alAssets (alUSD, alETH, and alUSDb on Base) are synthetic tokens that mirror the value of their underlying asset.
They serve two purposes:
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Borrowing unit: When you open a loan, new alAssets are minted to you.
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Redemption instrument: Anyone can deposit alAssets into the Transmuter to redeem 1 alAsset for its underlying asset (alUSD and alUSDb → USDC, alETH → ETH) 1:1 after a fixed term.
The protocol values 1 alAsset at 1 unit of its underlying, but market price can drift below that. Borrowing and redemption both create opportunities around that gap.
alAssets are synthetic debt tokens, not algorithmic stablecoins. Every alAsset is minted against MYT collateral worth at least 1.11 times the debt (90% maximum LTV). If that collateral ever loses value, liquidations and pro-rata Transmuter payouts restore the balance. The soft peg is maintained via the Transmuter’s 1:1 exchange mechanism, not by minting/burning algorithms.
Learn more about the Transmuter.
alUSDb on Base
Alchemix on Base is a separate market with its own USD alAsset, alUSDb, approved by AIP-125. You deposit USDC into the Base MYT (Risk-adjusted Mix USDC in the app) and borrow alUSDb against it. alUSDb is minted and burned only by the Alchemist and Transmuter on Base, and it cannot be bridged to or from any other chain.
alUSD that reached Base through the Alchemix Bridge is a different token. It cannot repay alUSDb debt or be deposited into the Base Transmuter, so check which token you hold before you buy an alAsset on Base. The main alUSDb market is the USDC/alUSDb pool on Aerodrome.
The Base Transmuter redeems alUSDb for USDC 1:1 after a four-week term, shorter than the terms on the other chains. Some Base fees also differ from the other chains; see Fees.
Borrowing, selling, and the market discount
When you borrow, the protocol mints alAssets at face value. 1 alAsset offsets exactly 1 unit of debt inside Alchemix. Selling those tokens on an exchange may yield less than 1.00 since alAssets can trade at a market discount. For borrowers this is an upfront cost; for traders it can be a source of fixed return.
| Action | Inside Alchemix | On the open market |
|---|---|---|
| Mint alAssets | 1 alAsset = 1 unit of debt | – |
| Sell alAssets | – | Price < 1.00 → market discount |
| Deleveraging | alAssets repay debt at 1:1 | Creates transmuter opportunities |
Example
Deposit 1,000 USDC, mint 900 alUSD (90% LTV). If alUSD trades at 0.97 USDC, selling yields 873 USDC (a 27 USDC market discount) while your recorded debt inside the vault remains 900 USDC. That 27 USDC is the cost of the loan. If alUSD still trades below 1.00 when you repay, Flash Repay can recover part or all of it.
Why alAssets trade below par
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Loan demand: Borrowers mint and sell alAssets for working capital.
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Liquidity: Low liquidity can result in more dramatic price swings.
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Market sentiment: Traders may discount synthetic assets during volatility.
A small, predictable discount is healthy; large discrepancies invite arbitrage.
Mechanisms that close the discount
| Mechanism | How it helps |
|---|---|
| Transmuter | Fixed-duration redemptions let traders lock in the spread as a bond-like yield, burning alAssets when claimed. |
| Repayment arbitrage | Borrowers can buy alAssets cheaply on secondary markets and repay debt below face value, up to the amount of alAssets the Alchemist on that chain has issued. |
Together these forces pull market price toward 1.00 and keep borrowing capital-efficient.
Using alAssets across DeFi
Historically alAssets were used primarily inside the Alchemix ecosystem, because external protocols had no reliable way to price them. With dedicated Chronicle Labs oracles, one feed per alAsset, alAssets can now be verifiably priced by other protocols and used as productive collateral across DeFi.
In practice this means you can hold an alAsset and put it to work elsewhere rather than selling it: for example, supplying alETH to an external lending market to borrow against it. Because holders can deploy alAssets instead of selling them, sell pressure drops, which reinforces the price and strengthens the soft peg for everyone.
See where alAssets can be put to work in external lending markets like the Euler 4-way market on the app's Lending page, under Ecosystem → Lending. The Lending tutorial → walks through supplying and borrowing there.
LTV sensitivity
A higher LTV does not, by itself, change the percentage discount an alAsset trades at. That spread is driven mainly by market liquidity and demand. What changes is your exposure to that discount and how yield interacts with redemptions over time.
Higher LTV means more capital deployed upfront. At 90% LTV on a $1,000 deposit you receive $900 in alAssets, twice what you’d get at 45%. That capital is yours to use anywhere: yield strategies, liquidity pools, purchases, or working capital. Whether high LTV makes sense depends on whether your deployed capital earns more than the collateral erosion it costs you over time.
Inside Alchemix, high LTV positions erode more collateral per redemption cycle than the vault yield replaces. Each redemption cancels the same value of debt as it removes in collateral, so your LTV drifts down and you’ll need to re-borrow more often to maintain leverage. At lower LTV, vault yield can outpace redemptions entirely, so collateral grows while debt falls.
The visualizer below shows only the internal Alchemix view. Returns on capital deployed outside the protocol are not included, and those returns are often the primary reason to borrow at higher leverage.
- ~$882 USDC deployed upfront — twice the capital of a 45% position
- That capital can earn in yield strategies, liquidity pools, or wherever you put it
- Each redemption removes more collateral than vault yield replaces; collateral erodes over time
- LTV falls slowly; re-borrow more often to maintain leverage
- Worth it when returns on deployed capital exceed the collateral erosion cost
- ~$441 USDC deployed — less upfront, but the position largely manages itself
- Vault yield outpaces each redemption; collateral grows while debt falls
- LTV improves every quarter; the position gets safer as it deleverages
- More flexibility on when or whether to re-leverage
- Good fit for long-duration positions where low maintenance matters
These numbers are illustrative. Actual redemption rates vary based on Transmuter queue depth and system debt.