alAssets

Synthetic Debt Tokens representing Future Yield

alAssets are the synthetic debt assets that represent a user's future yield. Each alAsset has at least one corresponding underlying asset that backs it (ETH for alETH, various stablecoins for alUSD).

Anyone with debt in Alchemix may repay debt with an alAsset or the underlying asset. Thus, the value of an alAsset to someone with a loan is equivalent to the value of the underlying (1:1).

In order to utilize Alchemix loans for on-chain and real world purchases, users must be able to sell them for other assets. For someone without an Alchemix debt position, an alAsset is equivalent to the underlying asset eventually - due to the Transmuter. Alternatively, an alAsset may be sold to someone with an Alchemix loan that wishes to repay their debt. For these reasons, alAssets will typically be valued by the market at some discount from 1:1 with the underlying. For example, a 3rd party may purchase an alAsset from someone with debt at some value less than 1:1 because they expect to receive a 1:1 conversion from the Transmuter over a short enough time period that the discount is worthwhile.

The market price discount from 1:1 can be viewed as the price depositors pay to access their future yield up-front. The Transmuter, Elixir AMO, as well as treasury operations, help maintain sufficient alAsset liquidity and work to minimize the discount for each alAsset within frameworks outline by governance.