Alchemix is a Decentralized Finance (DeFi) protocol that enables users to deposit assets as collateral and get an advance on the future yield that those assets will earn. The advance is provided in the form of a synthetic token (alUSD or alETH). Alchemix pioneered the concept of the “self-repaying loan” in DeFi.
The first version of Alchemix was launched in 2021 by a pseudonymous group of developers. The most well-known of these developers goes by @scupytrooples on Twitter.
Alchemix V1 only allowed alUSD and alETH to be collateralized with one token. The launch of V2 in March 2022 made Alchemix a more flexible platform for both investors looking to borrow funds and developers seeking to integrate with the protocol.
Between versions 1 and 2, Alchemix launched a governance token ALCX which is used to facilitate community votes on product updates and improvements.
The primary feature of Alchemic V1 was the self-repaying loan. Facilitated by a smart contract, users deposited collateral into one of the platform’s vaults in order to take out a loan. To start, users could only deposit DAI as collateral. Eventually the platform added ETH as an option.
The loans were given to users in the form of synthetic tokens, alUSD or alETH, and these loaned tokens were backed by the future yield of the deposited assets: DAI or ETH.
Users deposit their assets into one of Alchemix’s vaults. Alchemix partners with a few different yield protocols to maximize the yield earned on deposited assets. At the beginning of V1, Alchemix exclusively worked with Yearn to generate yield on deposited assets. As of April 2022, Lido and Rocket are also options for optimizing your yield on Alchemix, and the team at Alchemix have plans to integrate with Aave, among other yield optimization tools.
Alchemix’s Transmuter is a feature that helps to stabilize the value of borrowed loaned assets. alUSD and alETH. The transmuter is run via a smart contract, and it allows users to exchange DAI or ETH with alUSD or alETH one-for-one.
Launched in March 2022, the goal of Alchemix V2 was flexibility: for users and developers alike. Many of the improvements for V2 aimed at providing more options for community members seeking a loan, or devs who wanted to integrate Alchemix with their product.
V2 was launched with infrastructure that will enable long-term integration of more token and collateral types with the product. As of April 2022 the product was still limited to accepting only DAI and ETH as collateral, but the way V2 was structured will give the Alchemix team more flexibility to add additional tokens and give users much more flexibility to structure their loans.
The skeleton of V2 also allows for further integration of different yield optimizers, so users can choose their preferred protocol for generating the yield that repays their loan.
The composability of Alchemix was enhanced for V2, which means it is much easier for other dAPPs to utilize Alchemix’s self-repaying loan platform in their own product.
ALCX is Alchemix's native governance token, allowing holders to participate in AlchemixDAO. The DAO gives members the opportunity to influence protocol decisions, such as treasury management, liquidity mining distributions, and product rollouts.
