Written By
DeFi Dad
Community Lead

How to Earn Up to 262% Farming on Alchemix

June 11, 2021

Disclaimer: This is not financial advice. This is an educational resource that should never be interpreted as an endorsement to buy any digital assets mentioned. Please do your own research and be sure to check the updated APRs being earned because rates can go up or down with the price of ALCX, CRV, and CVX rewards and depending on how diluted staking pools become.

Self-Repaying Loans on Alchemix

Alchemix Finance is a platform that allows users to borrow future yield while leaving deposited collateral in an automated yield-earning strategy to pay down the loan. Alchemix cleverly gives you an advance on the yield in the form of a synthetic stablecoin called alUSD.

Imagine a user deposits 100 DAI into an Alchemix vault. They are then able to mint up to 50% the deposited DAI as 50 alUSD. The deposited DAI is deployed by Alchemix smart contracts to earn stablecoin yield in a Yearn.Finance yDAI vault. As the yield is earned from the yDAI vault, Alchemix uses that yield to pay down the 50 alUSD debt. The user can choose to wait until their debt is completely paid off by the Alchemix or they can pay back the debt manually or even liquidate part of their collateral.

The net result of this protocol is it allows users to get advances on future yield, open non-liquidatable loans, establish a new synthetic stablecoin (alUSD), and create incentivized opportunities to provide alUSD liquidity and ALCX liquidity.

As of today, Alchemix has about $480M in TVL (total value locked) according to DeFi Pulse.

High Yield Alchemix Farming Opportunities

The opportunities identified in this Alpha Leak are for 2 types of yield farmers: those who wish to earn with stablecoins and those who wish to hold ALCX exposure while earning higher APRs. As of this writing, the following farming opportunities exist on Alchemix.

  1. 262% APR staking the ETH / ALCX LP token on SushiSwap
  2. 169% APR staking ALCX
  3. 39% APR staking the alUSD3CRV LP token from Curve on Convex Finance

Fees

There are no fees to deposit for these LPs. However, quoted projected ROI for the third farm in Convex Finance accounts for these deducted performance fees below:

  • 10% performance fees distributed to cvxCRV stakers
  • 5% operations fees distributed to CVX stakers
  • 1% platform fees distributed to harvesters

Risks

This opportunity exposes participants to the following major risks:

  • Smart contract risk in Alchemix, SushiSwap, Curve, and/or Convex protocols
  • Systemic risk in nearly all of DeFi due to the interconnected nature of money legos
  • Risk of a synthetic stablecoin like alUSD de-pegging
  • Impermanent loss for those staking the ALCX/ETH LP
  • Reminder, buying/holding ALCX to farm does not guarantee the price of ALCX will not go down and cost more losses than what's earning yield farming

Here's how to get started earning with the 3 different farming opportunities on Alchemix.

292% APR with ALCX/ETH SLP on Alchemix

First, to stake the ALCX/ETH LP in SushiSwap for 292% APR, one can follow these steps below.

  1. For those already holding ALCX or those who are ready to trade tokens that will be swapped for 50% ETH + 50% ALCX, simply go to this Zapper Pools link to add liquidity to the ALCX/ETH pool in SushiSwap.
How to Invest in ALCX/ETH LP in SushiSwap
  1. Then, go to Zapper Farms.
  2. Search ALCX and find the option requiring the ETH / ALCX SushiSwap LP to stake.
  3. Click the green Stake button.
  4. Specify how much to deposit and click Approve followed by Stake. It will require 2 MetaMask confirmations.
  5. That's it! Return here to Claim Rewards in the form of ALCX in the future.
Please note the estimated ROI for these farms can fluctuate.

141% APR with ALCX on Alchemix

Alternatively, one who's looking to stake ALCX for 141% APR would follow these steps.

  1. For those already holding ALCX or those buying ALCX using Zapper Exchange, they start earning 141% APR in the Zapper Farms dashboard in just 2 clicks!
  2. Go to Zapper Farms.
  3. Search ALCX and find the option below requiring just ALCX to stake.
  4. Click the green Stake button.
  5. Specify how much to deposit and click Approve followed by Stake. It will require 2 MetaMask confirmations.
  6. That's it! Return here to Claim Rewards in the form of ALCX in the future.
Please note the estimated ROI for these farms can fluctuate.

39% APR with alUSD on Alchemix

Lastly, the most conservative farming strategy involves holding exposure to basket of stablecoins including alUSD, DAI, USDC, and USDT.

  1. To earn an estimated 39% projected ROI, one would invest liquidity into the alUSD Curve pool using Zapper Pools. I can add liquidity with any token and Zapper will swap to the appropriate underlying tokens which are alUSD, DAI, USDC, and USDT. Preferably, I would enter with a stablecoin so I can avoid having to sell other tokens such as ETH.
How to Zap into alUSD Curve Pool with Zapper Pools
  1. Click Approve and then Confirm to become a liquidity provider (LP) in this Curve pool. Once those 2 transactions are completed, I officially own a share of this Curve pool and immediately begin accruing a share of the fees paid by traders in Curve.
  2. The last step to begin earning a combination of CRV (by Curve), CVX (by Convex Finance), and ALCX (by Alchemix) rewards is to stake this alUSD3CRV LP token in the Convex Finance staking page. Find the alUSD staking option near the bottom, where you're required to Approve and then Deposit & Stake. Once these 2 transactions are completed, you're earning all 3 tokens above!
How to Stake alUSD3CRV LP with Convex Finance
  1. To collect/harvest these 3 forms of yield, simply return to the Convex Finance Claim tab under Curve Pools.
How to Claim Farming Rewards from alUSD3CRV LP

You're done! Track the balance of all your Alchemix farms and earned rewards along with your DeFi portfolio on Zapper Dashboard.

Get started on Zapper Farms
Track, stake, and claim ALCX rewards

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