Thread by @FiftySatFinance

Wish your loan could pay off itself?

[ THREAD ]

It can with Alchemix.

@AlchemixFi is a DeFi app that offers self repaying loans.

1. How It Works

In simple terms:

• You deposit crypto into Achelmix
• Alchemix lets you borrow against it
• Your deposit's interest pays your loan

First you need to deposit $DAI.

$DAI = USD stablecoin.

You can then borrow up to 50% of your deposit.

So if you deposit $20k then you can borrow up to $10k.

Alchemix takes your $DAI and deposits it into Yearn—a yield optimizer.

Alchemix earns 10-20% APY on your deposit.

And uses that interest to pay off your loan.

Let's run some numbers...

You deposit $20k.

You borrow $10k.

Assuming a 10% APY...

Your $20k deposit earns $2k interest after a year.

Alchemix uses that $2k to pay your loan.

Your loan is now $8k.

You still have your $20k deposit.

And you didn't make any loan payments.

🤯

2. Why Borrow Against Your Assets?

Borrowing against your assets lets you:

• Have access to cash
• Avoid paying capital gains tax
• Keep your assets working in the market

3. Compared to TradFi

Having your assets pay off your loans isn't a new concept.

You can borrow against your stocks and use the dividends to pay off your loan.

But the process isn't optimized.

Most companies pay out dividends quarterly.

Alchemix pays off your loan in real time so it's never gaining interest.

Alchemix is also permissionless.

• No paper work
• No business hours
• No sign up needed

All you need is an internet connection and a crypto wallet.

It doesn't matter...

• Who you are
• Where you live
• How much money you make

Anyone can get a loan 24/7, 365 days a year.

4. What Can I Use This For?

Let's say you can live off $60k a year.

You could:

• Deposit $600k into Alchemix
• Take a $60k loan to live off of

Your 600k deposit earns $60k interest over the year.

That $60k interest pays off your loan.

Rinse and repeat.

You can also do this for:

• Buying market dips
• Starting a business
• Home down payments

Note:

Alchemix is only on Ethereum right now.

So gas fees can be expensive.

5. Risks

"This shit sounds too good to be true... What are the risks?"

Smart Contract Risk:

Even the best programmers can have bugs in their codes.

Hackers can exploit bugs and steal all the funds.

Alchemix's code has been audited.

And they have a continuous auditing system.

Being audited doesn't mean it's 100% risk free though.

Built On Other DeFi Apps:

Alchemix uses Yearn.

Yearn uses other apps like Compound, Aave, and SushiSwap.

There could be a domino effect if something fails with any of the underlying apps.

DeFi is still a new and emerging space.

All of these apps are experimental.

So please use at your own risk.

Alchemix is one example of the many innovations in DeFi.

I'm hyped to see where this space goes.

And it's only getting started.

Thanks for reading!

If you liked this thread then:

• RT the first tweet
• Follow @FiftySatFinance for more crypto and finance content

Peace ✌🏼

https://twitter.com/FiftySatFinance/status/1463876863470669825