Transmuter

The Transmuter is the primary price restoring mechanism for the alchemical synthetic tokens (alAssets). The Transmuter.sol contract powers the Transmuter. Harvested yield, as well as liquidation, will flow directly to the TransmuterBuffer. The TransmuterBuffer will send funds to the Transmuter following a rate and limit set by governance, thus ensuring that Transmuter depositors are guaranteed a 1:1 redemption of alAssets for their underlying collateral.

Users deposit alUSD into the Transmuter. As the yield, liquidations, and repayments come in, it will credit users (for example) DAI proportional to the amount of alUSD they have staked, relative to the total amount of alUSD staked. When a user chooses to withdraw the converted DAI, an equal amount of alUSD will be burned.

The rate at which funds can be converted to their underlying collateral is dependent on the flow rate of the TransmuterBuffer. More information can be found in The Transmuter, Elaborated. This limit ensures that the Transmuter will not be drained for tiny (0.1%) arbitragers, and also creates a front-stop (i.e. excess) pool of funds that would remain idle until eventually allowed to be transmuted. Instead of these funds remaining idle, the Transmuter was upgraded to send significant excess funds to the Elixir AMO.

Many users wish to estimate the conversion rate of the transmuter. Assuming there is sufficient available flow, funds will enter the transmuter whenever there is a yield harvest. Therefore, the minimum flow to the transmuter may be estimated by the average yield being earned by all depositors for the corresponding alAsset. The yield is shared with all transmuter depositors proportionally. Additional funds will be sent to the transmuter whenever any user repays or liquidates their loan, which is why using the average yield results in a minimum estimate of flow to the transmuter and transmutation rate.

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