🔮Overview
Last updated
Last updated
Picture a bank where you deposit your assets and watch them grow via interest.
Now imagine that in addition to earning interest, the bank allows you to access an instant credit line without the burden of interest payments or liquidation risks, and the interest you earn repays your debt automatically.
Alchemix is like your personal DeFi bank that you control - where deposited assets generate yield that automatically pays off any debt accrued and increases your credit.
With Alchemix, your collateral becomes your credit card, allowing you to spend a portion of your assets upfront, all while your accrued interest effortlessly repays any borrowed amounts over time.
There's no interest on the debt.
There are no monthly payments to make.
There are no liquidations.
Alchemix offers an innovative DeFi protocol that provides self-repaying, interest-free, non-liquidating loans - giving you the freedom to do more with your capital.
For detailed information and to learn how it works, see Components, How-to, and Guides and Explainers.
Alchemix accepts diverse collateral types used to mint alAssets and take out loans. Keep up to date with all of the current yield strategies and liquidity incentives on the Alchemix Statistics page.
Step 1: Deposit, Earn & Borrow
Deposit: Users can select a yield strategy and then deposit collateral (e.g., stablecoins or ETH) into that strategy, which will start harvesting yield from their deposit.
Borrow: Users can choose to borrow up to the maximum collateral value. The borrowing limit is determined by the collateral-to-debt ratio, which is the collateral value divided by the loan value. The maximum allowed is a 2:1 collateral-to-debt ratio, which means users can borrow up to 50% of the quantity of the collateral in alAssets.
Synthetic Assets: alAssets are tokens that represent debt and the market price of alAssets fluctuates since it represents the future yield of the borrowed amount. The protocol treats alAssets as being equivalent to the underlying assets when borrowing and repaying debt
Step 2: Market Swap
Convert: Swap alAssets to any other token via a DEX or DEX Aggregator. By design, alAssets can be priced at some discount relative to the underlying asset, so it is recommended to check the price of the alAsset before initiating a loan repayment. The discount can be viewed as the up-front cost to access your future yield today. alAssets can also be used directly on some DeFi protocols.
Spend: You can do anything with the loan: buy more crypto, book a vacation, cash out savings, or any other way to spend money. Because there are no forced liquidations in Alchemix, you do not have to worry about being forced to repay your loan to avoid liquidation like many other lending protocols.
Wait: The user's chosen collateral yield strategy will go to work earning interest on the full initial deposit. The harvested yield automatically repays the user's debt over time.
Step 3: Withdraw & Repay
Withdraw: At any time, users can withdraw the principal amount (the amount deposited). The limits to withdrawals depend on the collateral-to-debt ratio. As long as a 2:1 ratio is maintained, users have two options: they can either wait for the yield from the chosen strategy to pay down the debt over time with the interest harvested, or they can use their deposited collateral to resolve their debt and self-liquidate.
Repay: Users have the option to repay their loans using the respective alAsset or the underlying asset. They can also repay their debt at a discount by purchasing alAssets when trading at lower prices in the broader market compared to when the loan was taken out.
The Alchemists handle collateral deposits, issue synthetic assets, and manage yield strategies. There is one Alchemist for each alAsset on each chain.
Read more - Alchemist
alAssets are tokens that represent future yield. They can be used for market swaps, transmuting, liquidity provision, and loan repayments.
Read more - alAssets
The Transmuter converts synthetic alAssets to their underlying assets on a 1:1 basis by gradually releasing yield from Alchemists to alAsset token stakers.
Read more - Transmuter
The Elixir AMO (Automatic Market Operator) deposits surplus funds from the Transmuter into external liquidity pools, which supports alAsset prices and generates additional protocol revenue. The Elixir also has the flexibility to withdraw alAssets for price stabilization.
Read more - Elixir AMO
The Alchemix DAO is empowered by the governance token ALCX, which grants holders governance rights to signal their desires that help shape the protocol's direction and resource utilization.
Read more - Alchemix DAO
ALCX serves as both the governance and incentive token for Alchemix, facilitating community decision-making and rewarding liquidity providers within the ecosystem.
Read more - ALCX Token
