Disclosure: Members of our team hold ALCX. This statement is intended to disclose any conflict of interest and should not be misconstrued as a recommendation to purchase ALCX or participate in any yield farms. This is not investment advice.
Alchemix, a “future-yield-backed synthetic asset platform,” went live this weekend and has already absorbed close to 190M in DAI TVL. While TVL growth is primarily driven by ALCX farming, the Alchemix protocol should not be underestimated.
Alchemix can be seen as an extension of the smart-stablecoin (and smart-asset) stack, something we have written previous dailies on. Alchemix’s alUSD, a yield-backed synthetic token, unlocks capital efficiency gains by allowing users to receive an advance on future yield. Yield-based derivatives, particularly stablecoin variants, have an immediate use case as they simply function as (synthetic) assets utilized in various other defi applications. On top of this, leveraging future yield unlocks a variety of creative demand drivers – for example, as Loomdart and CL pointed out on Twitter, using future yield to pay for various services, subscriptions, etc.
So how does this all work?
The Alchemix protocol comprises three core components: Vaults, Transmuters, and the Treasury. The graphic below does a great job in describing the asset/user flow.
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