to feel bullish on $ALCX. This is as good as it gets!

23/ A few links to dig deeper:
-Docs: alchemix-finance.gitbook.io/alchemix-finan…
-Dune Analytics : duneanalytics.com/nyyls/ALCX-Das…
-Medium: alchemixfi.medium.com
-BlockCrunch podcast with @scupytrooples: blockcrunch.libsyn.com/alpha-leak-alc…