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Liquidity assets + debt Alchemix: synthesis, release YFI | project to introduce a new way

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How Alchemix frees up more mobility for YFI participants.

Original title: "Introducing Alchemix"

Original compilation: 0x26

In view of the difficulty in understanding the original text, the author firstly summarizes the introduction and personal understanding of Alchemix co-founder Scoopy Trooples as follows:

Scoopy: Essentially, Alchemix is a customer data platform (CDP system) built on top of YFI. Users deposit DAI (and other stablecoins) into Alchemix to receive ALUSD. ALUSD is a currency based on the proceeds of liquid mining.

What makes Alchemix different is that it's very flexible. There is no minimum lock time and expiration date. You can exit the position at any time by paying the ALUSD debt with ALUSD or DAI.

The proceeds generated by the YFI will automatically pay off the debt.

My personal understanding is that Alchemix releases YFI proceeds in the form of a synthetic asset, ALUSD (which is also debt), which frees up liquidity for mining stablecoins in YFI and can be redeemable at any time (i.e., exiting YFI). This means that users can not only receive YFI income, but also obtain the liquidity of part of their deposits to participate in other DEFI activities.

Here is the full text of Alchemix:

After more than six months of planning and producing, conceiving and integrating, we can finally share with you what we've been working so hard to create. Alchemix (Alchemix) -- A modern use of ancient powers.

Alchemix is a Defi protocol that provides users with a synthetic asset token model to obtain future returns on their deposits. The agreement allows users to get back some of their deposits temporarily pledged as stablecoins. (Users can get instant toketized value through deposits in temporary stablecoins.) The protocol provides a powerful new DEFI primitive that opens up new possibilities for countless applications for users, as well as an exciting new tool for other developers.

Working principle:

The first version of the Alchemix protocol will be released together with the token derivative "ALUSD", which will be implemented using DAI (other stablecoins to be added later). To create ALUSDs, users deposit DAI into the AlChemist smart contract through eschowage, and then create ALUSDs worth 50% of the total deposit. The stored DAI will be used by Yearn Vaults to earn returns.

Alchemix is full of possibilities... Users' money will not be tied up in "medieval" ways.

Once deposited, the funds are automatically earned through YFI and eventually automatically repaid the user's debt (ALUSD). Users can choose several ways to manage their loans:

Option 1: keep your deposits earning and regularly reduce your collateral.

Option 2: Pay off the loan early using ALUSD or DAI, allowing collateral withdrawals.

Option 3: Use part of the collateral to pay off the loan and withdraw all the remaining funds.

What can you do with ALUSD?

Like many other ERC20 tokens on Ethereum, ALUSD is tradable and goes through price fluctuations. This provides the savvy investor with a range of opportunities beyond the scope of this article. We have introduced some use cases at the end of this article for users' reference.

Entry converter

Users can send their ALUSD to a converter to convert it back to DAI and other stablecoins.

Describe the Alchemix protocol

How ALUSD is pegged to $1:

The protocol itself contains several anchoring mechanisms that minimize governance:

Transformation from ALUSD to DAI:

Yearn Vault regularly collects revenue and stores it in the conversion pool. Each time the proceeds are sent to the conversion pool, it is distributed pro rata to all the pledgers of ALUSD. When users claim DAI in the conversion pool, they burn the same amount of ALUSD from their pledged deposits.

Pledge (ALUSD-3CRV) to receive rewards:

Alcx DAO Pledge Bonus by providing ALUSD /DAI/USDC/USDT liquidity in Curve (via the permission-free Crv.Finance dApp) and then pledging in the Alchemix protocol. This adds deep liquidity to ALUSD and allows for a wear-free transfer of value, thus anchoring the price of ALUSD tokens at $1.

Early settlement of user deposits:

The user's debt can be repaid at any time with DAI or ALUSD. For example, Bob has a debt of 1000 DAI in the system and he sees the price of ALUSD as cheap at 0.9 DAI. Bob can buy 1000 ALUSDs from the market at a discount and settle the debt with ALUSDs,The protocol always treats ALUSD as equivalent to DAI. Doing so will save Bob money, and his purchase of ALUSD will help restore it to its anchor state. And vice versa. If the ALUSD exceeds the peg price, Bob can sell the ALUSD in exchange for DAI, allowing him to settle the debt at a discount.

Ecosystem growth:

The Alchemix team plans to release additional DApps that will leverage ALUSD and other future Al-Tokens to expand the use case. As more DApps use these tokens, greater demand and appreciation pressure will expand Al-Toekn's market value, which will make its anchoring mechanism more effective.