알케믹스 (ALCX)·
by Scoopy Trooples
It feels like a lifetime ago, February 2021 to be precise, when we introduced Alchemix and the concept of Self-Repaying Loans to the world. It was quite revolutionary then, and it remains a beloved DeFi protocol that has expanded and refined itself in various ways over the years. Since launching, we have learned a significant amount about the dynamics of lending and synthetic assets. After years of theorizing and iterating on our models, we are finally ready to introduce the world to Alchemix v3. We have enhanced Alchemix with more sophisticated mechanics, and improved fairness for all parties. If you have enjoyed Alchemix in the past, this next evolution (or perhaps revolution) will feel like a natural, powerful upgrade.
At its core, Alchemix v3 still lets users borrow synthetic alAssets, alUSD and alETH, based on future yield. Simply deposit USDC or ETH, borrow their synthetic counterpart, and watch your collateral generate yield to repay your loan. However, Alchemix v3 doesn’t stop there. It introduces temporal mechanics, carefully designed systems ensuring fair and efficient debt repayment for all users. To understand this better, we must first discuss the new and improved redemption module, The Transmuter.
In Alchemix v2, redemptions were powered by liquidated yield flowing from collateral repayments into the Transmuter. This, unfortunately, was an unpredictable mechanism, as redemption rates depended heavily on yield variability, potentially hurting both borrowers and decentralized exchange (DEX) liquidity providers (LPs) by weakening the price of the synthetic alAssets.
The Alchemix v3 transmuter fixes this dynamic.
To maintain the value (or “peg”) of alUSD and alETH, Alchemix v3 introduces fixed-duration redemptions through our Transmuter redemption module. The Alchemix DAO sets specific redemption periods, likely three or fewer months. When you deposit alUSD or alETH into the transmuter, you will know exactly when they become redeemable at their 1:1 counterpart value (e.g. 1 alUSD for 1 USDC).
This fixed-duration redemption creates predictable yield opportunities for arbitrageurs and establishes a new fixed-rate interest primitive in DeFi. For example, if alUSD drops to 0.98 USDC in value, and there is a three-month duration redemption, the arbitrager can earn an effective 8% annualized fixed yield. This activity stabilizes the alAsset peg and creates a consistent demand for alAssets. Moreover, this mechanism also directly protects DEX LPs from impermanent loss. If the peg begins to falter, LPs can let arbitrageurs restore the peg, or they can withdraw alAssets and redeem them 1:1, effectively erasing losses and even allowing profit opportunities.
Alchemist v3: Simpler, More Powerful Collateralized Debt Positions (CDPs) and Temporal Leverage.
The first major advancement in the v3 CDP system, The Alchemist, is a massive UX simplification and optimization through the introduction of an Alchemix-DAO-managed Meta-Yield Token (MYT). In Alchemix v2, users could select from various yield strategies (e.g., Yearn, AAVE, wstETH) as collateral. While offering granular control, this approach made system-wide optimization difficult, increased user complexity, and risked obsolescence when strategies changed.
The MYT is a composite of multiple yield strategies integrated into one token, built on Morpho V2, a customized ERC-4626 implementation. This token will then be managed initially by the DAO Multisig and later fully governed on-chain by the Alchemix DAO. Strategies will include some of our current offerings, additional yield tokens from other protocols, and custom strategies developed by our community builders via our grants program. The goal is to weigh these strategies to balance yield optimization and safety, creating the best risk-adjusted yield token in DeFi. Furthermore, the specific composition of the MYT will vary across different chains, providing users with distinct strategy mixes suited to different risk profiles, ranging from conservative to more aggressive yield strategies. This significantly streamlines users’ yield generation and provides an exceptionally simple but powerful user experience.
Additionally, if you prefer straightforward passive returns without borrowing, simply deposit into the MYT directly and let it earn yield effortlessly.
With the vastly more robust peg-keeping mechanisms, Alchemix v3 will now allow users to borrow up to 90% of their collateral value, significantly enhancing capital efficiency. Sophisticated yield strategists will find plenty to appreciate here. Deposited collateral continuously compounds yield within the MYT, and unlike previous versions, repayments no longer come from liquidated yield, but rather from redemption events from the Transmuter. Upon redemption, users’ collateral will be partially liquidated in order to repay earmarked debt and fund redemptions.
Unlike in v2, where yield is automatically liquidated for debt repayments, Alchemix v3 introduces a structured redemption and earmarking system designed for fairness, transparency, and efficiency.
When a redemption event starts in the Transmuter, portions of users’ debts gradually become “earmarked debt” based on each user’s share of the total debt and how long they’ve held it during the redemption period. This earmarked debt is a subset specifically reserved by the system for repayment via redemptions. The purpose of earmarking is critical. Without it, sophisticated users could unfairly avoid repayments by sandwiching repaying debt immediately before a redemption and then quickly re-establishing their position afterward. Such activity would unfairly shift repayment burdens onto other users.
To further ensure fairness, earmarking follows a “time-weighted” approach:
Users retain flexibility to repay their debts at any time. However, normal debt repayment requires alAssets, while earmarked debt repayment specifically requires the MYT. Repaying earmarked debt early places the used MYT into a buffer, prioritizing future redemptions from this buffer, thus extending the temporal advantage to all participants.
The secret advantage comes from deferred redemptions from the fixed-duration transmuter redemptions. Unlike other synthetic-asset protocols with redemption mechanisms that immediately deduct collateral, our system waits until the redemption is completed. During this waiting period, your collateral continues earning yield on the full original amount, not the reduced post-redemption amount. For example, if you have 100 units of collateral and a redemption of 10 units is planned, you continue earning yield on the entire 100 units until the redemption actually takes place. This extended yield-earning period provides you with an inherent advantage — what we call “temporal advantage.”
High-leverage borrowing (up to 90%) demands robust safeguards. There is always risk in DeFi — protocol logic bugs, economic attacks, or mismanagement , all potentially leading to losses. Given the MYT consists of multiple DeFi strategies, any specific strategy might incur losses, reducing collateral value. Alchemix v3 employs clear and robust liquidation mechanisms, triggered only if the MYT loses backing , as determined by fundamental oracles measuring actual collateral value rather than market price to maintain solvency if needed.
Alchemix v3 offers a comprehensive, improved approach to yield driven lending:
Alchemix v3 refines and advances our original vision of self-repaying loans, balancing sophisticated financial strategies with simplicity, fairness, and safety. Our team at Alchemix DAO have lovingly crafted this protocol in a manner that we think befits the spirit and ethos of DeFi, and we hope that everyone takes advantage of what we think will prove to be one of the most innovative and powerful savings and credit platforms in the space today.
Alchemix | Docs | Discord | YouTube | Twitter | Github