⚖️Transmuter
Last updated
Last updated
The Transmuter is the primary mechanism for restoring alAsset prices and reducing supply by converting alAssets into their underlying assets.
The Transmuter achieves this by receiving all harvested yields, self-liquidations, and repayments while gradually releasing them to alAsset depositors to be redeemed via a time-based formula.
Users that deposit alAssets to the Transmuter will gradually be credited with the corresponding assets proportional to the amount of alAssets that they have deposited in the Transmuter. The alAssets are burned when a user claims the transmuted token.
For example, if a user deposits 100 alUSD into the Transmuter, it will convert the alUSD to DAI over time. Once the 100 alUSD are fully redeemable for 100 DAI, the user can claim the corresponding 100 DAI, which will also burn the 100 alUSD.
Enables the conversion of alAssets to underlying assets at a 1:1 rate.
The transmutation rate is dictated by the average yield earned by depositors, which provides a baseline estimation for the flow of yield into the Transmuter. The flow rate to the Transmuter increases with self-liquidations and loan repayments.
Receiving funds from Alchemists and redirecting excess funds to the Elixir AMO optimizes the capital efficiency within the ecosystem.
Transmuter parameters are managed based on governance decisions, aligning with the ecosystem's evolving needs.
The Transmuter provides an efficient mechanism to stabilize the price of the alAsset.
Deposit: Users deposit alAssets (like alUSD) into the Transmuter.
Accumulation & Exchange: Over time the underlying asset is accumulated in the Transmuter via yield harvest, self-liquidations, and loan repayments. The asset is proportionally allocated to users based on their alAsset deposit. For example, the Transmuter will gradually allocate DAI based on how much alUSD has been deposited.
Claim: Users claim the alAssets equivalent to their deposited tokens and burn the alAssets at a 1:1 ratio. In this example, if the user deposited 100 alUSD the user will burn their 100 alUSD deposits when they claim the 100 DAI equivalent.
Users who deposit alUSD in the Transmuter would gradually be credited with DAI proportional to their alUSD deposit. Once the user decides to withdraw DAI, an equivalent amount of their deposit alUSD is burned, completing the transmutation cycle.
The flow rate at which these assets can be converted from alAssets (alUSD) into the underlying tokens (DAI) is limited to ensure that the system is not drained by minor arbitrages while creating a front-stop or excess pool of funds for conversions when the price of the alAsset diverges further from the underlying. If the excess funds are significant, they are sent to the Elixir AMO.
The minimum flow to the Transmuter may be estimated by the average yield earned by all depositors for the corresponding alAsset. Furthermore, repayments and self-liquidations are sent directly into the Transmuter, contributing to the conversion flow, which is part of the average yield.
More information can be found in The Transmuter, Elaborated
