# Alchemix

Alchemix lets you instantly access loans representing your collateral's future yield. Over time, the interest your deposit earns is used to repay your debt automatically. Alchemix loans are self-repaying, interest-free, and non-liquidating.

> ***Alchemix gives you DeFi loans that transform future yield into present-day capital.***

Explore Alchemix's diverse collateral strategies to find the best self-repaying loan for you on our [main website](https://alchemix.fi/).

## **The Benefits of Alchemix**

* **Maximize Your Assets:** Maintain exposure to your yield-bearing assets while accessing immediate value—spend your future yield today.
* **Diverse Collateral Strategies:** Complete flexibility to choose between any integrated yield strategies.
* **No Forced Liquidations:** Your loan can't be forcibly closed by anyone, not even the protocol. You can self-liquidate anytime by repaying your debt with your collateral.
* **Complete Freedom:** Your position remains accessible at all times, with no locking or deposit/withdrawal fees. You can repay your debt whenever you choose or let it repay itself over time.

<figure><img src="/files/XZIm1f3xbsEEhwP2kWWc" alt=""><figcaption></figcaption></figure>

## **Get Your First Self-Repaying Loan**

* [Watch the Alchemix cinematic ad](https://www.youtube.com/embed/FlWP9FC8C3c?autoplay=1)
* [Borrow using Alchemix](https://alchemix.fi/)

## Quick Start Guide

1. **Deposit to Earn & Borrow**\
   Deposit your collateral into your preferred yield strategy to start earning interest, and be able to take out a loan. Use your deposit to borrow and receive alAssets while your deposit earns interest.
2. **Swap alAsset**\
   Swap the alAsset to any other token via a DEX or DEX Aggregator to access the value of your loan. alAssets can also be used directly on some DeFi protocols.
3. **Wait, Withdraw, Borrow, Repay, or Self-Liquidate**\
   Your chosen yield strategy will earn interest on the full initial deposit. When the chosen strategy earns yield, your share of the yield is used to repay your debt over time automatically. Manage your loan as needed, with the flexibility to withdraw principal, borrow more, repay, or self-liquidate at any time.

<figure><img src="/files/jy1y6OHfnz45lL1O2qqM" alt=""><figcaption><p><strong>The Alchemist Flow.</strong> Deposit your collateral to Alchemix to earn credit, borrow synthetic assets to spend, or save your capital and let your credit accrue.</p></figcaption></figure>

<figure><img src="/files/gmoNItXLUDfXNY7H5RPb" alt=""><figcaption><p><strong>Alchemix Collateral.</strong> These are the types of underlying collateral assets that Alchemix supports. Alchemix offers a diverse selection of yield strategies for each underlying asset.</p></figcaption></figure>

## Learn more

> * [Guides](/user-docs/resources/guides)
> * [How to](/user-docs/resources/how-to)

<figure><img src="/files/vjAqOwFhQTIthEzfdwcB" alt=""><figcaption></figcaption></figure>


# Overview

## How does Alchemix work? <a href="#what-does-alchemix-do" id="what-does-alchemix-do"></a>

Picture a bank where you deposit your assets and watch them grow via interest.

Now imagine that in addition to earning interest, the bank allows you to access an instant credit line without the burden of interest payments or liquidation risks, and the interest you earn repays your debt automatically.

Alchemix is like your personal DeFi bank that you control - where deposited assets generate yield that automatically pays off any debt accrued and increases your credit.

With Alchemix, your collateral becomes your credit card, allowing you to spend a portion of your assets upfront, all while your accrued interest effortlessly repays any borrowed amounts over time.

> ***There's no interest on the debt.***
>
> ***There are no monthly payments to make.***
>
> ***There are no liquidations.***

Alchemix offers an innovative DeFi protocol that provides self-repaying, interest-free, non-liquidating loans - giving you the freedom to do more with your capital.

{% hint style="info" %}
For detailed information and to learn how it works, see [Components](#the-components-of-alchemix), [How-to](/user-docs/resources/how-to), and [Guides and Explainers.](/user-docs/resources/guides)
{% endhint %}

<figure><img src="/files/XZIm1f3xbsEEhwP2kWWc" alt=""><figcaption></figcaption></figure>

## How to use Alchemix <a href="#how-do-i-use-it" id="how-do-i-use-it"></a>

<figure><img src="/files/xb5EH4W8BVM5OqVockyA" alt=""><figcaption><p><strong>The Alchemical Flow.</strong> This graph shows the series of steps users take when using Alchemix.</p></figcaption></figure>

{% hint style="info" %}
Alchemix accepts diverse collateral types used to mint alAssets and take out loans. Keep up to date with all of the current yield strategies and liquidity incentives on the [Alchemix Statistics page](https://alchemix-stats.com/).
{% endhint %}

**Step 1: Deposit, Earn & Borrow**

* **Deposit:** Users can select a yield strategy and then deposit collateral (e.g., stablecoins or ETH) into that strategy, which will start harvesting yield from their deposit.
* **Borrow:** Users can choose to borrow up to the maximum collateral value. The borrowing limit is determined by the collateral-to-debt ratio, which is the collateral value divided by the loan value. The maximum allowed is a 2:1 collateral-to-debt ratio, which means users can borrow up to 50% of the quantity of the collateral in alAssets.
* **Synthetic Assets:** alAssets are tokens that represent debt and the market price of alAssets fluctuates since it represents the future yield of the borrowed amount. The protocol treats alAssets as being equivalent to the underlying assets when borrowing and repaying debt

**Step 2: Market Swap**

* **Convert:** Swap alAssets to any other token via a DEX or DEX Aggregator. By design, alAssets can be priced at some discount relative to the underlying asset, so it is recommended to check the price of the alAsset before initiating a loan repayment. The discount can be viewed as the up-front cost to access your future yield today. alAssets can also be used directly on some DeFi protocols.
* **Spend:** You can do anything with the loan: buy more crypto, book a vacation, cash out savings, or any other way to spend money. Because there are no forced liquidations in Alchemix, you do not have to worry about being forced to repay your loan to avoid liquidation like many other lending protocols.
* **Wait:** The user's chosen collateral yield strategy will go to work earning interest on the full initial deposit. The harvested yield automatically repays the user's debt over time.

**Step 3: Withdraw & Repay**

* **Withdraw:** At any time, users can withdraw the principal amount (the amount deposited). The limits to withdrawals depend on the collateral-to-debt ratio. As long as a 2:1 ratio is maintained, users have two options: they can either wait for the yield from the chosen strategy to pay down the debt over time with the interest harvested, or they can use their deposited collateral to resolve their debt and self-liquidate.
* **Repay:** Users have the option to repay their loans using the respective alAsset or the underlying asset. They can also repay their debt at a discount by purchasing alAssets when trading at lower prices in the broader market compared to when the loan was taken out.

<figure><img src="/files/PVvwAq3Jb0UYs5L1AH38" alt=""><figcaption><p><strong>The Components of Alchemix.</strong> This graph shows the Alchemical Flow along with the components of the platform. Users interact with a diverse group of smart contracts to use Alchemix.</p></figcaption></figure>

<figure><img src="/files/XZIm1f3xbsEEhwP2kWWc" alt=""><figcaption></figcaption></figure>

## The Components of Alchemix

<figure><img src="/files/86T7EXnJIWzNOpJHVnCO" alt="" width="80"><figcaption><p>Alchemist</p></figcaption></figure>

### Alchemist

The Alchemists handle collateral deposits, issue synthetic assets, and manage yield strategies. There is one Alchemist for each alAsset on each chain.

*Read more -* [***Alchemist***](https://alchemix-finance.gitbook.io/user-docs/alchemix-ecosystem/alchemist)

<figure><img src="/files/t76GPjbbPVQxnGPvWGTC" alt="" width="75"><figcaption><p>alUSD, an alAsset</p></figcaption></figure>

### alAssets

alAssets are tokens that represent future yield. They can be used for market swaps, transmuting, liquidity provision, and loan repayments.

*Read more -* [***alAssets***](https://alchemix-finance.gitbook.io/user-docs/alchemix-ecosystem/alassets)

<figure><img src="/files/JDA1i8VGWfLs3jy4KSUZ" alt="" width="80"><figcaption><p>Transmuter</p></figcaption></figure>

### Transmuter

The Transmuter converts synthetic alAssets to their underlying assets on a 1:1 basis by gradually releasing yield from Alchemists to alAsset token stakers.

*Read more -* [***Transmuter***](https://alchemix-finance.gitbook.io/user-docs/alchemix-ecosystem/transmuter)

<figure><img src="/files/MZgGw7Twao1ohmAbunVs" alt="" width="80"><figcaption><p>Elixir AMO</p></figcaption></figure>

### Elixir AMO

The Elixir AMO (Automatic Market Operator) deposits surplus funds from the Transmuter into external liquidity pools, which supports alAsset prices and generates additional protocol revenue. The Elixir also has the flexibility to withdraw alAssets for price stabilization.

*Read more -* [***Elixir AMO***](https://alchemix-finance.gitbook.io/user-docs/alchemix-ecosystem/elixir-amo)

<figure><img src="/files/sstrzwA6e3293GUnbmNh" alt="" width="125"><figcaption><p>Alchemix DAO</p></figcaption></figure>

### AlchemixDAO

The Alchemix DAO is empowered by the governance token ALCX, which grants holders governance rights to signal their desires that help shape the protocol's direction and resource utilization.

*​Read more -* [***Alchemix DAO***](https://alchemix-finance.gitbook.io/user-docs/alchemix-dao/the-alchemix-dao)

<figure><img src="/files/TfBjdIJGy778mNmiQlXW" alt="" width="80"><figcaption><p>ALCX</p></figcaption></figure>

### ALCX Token

ALCX serves as both the governance and incentive token for Alchemix, facilitating community decision-making and rewarding liquidity providers within the ecosystem.

*Read more - ​*[***ALCX Token***](https://alchemix-finance.gitbook.io/user-docs/alchemix-dao/alcx-token)

<figure><img src="/files/BdJUe7Jx8opOv6RG7Udb" alt=""><figcaption></figcaption></figure>


# Alchemist

The Alchemists are the core smart contracts responsible for managing user accounts in Alchemix. They are used for various reasons, including depositing tokens, minting synthetic assets (alAssets), withdrawing tokens, engaging in yield farming strategies, and repaying debt.

Alchemist contracts primarily manage the yield strategies and then distribute the harvested yield to depositors. Whenever users deposit funds they can use those deposits to take out a loan via minting alAssets.

alAssets have several uses, such as exchanging them for other tokens in markets or using them in various DeFi protocols. Users also have the freedom to repay their debt using underlying tokens or alAssets.

Alchemists can have multiple yield strategies but can only issue one type of alAsset. For example, the alUSD Alchemist issues alUSD but can accept yield-bearing tokens for any approved stablecoin.

<figure><img src="/files/1sItwiuULh04m3xwmFSq" alt=""><figcaption><p>The Alchemist contracts utilize your deposits to harvest yield from deposits.</p></figcaption></figure>

{% hint style="info" %}
Each alAsset on each chain is managed by a dedicated Alchemist. Learn more about this here: [Alchemix on L2](/user-docs/alchemix-ecosystem/alchemix-on-l2)
{% endhint %}

## Key Features

### **Diverse Yield Farming Strategies**

Alchemists accept yield-bearing assets as collateral but also can accept underlying tokens as deposits, which are converted to third-party yield tokens and then deposited. Alchemix accepts different collateral types, such as ETH-denominated tokens and stablecoins.

### **Minting**

Users can mint alAssets by depositing collateral, effectively taking out a loan. Minting alAssets increases your debt by a corresponding amount, equivalent to borrowing against your deposited collateral.

### **Flexible Withdrawals**

Users can withdraw their original underlying assets, subject to certain limitations.

Withdrawals are limited by the minimum collateral-to-debt ratio (2:1, collateral must be at least twice the debt). Collateral withdrawals are not allowed if they cause the collateral-to-debt ratio to fall below the required minimum, ensuring system solvency and protection against defaults.

To withdraw collateral after taking out a loan, users must either:

* **Repay the Debt**: You can repay your debt by depositing alAssets (alUSD or alETH) or repaying with the associated underlying asset (stablecoin or ETH). Repaying debt with alAssets effectively burns the tokens which in turn eliminates the debt.
* **Wait for Yield**: The yield harvests generated by the deposited assets can reduce the debt over time. This debt reduction either allows you to take out a loan or, if you choose not to, enables you to withdraw additional collateral.
* **Self-Liquidation:** The deposited collateral can be used to repay the debt, provided the collateral-to-debt ratio (2:1) is maintained. This process involves using a portion of your collateral to settle the debt.

<figure><img src="/files/XZIm1f3xbsEEhwP2kWWc" alt=""><figcaption></figcaption></figure>

## How it works

Below is an example of how it works with the stablecoin DAI and the Alchemix synthetic stablecoin, alUSD, using the Yearn Finance DAI yVault vault. The system works the same for other accepted stablecoins, as well as ETH-denominated yield strategies:

1. **Depositing Assets:** Users can deposit a range of yield-bearing assets or their underlying counterparts. If the underlying asset is deposited, the protocol will convert it to the yield-bearing asset on behalf of the user before depositing it into Alchemix.
   * **Example:** If the user deposits DAI, the Alchemist will first convert the DAI into yvDAI through Yearn Finance and then accept the deposit.
2. **Earning & Borrowing:** Users take loans in synthetic alAssets: alETH can be borrowed against ETH-denominated yield token deposits, and alUSD can be borrowed against stablecoin-denominated yield token deposits. Users can borrow alAssets for up to 50% of the collateral's quantity (a minimum collateral-to-debt ratio of 2:1).
   * **Example:** The user borrows alUSD worth up to 50% of the amount of deposited collateral. Loans require a minimum collateralization ratio of 200%. For every 2 DAI a user deposits, they may borrow up to 1 alUSD.
3. **Yield Harvesting:** The user deposits are placed in a yield strategy and the accrued yield from your collateral contributes to repaying the borrowed amount. Each yield harvest reduces your debt, and this also causes an increase in your borrowing capacity.
   * **Example:** The yield that accrues to the yvDAI is periodically harvested to repay the debt of the depositors. With each harvest, the user's account is credited a proportional share of the harvest, thus reducing the user's debt. If you have deposited DAI, but have not borrowed alUSD, the harvest will increase your alUSD borrow limit.
4. **Debt Management & Repayment:** Users can repay their debt at any time, using the alAsset or underlying assets. As the protocol pays down the user's debt, the user can withdraw increasing amounts of DAI from the Alchemist or re-up their alUSD loan while maintaining a minimum 200% collateral ratio. Users can buy alAssets from the open market and pay off their debt at a discount. alAssets and the underlying tokens are treated as 1:1 by the Alchemist for repayment and self-liquidation.
   * **Example:** alUSD debt can be repaid with alUSD, DAI, USDC, and USDT. Repaying debt with alUSD is also a price-restoring mechanism because when the alUSD price is under $1, users can buy it from AMMs and pay off their debt at a discount.
5. **Self-Liquidation:** If users do not have the capital to repay their loan, they can self-liquidate. Self-liquidation will use a user's collateral to repay outstanding debt, at which point the user can withdraw all remaining collateral.
   * **Example:** Users can self-liquidate a portion or all of their collateral whenever needed. The contract will repay their alUSD debt using the DAI from their yvDAI collateral.
6. **Harvesting Fees:** As yield is harvested, it is transferred to the [Transmuter](https://alchemix-finance.gitbook.io/user-docs/alchemix-ecosystem/transmuter) contract from the Alchemist contracts. Alchemix charges a fee of 10% of all generated yield, which means that 90% of the interest your position earns will pay down your debt, or increase your debt allowance if you have no debt.

The Alchemists give users a flexible line of credit for their future yield. Users can enter and exit anytime without committing to long lockups. A user's collateral will never be liquidated unless they do it themselves, because their debt can only go down.

Alchemix has undergone multiple [audits](https://alchemix-finance.gitbook.io/user-docs/resources/audits-and-reports), hosts an ongoing [bug bounty program](https://immunefi.com/bounty/alchemix/), and utilizes internal security reviews and risk monitoring tools.

### **To protect deposits, Alchemists incorporate:**

* **Collateral Deposit Cap:** To limit the supply of alAssets and exposure to any single yield source, the amount of each collateral type used to mint alAssets is capped.
* **Operational Safeguards**: With Maximum Loss, Repay Cap, and Liquidate Cap limits, the protocol guards against instability from market fluctuations.
  * **Maximum Loss:** The maximum loss parameter limits how much a yield strategy can lose. If exceeded, the yield strategy is automatically paused for evaluation. See[ multisig admin rights ](/user-docs/alchemix-dao/the-alchemix-dao/governance-process/multisig-admin-rights)for more information.
  * **Repay and Liquidate Caps:** Time-bound limits that manage the quantity of debt that can be repaid and the amount of collateral that can be liquidated, limiting damage of any potential exploits.

{% hint style="info" %}
For detailed information about this topic, see [Vault Losses and Collateral De-pegging](/user-docs/resources/guides/vault-losses-and-collateral-de-pegging).
{% endhint %}

<figure><img src="/files/BdJUe7Jx8opOv6RG7Udb" alt=""><figcaption></figcaption></figure>


# alAssets

alAssets represent users' future yield from deposited yield-bearing collateral, functioning as tokenized loans for the different strategies (e.g., ETH for alETH, various stablecoins for alUSD).

alAssets can be swapped for other assets, paired with other assets to provide liquidity, converted to their underlying assets via the Transmuter, or used in various DeFi protocols such as the ones on [Alchemix Stats](https://alchemix-stats.com/earn).

Because alAssets represent *future* yield, they are typically expected to be valued by the market at a discount from 1:1 with their associated underlying asset. Thus, experienced DeFi users may wish to purchase alAssets directly (instead of taking a loan) to earn yield, speculate on the price of the alAsset, or profit by converting it back to its underlying asset via the Transmuter. This type of user is the counterparty that makes it possible to access self-repaying loans from Alchemix.

Governance mechanisms and systems, such as the Transmuter, Elixir AMO, and liquidity incentives provided by the DAO treasury, work together to influence the price and manage the supply of alAssets.

<figure><img src="/files/0P8KjE9IPYh5Y5uCUs99" alt=""><figcaption><p>alAssets are minted when users deposit collateral into the Alchemists and take out loans against those deposits. These assets can be used in market swaps or any type of transaction. alAssets can also be used in the Transmuter which will gradually convert these into the underlying from the harvested yields.</p></figcaption></figure>

## Key Features

### **Yield Representation**

alAssets represent future yield generated by deposited assets in the platform.

### **Discounted Trading**

alAssets typically trade at a discount to the underlying, reflecting their representation of future value.

### **Governance Oversight**

The alAsset supply and price are influenced by the Transmuter, Elixir AMO, and DAO-managed liquidity incentives (find more info about the incentives in [Staking Pool Incentives](/user-docs/alchemix-dao/the-alchemix-dao/staking-pool-incentives)).

### **Debt Repayment**

Enables users to repay debt or convert assets using alAssets.

### **Collateral Deposit Cap**

Ensures a predictable maximum global supply in addition to Alchemist collateral deposit caps.

<figure><img src="/files/XZIm1f3xbsEEhwP2kWWc" alt=""><figcaption></figcaption></figure>

## How it works

1. **Deposit Collateral:** Users deposit collateral assets into the Alchemix protocol.
2. **alAsset Issuance:** When users take out loans, they receive alAssets representing their future yield from the deposited assets.
3. **Market Accessibility:** Users can utilize alAssets for various on-chain transactions, including market swaps and loan repayments.
4. **Liquidity Management:** Users taking loans will expand the supply of alAssets. Loan repayments, Transmutation, and the Elixir AMO will all shrink the supply of alAssets. The price of the alAsset is representative of these mechanisms, as well as demand for loans, third-party liquidity providers, and Transmuter users.
5. **Transmuter Conversion:** Users can deposit alAssets into the Transmuter, gradually converting them into their underlying collateral assets over time.

{% hint style="info" %}
For detailed information, see this guide to learn how to[ Deposit collateral](/user-docs/resources/how-to/deposit-funds) & how to [Take a Self-repaying Loan](/user-docs/resources/how-to/take-a-self-repaying-loan).
{% endhint %}

<figure><img src="/files/BdJUe7Jx8opOv6RG7Udb" alt=""><figcaption></figcaption></figure>


# Transmuter

The Transmuter is the primary mechanism for restoring alAsset prices and reducing supply by converting alAssets into their underlying assets.

The Transmuter achieves this by receiving all harvested yields, self-liquidations, and repayments while gradually releasing them to alAsset depositors to be redeemed via a time-based formula.

Users that deposit alAssets to the Transmuter will gradually be credited with the corresponding assets proportional to the amount of alAssets that they have deposited in the Transmuter. The alAssets are burned when a user claims the transmuted token.

For example, if a user deposits 100 alUSD into the Transmuter, it will convert the alUSD to DAI over time. Once the 100 alUSD are fully redeemable for 100 DAI, the user can claim the corresponding 100 DAI, which will also burn the 100 alUSD.

<figure><img src="/files/uagiY0VI5xCEC4QaJ650" alt=""><figcaption></figcaption></figure>

## Key Features

### **1:1 Asset Conversion**

Enables the conversion of alAssets to underlying assets at a 1:1 rate.

### **Minimum Estimate of Flow**

The transmutation rate is dictated by the average yield earned by depositors, which provides a baseline estimation for the flow of yield into the Transmuter. The flow rate to the Transmuter increases with self-liquidations and loan repayments.

### **Protocol Synergy**

Receiving funds from Alchemists and redirecting excess funds to the Elixir AMO optimizes the capital efficiency within the ecosystem.

### **Governance-Controlled Parameters**

Transmuter parameters are managed based on governance decisions, aligning with the ecosystem's evolving needs.

### **Stabilization of alAssets**

The Transmuter provides an efficient mechanism to stabilize the price of the alAsset.

<figure><img src="/files/XZIm1f3xbsEEhwP2kWWc" alt=""><figcaption></figcaption></figure>

## How it works

1. **Deposit:** Users deposit alAssets (like alUSD) into the Transmuter.
2. **Accumulation & Exchange:** Over time the underlying asset is accumulated in the Transmuter via yield harvest, self-liquidations, and loan repayments. The asset is proportionally allocated to users based on their alAsset deposit. For example, the Transmuter will gradually allocate DAI based on how much alUSD has been deposited.
3. **Claim:** Users claim the alAssets equivalent to their deposited tokens and burn the alAssets at a 1:1 ratio. In this example, if the user deposited 100 alUSD the user will burn their 100 alUSD deposits when they claim the 100 DAI equivalent.

Users who deposit alUSD in the Transmuter would gradually be credited with DAI proportional to their alUSD deposit. Once the user decides to withdraw DAI, an equivalent amount of their deposit alUSD is burned, completing the transmutation cycle.

<figure><img src="/files/XZIm1f3xbsEEhwP2kWWc" alt=""><figcaption></figcaption></figure>

## Conversion Flow

The flow rate at which these assets can be converted from alAssets (alUSD) into the underlying tokens (DAI) is limited to ensure that the system is not drained by minor arbitrages while creating a front-stop or excess pool of funds for conversions when the price of the alAsset diverges further from the underlying. If the excess funds are significant, they are sent to the [Elixir AMO](https://alchemix-finance.gitbook.io/user-docs/alchemix-ecosystem/elixir-amo).

The minimum flow to the Transmuter may be estimated by the average yield earned by all depositors for the corresponding alAsset. Furthermore, repayments and self-liquidations are sent directly into the Transmuter, contributing to the conversion flow, which is part of the average yield.

{% hint style="info" %}
More information can be found in [The Transmuter, Elaborated](/user-docs/resources/guides/the-transmuter-elaborated)
{% endhint %}

<figure><img src="/files/BdJUe7Jx8opOv6RG7Udb" alt=""><figcaption></figcaption></figure>


# Elixir AMO

The Elixir AMO is a liquidity management tool designed to take advantage of the funds built up by the Transmuter. Excess underlying assets in the Transmuter are sent to third-party liquidity pools via the Elixir AMO to rebalance the alAsset price and generate yield.

The Elixir AMO removes assets from the liquidity pool when they fall below a target price, stabilizing the alAssets. The Elixir AMO enhances the sustainability of the Alchemix protocol by generating additional revenue streams and providing an additional lever for managing the system.

<figure><img src="/files/4DhW83aAfFacYDibBvsD" alt=""><figcaption></figcaption></figure>

## Key Features

### **Automated Market Operator**

The Elixir AMO automates liquidity management by deploying excess funds from the Transmuter into yield strategies, effectively rebalancing liquidity pools.

### **Price Stabilization**

The Elixir AMO can withdraw alAssets to stabilize prices when they fall below the target price, helping to mitigate volatility and increase stability.

### **Revenue Generation**

Deposits into liquidity pools to generate additional revenue for the protocol.

### **Flexible Withdrawal Mechanism**

The Elixir AMO offers the flexibility to withdraw alAssets and remove them from circulation when necessary, providing faster-acting influence over the alAsset supply than the Transmuter alone can offer.

### **Sustainability**

By enhancing alAsset management and generating additional revenue streams, the Elixir AMO contributes to the long-term sustainability of the Alchemix ecosystem.

<figure><img src="/files/XZIm1f3xbsEEhwP2kWWc" alt=""><figcaption></figcaption></figure>

## How it works

1. **Transmuter Accumulation:** Excess funds accumulate in the Transmuter.
2. **Transfer to Elixir AMO:** When significant, these funds are deployed to the Elixir AMO.
3. **Elixir AMO Deposits:** The Elixir AMO deposits the funds into corresponding liquidity pools, rebalancing the pools and increasing the alAsset prices.
4. **Yield Generation:** Yield generated from these deposits (such as CRV, CVX, or similar) creates additional revenue for the protocol.
5. **Removing Assets:** The AMO can also remove alAssets from circulation as a faster-acting method of influencing alAsset supply and price.

{% hint style="info" %}
For detailed information on how it works, see [The AMO: The Elixir](/user-docs/resources/guides/the-amo-the-elixir).
{% endhint %}

<figure><img src="/files/BdJUe7Jx8opOv6RG7Udb" alt=""><figcaption></figcaption></figure>


# Alchemix on L2

Differences between Mainnet Alchemix and other Layer 2 chains

Alchemix primarily operates on the Ethereum Mainnet but also maintains additional deployments on Optimism and Arbitrum. ALCX and alAssets in Layer 2 chains are sometimes called ‘xalAssets’, as they are not technically identical to the Mainnet assets. Below are the key differences between Mainnet components and their Layer 2 counterparts:

<figure><img src="/files/TfBjdIJGy778mNmiQlXW" alt="" width="80"><figcaption><p>ALCX</p></figcaption></figure>

## ALCX <a href="#alcx" id="alcx"></a>

ALCX can only be minted on the Ethereum Mainnet. Any amount of ALCX may be bridged to Arbitrum or Optimism through the Everclear (prev Connext) bridge. When ALCX is bridged from Mainnet, it is locked in a lockbox contract and xALCX (Layer 2 ALCX) is minted on the Layer 2 chain. To bridge back, xALCX may be burned on the Layer 2 chain to claim ALCX from the lockbox on Mainnet. So long as the system behaves as expected, there would be no reason that xALCX on any Layer 2 could not be burned/bridged to claim equivalent ALCX on Mainnet.

<figure><img src="/files/XZIm1f3xbsEEhwP2kWWc" alt=""><figcaption></figcaption></figure>

<div align="center"><figure><img src="/files/Mv5z6yDt5LbnvYNy3DXE" alt="" width="80"><figcaption><p>alETH</p></figcaption></figure></div>

## alAssets <a href="#alassets" id="alassets"></a>

Like xALCX, alUSD, and alETH can be locked/bridged in any quantity on/from Mainnet to earn equivalent credit to mint xalUSD and xalETH (Layer 2 alUSD and Layer 2 alETH). Additionally, xalUSD and xalETH can be minted on Arbitrum and Optimism by taking a self-repaying loan. Lastly, bridging xalAssets between L2s is unlimited, but bridging xalAssets to Mainnet can only be done up to the extent that the corresponding alAsset has been bridged from Mainnet to any L2.

For example, assuming no other bridging had ever taken place: if you were to bridge 10 alUSD from Mainnet to Optimism, and then someone else was to take an alUSD loan and bridge 10 OP-xalUSD from Optimism to Mainnet, you would no longer be able to bridge any xalUSD back from Optimism to Mainnet (someone else would have used the liquidity you created). However, you can bridge your 10 OP-xalUSD from Optimism to Arbitrum. Ultimately, xalAssets are backed by a mix of Mainnet alAssets (through bridging) and the yield sources of that specific chain. OP-xalUSD is backed by Optimism future yield and alUSD bridged from Mainnet. Mainnet alUSD is only backed by Mainnet future yield.

This system helps create more liquidity on L2 chains while ensuring that the primary Alchemix deployment (Mainnet) is insulated from the L2 chains. In that manner, xalAssets should generally be expected to have an equivalent or lesser value than Mainnet alAssets as bridging from Mainnet to L2s (and between L2s) is unrestricted while bridging from L2s to Mainnet is liquidity-based.

<figure><img src="/files/XZIm1f3xbsEEhwP2kWWc" alt=""><figcaption></figcaption></figure>

<figure><img src="/files/86T7EXnJIWzNOpJHVnCO" alt="" width="80"><figcaption><p>Alchemists</p></figcaption></figure>

## Alchemists <a href="#alchemists" id="alchemists"></a>

Loans on L2 chains behave the same as on Mainnet, but each chain has unique yield strategies.

<figure><img src="/files/XZIm1f3xbsEEhwP2kWWc" alt=""><figcaption></figcaption></figure>

<figure><img src="/files/JDA1i8VGWfLs3jy4KSUZ" alt="" width="80"><figcaption><p>Transmuter</p></figcaption></figure>

## Transmuter <a href="#transmuter" id="transmuter"></a>

The Transmuter behaves the same on L2 chains, where xalAssets can be redeemed over time at a 1:1 rate for the underlying assets. The flow to the Transmuter is based on the yield for each chain. Users can bridge alAssets from Mainnet to obtain xalAssets on an L2 and deposit them into the Transmuter.

<figure><img src="/files/XZIm1f3xbsEEhwP2kWWc" alt=""><figcaption></figcaption></figure>

<figure><img src="/files/MZgGw7Twao1ohmAbunVs" alt="" width="80"><figcaption><p>Elixir AMO</p></figcaption></figure>

## Elixir AMO <a href="#elixir-amo" id="elixir-amo"></a>

When available, the AMO functions on L2s in the same way as on Mainnet. The backing is held in the alAsset liquidity pool and can be withdrawn single-sided as alAssets to influence the price, according to governance. On some L2s, the AMO exists as a multisig rather than a contract.

<figure><img src="/files/XZIm1f3xbsEEhwP2kWWc" alt=""><figcaption></figcaption></figure>

## Appendix - Everclear Bridge <a href="#appendix-connext-bridge" id="appendix-connext-bridge"></a>

Alchemix uses the xERC20 + Lockbox standard pioneered by Everclear (prev Connext). Currently, Everclear is also the only whitelisted bridge. Bridging alAssets and ALCX is secured through Everclear's cross-chain message system through the Arbitrum and Optimism canonical bridges. Everclear has the right to pause its system. If bridging is ever paused for an unreasonable amount of time, Alchemix has the option to whitelist another bridging service to provide cross-chain messaging such that bridging can continue between chains. Because of this system, Alchemix is not exclusively dependent on Everclear for bridging services. The bridge contracts on each chain are owned by Alchemix, with the intent to turn ownership over to veALCX.

{% hint style="info" %}
For detailed information see this guide to learn how to [bridge assets to other chains](/user-docs/resources/guides/bridging-assets-to-other-chains).
{% endhint %}

<figure><img src="/files/BdJUe7Jx8opOv6RG7Udb" alt=""><figcaption></figcaption></figure>


# Utility Tools

Alchemix has utility tools that are built by 3rd parties. These tools have no guarantee of audit, review, ownership, or maintenance by Alchemix and you can find them on the [utilities page on the website](https://alchemix.fi/utilities).

### Statistics

Alchemix keeps an extensive statistical data dashboard where you can find all the information related to vaults, staking, treasury, and more!

{% embed url="<https://alchemix-stats.com/>" %}

Additionally, you can find more information about Alchemix at:

* [Revelo Intel - Alchemix Breakdown](https://revelointel.com/project-breakdown/alchemix)
* [Dashboard made by Alphaday](https://app.alphaday.com/b/alchemix/)
* [DeFi Llama](https://defillama.com/protocol/alchemix#information)

<figure><img src="/files/02ov8CxpqbZsjdtkiA3N" alt=""><figcaption></figcaption></figure>


# Links & Resources

* [**Website**](https://www.alchemix.fi/)
* [**Discord**](https://discord.com/invite/alchemix)
* [**Twitter**](https://twitter.com/AlchemixFi)
* [**Medium**](https://alchemixfi.medium.com/)
* [**Newsletter**](https://alchemixfi.substack.com/)
* [**YouTube**](https://www.youtube.com/c/AlchemixFinance)
* [**Github**](https://github.com/alchemix-finance/)
  * [**Front End Repository**](https://github.com/alchemix-finance/alchemix-v2-frontend)
  * [**Contract Deployments**](https://github.com/alchemix-finance/deployments)
* [**Grants Program**](https://alchemix.questbook.app/)
* [**Developer Docs**](https://alchemix-finance.gitbook.io/v2/)
* [**Stats and data**](https://alchemix-stats.com/)

## Learn more

> * [Guides](/user-docs/resources/guides)
> * [How to](/user-docs/resources/how-to)

<figure><img src="/files/02ov8CxpqbZsjdtkiA3N" alt=""><figcaption></figcaption></figure>


# The Alchemix DAO

## Empowering Community Governance

The Alchemix DAO serves as the governance backbone for the Alchemix ecosystem. Its primary objectives include:

1. **Treasury Management:** The DAO receives protocol income from fees and allocates funds for development, maintenance, audits, and community initiatives.
2. **Ecosystem Project Funding:** The DAO supports projects that enhance Alchemix or utilize Alchemix components.
3. **Bug Bounty:** A significant portion of ALCX tokens is reserved for bug bounties, ensuring protocol security. Vulnerabilities can be reported via the [Alchemix website](https://app.alchemix.fi/) or the [Immunefi Bug Bounty](https://bugs.immunefi.com/program-reports) program.
4. **Supporting Ethereum Community:** The DAO occasionally allocates treasury income to initiatives like Gitcoin grants and charitable programs, fostering broader community support.
5. **Governance Voting:** ALCX token holders influence protocol direction and treasury usage through governance voting, ensuring community representation.

<figure><img src="/files/anKC1XiKqNfiHTd2iGiN" alt=""><figcaption></figcaption></figure>

## The Future

As the Alchemix protocol and DAO advance, there will be a progressive shift to empower community governance through a transparent and open process. The team values community feedback and recognizes the wealth of knowledge and diverse skill sets within the community, anticipating that this will significantly shape the DAO's direction and design.

<figure><img src="/files/XZIm1f3xbsEEhwP2kWWc" alt=""><figcaption></figcaption></figure>

## **Bug Bounty Program**

Alchemix offers a bug bounty program to maintain protocol security. The program encourages users to report vulnerabilities for bug bounty rewards. Vulnerabilities can be reported via the [Alchemix website](https://app.alchemix.fi/) or the [Immunefi Bug Bounty](https://bugs.immunefi.com/program-reports) program.

## **DAO Grants Program**

The Alchemix Grants program, launched to fund various Alchemix-related projects, is hosted through Questbook: [alchemix.questbook.app](https://t.co/SUDI85lFzB).

<figure><img src="/files/BdJUe7Jx8opOv6RG7Udb" alt=""><figcaption></figcaption></figure>


# Governance Process

The Alchemix DAO is run through a developer multisig, signaling through the Snapshot app.

ALCX Tokens give holders governance rights over the direction of the protocol and use of the treasury. Community members may create proposals by following the community governance process. If you are interested in submitting a proposal to the Alchemix DAO, you must follow the process below. If you want to apply directly for a grant, please see [Questbook.](https://alchemix.questbook.app/)

## Community Governance Process

### Step 0 - Draft Proposal Discussion <a href="#step-0" id="step-0"></a>

Gather sentiment for your proposal idea through discussion with the community in the Discord server, fireside chats, DMs with other community members, and writing a draft document to share. Refine your proposals with the comments and interests of the community.

### Step 1 - Proposal Draft <a href="#step-1" id="step-1"></a>

Post your proposal as a new thread in the #governance-proposals channel of the Discord server.

### Step 2 - Community Discussion <a href="#step-2" id="step-2"></a>

Ping any relevant contributors thus far in the thread and engage in discussion related to the proposal. This step is important, as you want your proposal to gather as much feedback as possible.

### Step 3 - Off-Chain Signaling Via Snapshot <a href="#step-3" id="step-3"></a>

After a minimum of 5 days after completing Step 1 AND Step 2, you may post your proposal to the “Alchemixed Opinions” Snapshot (the platform for Alchemix governance temperature checks). Snapshot link: <https://snapshot.org/#/alchemixedopinions.eth>

1. A minimum of 50 ALCX is necessary to post a proposal. If you do not have 50 ALCX, you can ask someone with 50 ALCX to post on your behalf.
2. Proposals will be live for 3 days.
3. Voting options must only be For, Against, or Abstain.

### Step 4 - AIP <a href="#step-4" id="step-4"></a>

If greater than 50% of the non-abstain vote is “For” and a quorum of 5k ALCX voting is met, the proposal will move to the official Alchemix Proposal Snapshot as an AIP (Alchemix Improvement Proposal) at <https://snapshot.org/#/alchemixstakers.eth>

### Step 5 - AIP Vote <a href="#step-5" id="step-5"></a>

Official AIPs will have a quorum of 35k ALCX. If the quorum is met, then the multisig will be directed to execute the most popular voting option unless directed otherwise by the voting parameters.

<figure><img src="/files/XZIm1f3xbsEEhwP2kWWc" alt=""><figcaption></figcaption></figure>

## Supplementary Information <a href="#supplementary-information" id="supplementary-information"></a>

### Common Proposal Types <a href="#common-proposal-types" id="common-proposal-types"></a>

1. A change to the protocol treasury and how it is utilized.
2. A change to protocol parameters (such as Transmuter flow rate).
3. A grant, donation, or funding request for a specific feature.
4. Deploying a new protocol-related contract or upgrading an existing one by the core team (e.g., introducing a new yield strategy or launching on a new chain).

### What Makes a Good Proposal? <a href="#what-makes-a-good-proposal" id="what-makes-a-good-proposal"></a>

1. The proposals should have a structure or format that makes giving context and background information easy.
2. The first item in the proposal should summarize only the action items on what is being proposed. To be as brief as possible, it should not include any justification. This section intends to detail every step necessary to execute the proposal.
3. The introduction of the proposal should be an introduction giving context to the reason for the proposal and what the body of the proposal contains. This section should include the necessary background information or minimum context to understand the proposal.
4. The body of the proposal should include an in-depth analysis and justification for what is being proposed. This section should include the area of impact, justification, charts and analysis, in-depth technical specifications, budget allocations, and implementation.
5. The end of the proposal should state the voting options that will appear on the snapshot and what they mean (For, Against, Abstain). This section should clarify what each voting option means in precise and direct language.
6. Any proposal that requires a high level of effort (new features, new deployments, grant requests etc) should identify who will do the work or who exactly will implement the proposal. For example, a poorly written proposal might suggest a new feature, while a well-written proposal would not only suggest the feature but also provide verification that the Core team is willing and able to build it, or specify who will build it if a third party is involved. If a grant request is included, then there is more onus on the proposer to justify why they will be able to build the feature. Treasury actions and changing protocol parameters will typically only take a handful of multi-sig transactions - in these cases, it can be assumed that the multi-sig will carry out the proposal if passed.

<figure><img src="/files/BdJUe7Jx8opOv6RG7Udb" alt=""><figcaption></figcaption></figure>


# Development of New Adapters

Technical contributions to the Alchemix ecosystem can come in many forms, including:

* Token adapters for new yield sources
* Integration with other DeFi protocols
* Alchemix-specific tools and utilities

However, to integrate any new smart contracts into an AlchemixV2 debt system, some governance actions will be required. Contributors should use the following procedures to guide them as they prepare to build and integrate code into the Alchemix ecosystem.

## Token Adapters

Alchemix token adapters are standardized methods used to interact with different yield-bearing assets or vaults. Alchemix uses token adapters to integrate and manage the various assets seamlessly.

The following details the steps are necessary for integrating a new adapter into the Alchemix V2 protocol.

### Token Adapter Governance Process <a href="#token-adapter-governance-process" id="token-adapter-governance-process"></a>

There are three steps, including 2 separate AIPs (Alchemix Improvement Proposals), needed to get an adapter approved and connected in an Alchemix V2 debt system. The first AIP is technically optional, as both AIPs could be condensed into a single AIP if the integration developer is comfortable putting in the development work upfront without pre-approval.

The [Community Governance Process](https://alchemix-finance.gitbook.io/user-docs/alchemix-dao/the-alchemix-dao/governance-process) details the general governance steps that should be followed for each AIP.

#### *Step 1 - Propose the new yield source for integration, and request grant funding.* <a href="#step-1" id="step-1"></a>

The purpose of this step is for the integrator/proposer to verify that the Alchemix DAO wants to integrate the proposed yield strategy. Additionally, the integrator/proposer can request a pre-approved grant of ALCX tokens, to be paid out when the Adapter is deployed in step 2.

A template for Step 1 proposals will be provided in the future.

#### *Step 2 - Write, deploy, and verify the ITokenAdapter compliant adapter. See Technical Requirements below at the end of section.* <a href="#step-2" id="step-2"></a>

#### *Step 3 - Propose integration of the new yield source using the new adapter.* <a href="#step-3" id="step-3"></a>

The following parameters need to be approved in at least one of the two AIPs:

* Target network (eg. ETH Mainnet, Optimism, etc…)
* Yield bearing asset name & address (include Etherscan & Github links)
* Collateral asset name & address (include Etherscan & Github links)
* [Maximum Loss](https://alchemix-finance.gitbook.io/v2/docs/alchemistv2#setmaximumloss) is expressed in basis points (eg., 50 for 0.5%) [more info](https://github.com/alchemix-finance/v2-foundry/blob/master/src/interfaces/alchemist/IAlchemistV2AdminActions.sol#L49)
* Deposit cap (expressed in units of underlying collateral) [more info](https://github.com/alchemix-finance/v2-foundry/blob/master/src/interfaces/alchemist/IAlchemistV2AdminActions.sol#L49)
* Credit unlock blocks (how long after a harvest does it take for the yield to be distributed to depositors) [more info](https://github.com/alchemix-finance/v2-foundry/blob/master/src/interfaces/alchemist/IAlchemistV2AdminActions.sol#L49)

The following needs to be approved as well, once development and deployment are complete:

* Adapter name & address
  * include Etherscan link
  * include Github link to solidity code in the [v2-foundry repo](https://github.com/alchemix-finance/v2-foundry)
  * include Github link to deployment artifacts in [deployments repo](https://github.com/alchemix-finance/deployments)
* Multisig transaction details that should be executed by the Alchemix dev multisig, detailed [here](https://alchemix-fi.atlassian.net/wiki/spaces/AL/pages/679608321/Adapter+Integration#Dev-Multisig-Transactions)

NOTE: To be clear, all of the above bullet points only need to be approved ONCE by governance. It is up to the builder whether or not they want pre-approval before creating and deploying the new adapter, or if they want to make a single AIP for approval once the adapter is built, deployed, and verified.

<figure><img src="/files/XZIm1f3xbsEEhwP2kWWc" alt=""><figcaption></figcaption></figure>

## Technical Requirements <a href="#technical-requirements" id="technical-requirements"></a>

1. Build a token adapter that is compliant with the [**ITokenAdapter** interface](https://github.com/alchemix-finance/v2-foundry/blob/master/src/interfaces/ITokenAdapter.sol), along with a set of unit & integration tests, and make a PR against the master branch of the [Alchemix V2 Repo](https://github.com/alchemix-finance/v2-foundry).
2. Once the Pull Request is approved and merged by the core team, you can deploy the contract to the target network.
3. Make a pr against the master branch of the [deployments repo](https://github.com/alchemix-finance/deployments) that includes the artifacts from the deployment (.json file containing, at a minimum, the **abi** & **address** of the deployed adapter).

## Dev Multisig Transactions <a href="#dev-multisig-transactions" id="dev-multisig-transactions"></a>

Relevant addresses for already-deployed Alchemix contracts can be found in the [deployments repo](https://github.com/alchemix-finance/deployments).

## **Enable a new adapter**

1. TARGET\_ALCHEMIST\_ADDRESS.addYieldToken(YIELD\_TOKEN\_ADDRESS, (ADAPTER\_ADDRESS, MAXIMUM\_LOSS, MAXIMUM\_EXPECTED\_VALUE, CREDIT\_UNLOCK\_BLOCKS));
   1. YIELD\_TOKEN\_ADDRESS = the address of the yield token being integrated
   2. ADAPTER\_ADDRESS = the address of the newly deployed adapter
   3. MAXIMUM\_LOSS = the maximum loss value (in bps) from the AIP
   4. MAXIMUM\_EXPECTED\_VALUE = the deposit cap value (in units of underlying collateral) from the AIP
   5. CREDIT\_UNLOCK\_BLOCKS = the credit unlock blocks value from the AIP
2. TARGET\_ALCHEMIST\_ADDRESS.setYieldTokenEnabled(YIELD\_TOKEN\_ADDRESS, true);
   1. YIELD\_TOKEN\_ADDRESS = the address of the yield token being integrated

## **Upgrade an adapter**

(If the newly deployed adapter is an upgraded adapter for an existing yield token)

1. TARGET\_ALCHEMIST\_ADDRESS.setTokenAdapter(YIELD\_TOKEN\_ADDRESS, ADAPTER\_ADDRESS);
   1. YIELD\_TOKEN\_ADDRESS = the address of the yield token being integrated
   2. ADAPTER\_ADDRESS = the address of the newly deployed adapter

## **Create a harvest job for the Alchemix Keeper**

1. HARVEST\_RESOLVER\_ADDRESS.addHarvestJob(true, YIELD\_TOKEN\_ADDRESS, ALCHEMIST\_ADDRESS, MINIMUM\_HARVEST\_AMOUNT, MINIMUM\_DELAY, SLIPPAGE\_BPS);
   1. details on these parameters can be found [here](https://github.com/alchemix-finance/v2-foundry/blob/master/src/keepers/HarvestResolver.sol#L92)
   2. MINIMUM\_HARVEST\_AMOUNT should be set to a value that can be expected to be harvested every 1-2 days
   3. MINIMUM\_DELAY should be set to 1-2 days

<figure><img src="/files/BdJUe7Jx8opOv6RG7Udb" alt=""><figcaption></figcaption></figure>


# Multisig Admin Rights

## Multisig Admin Rights

### Access Control <a href="#access-control" id="access-control"></a>

#### Alchemist Contracts <a href="#alchemist-contracts" id="alchemist-contracts"></a>

Alchemist contracts for alUSD and alETH allow the user to create a debt position by depositing tokens as collateral and taking debt against the collateral by minting alUSD or alETH.

Each Alchemist Contract has the following privileged roles: Admin, Sentinel, and Keeper, with the following privileges:

1. **Admin**
   * Add tokens to the list of underlying and yield tokens supported by the Alchemist
   * Enable and disable tokens from this list
   * Add and remove sentinels and keepers
   * Transfer the admin role to a different address (must be accepted by the new admin)
   * Configure the Alchemist's parameters, including limits, fees, and the addresses of the Transmuter and protocol fee receiver
   * Reset ("snap") the expected value of a yield token to the current value. Since deposits, withdrawals of the underlying, and liquidations are blocked if the value of a yield token suddenly drops significantly below its expected value, this can prevent the contract from becoming unusable if the yield token doesn't recover, or takes too long to recover.
   * Disable or enable whitelisting requirements
2. **Sentinel**
   * Sentinels can disable (ie, pause) underlying and yield tokens. `pauseUnderlyingToken()` will disable `deposit()`, `depositUnderlying()`, `repay()`, and `liquidate()` functionality for the given underlying token. `pauseYieldToken()` will disable `deposit()`, `depositUnderlying()`, `withdraw()`, `withdrawUnderlying()`, `liquidate()` , and `harvest()`for the given yield token (ie, given yield strategy). See Pause Control below for more information.
3. **Keeper**
   * Keepers can trigger harvests of the yield tokens.

### Upgradeability <a href="#upgradeability" id="upgradeability"></a>

One major design choice of note in Alchemix v2 is upgradeability. All 3 major contracts (AlchemistV2, TransmuterV2, and TransmuterBuffer) are built to be used via upgradeable proxies. This entrusts the Alchemix DAO with the ability and responsibility to upgrade the functionality whenever needed.

### Pause Control <a href="#pause-control" id="pause-control"></a>

Sentinels have the ability to pause yield tokens should there be an issue. Admins may then unpause the tokens. When an underlying token is disabled, it should be noted that the `withdraw()`, `withdrawUnderlying()`, `repay()`, `mint()`, and `burn()` (ie, repay debt with alAssets) functions can still be called - allowing users to settle their debt and withdraw the yield token or underlying token.

Each accepted yield token has a configured maximum amount of loss that it can experience and still function normally. If the yield strategy loses more than the specified `maximumLoss`, then the yield strategy is paused automatically, meaning users may not make any deposits, may not liquidate or repay, and may not take a new loan with these strategies. Harvests will also be disabled. Lastly, users will be unable to withdraw collateral as the underlying asset. However, they will still be able to repay their loan and withdraw the yield token. For example, if the `maximumLoss` were exceeded, a user could not withdraw DAI from a strategy that uses yDAI. However, they could still repay their loan with DAI to withdraw their yDAI collateral.

Sentinels also have the ability to pause underlying tokens if issues arise. This applies only to alAssets with multiple underlying tokens, such as alUSD.If an underlying token is paused, the `deposit()`, `depositUnderlying()`, `liquidate()`, and `repay()` functions would be disabled for that token. Notably, debts may still be paid down by harvests and users may repay debt with alAssets or other underlying tokens and withdraw their funds.

### Multisigs, Timelock, and veALCX <a href="#multisigs-timelock-and-vealcx" id="multisigs-timelock-and-vealcx"></a>

The Alchemix Developer Multisig serves as the administrator for the Alchemix contracts and manages the protocol’s operational budget. Separately, the timelock multisig holds the majority of DAO-owned ALCX and owns the sweep functions of the AMO contracts (i.e., AMO funds can only be removed from the AMO contracts by the timelock multisig). The timelock is currently 600 seconds, reduced from 24 hours in response to the July 30th Curve Exploit. In the future, the timelock will likely be retired and all admin controls will be assigned to a mix of veALCX and the dev multisig, with a goal of shifting more power to veALCX and away from the dev multisig over time.

### More Information <a href="#more-information" id="more-information"></a>

For more in-depth information on admin controls and contract features, see the [v2 audit](https://github.com/runtimeverification/publications/blob/main/reports/smart-contracts/Alchemix_v2.pdf) and [developer docs](https://alchemix-finance.gitbook.io/v2/).

<figure><img src="/files/02ov8CxpqbZsjdtkiA3N" alt=""><figcaption></figcaption></figure>


# Staking Pool Incentives

{% hint style="info" %}
Take a look at the current Staking & Incentives program[ here](https://alchemix-stats.com/earn).
{% endhint %}

Alchemix alAssets require deep liquidity to be maximally effective.

The Staking Pools' primary purpose is to distribute ALCX tokens to community members who provide liquidity to the Alchemix ecosystem.

The emissions distribution is modified through governance proposals. Below are the types of pools, how they are incentivized, and their reasoning for existing:

1. alUSD and alETH LP tokens: Users may provide alAsset liquidity pools on 3rd-party decentralized exchanges, and stake their liquidity with these exchanges. These third-party pools aim to establish prices closer to 1:1 than the market would naturally allow, ensuring deep liquidity for alUSD and alETH. This enhances Alchemix's value proposition and boosts liquidity provider confidence. Incentives include protocol liquidity assets (vlCVX, sdCRV, veRAM, veVELO), ALCX emissions, and vote incentivization platforms.
2. ALCX/ETH LP tokens: Users may provide ALCX/ETH liquidity on Balancer, with the option to stake for additional yield on Balancer and Aura Finance, among other platforms.
3. ALCX single token staking: This Alchemix-owned pool rewards ALCX holders who may be too risk-averse to participate in the ALCX/ETH pool. It also acts as an anti-dilutive measure for ALCX holders. The community will determine the longevity of this pool.

These pools and their weights will be adjusted as Alchemix introduces additional alchemical synthetic tokens to the market. The priority will be to incentivize synthetic pairs with their base asset.

<figure><img src="/files/BdJUe7Jx8opOv6RG7Udb" alt=""><figcaption></figcaption></figure>


# ALCX Token

## **ALCX Token Overview**

The ALCX token is an ERC-20 token that serves as both the governance and incentive token for the Alchemix platform.

The token was launched without presales or external funding. ALCX does not have a hard cap but does have a carefully crafted emissions schedule (token mints). Emissions are the rate at which new ALCX tokens are minted. The token emissions are distributed to liquidity providers, the treasury, and to contributors to the protocol.

The ALCX emissions (slow minting) gradually reduce issuance over three years, continuing with a long tail of fixed weekly emissions. Alchemix is now in the long-tail period, where 2200 ALCX are minted per week indefinitely.

<figure><img src="/files/XZIm1f3xbsEEhwP2kWWc" alt=""><figcaption></figcaption></figure>

### **The ALCX Token Distribution & Emissions were distributed as:**

* 15% pre-mine for the Alchemix DAO
* 5% for Bug Bounties
* 80% of tokens available through LP staking
  * Founders, developers, and community contributors can access an exclusive staking pool that will receive 20% of the current ALCX emissions. This equates to 16% of the supply after 3 years.
  * Stakers and liquidity providers are eligible to obtain 80% of the ALCX block reward, which will equate to 64% of the supply after 3 years. Currently, a portion of these emissions are sent to the treasury.

<figure><img src="/files/JefZmIqUOmpYdoiMVhML" alt=""><figcaption></figcaption></figure>

This token distribution allocates the majority of tokens to those who contribute to the Alchemix protocol through working or liquidity provision. It assures that no one from the development team will have enough tokens to control the protocol while rewarding them for their work and incentivizing them to continue working on it.

<figure><img src="/files/T2JImx1cGZ53iPPd7cBd" alt="" width="563"><figcaption></figcaption></figure>

An initial supply of 478,612 $ALCX was minted as a pre-mine. Alchemix calculated that there would be 2,393,060 $ALCX in circulation after 3 years in the following distribution:

* 15% (358,959 tokens) to the DAO treasury
* 5% (119,653 tokens) to the bug bounty program

The staking pools distributed approximately 22,344 $ALCX tokens in their first week, with a 130 $ALCX weekly decrease for the first 3 years. Calculations are approximate as $ALCX rewards are calculated per block, and network conditions, although negligible, may slightly affect the schedule.

Alchemix is over three years old, which means a fixed 2200 $ALCX is emitted weekly, increasing the total supply by 114,400 $ALCX annually. This will lead to a gradual decrease in inflation over time.

At the three-year point, there was approximately a 4.5% annual inflation of supply, which has gradually decreased over time.

<figure><img src="/files/q9Aq6myS87x4fC76YMGj" alt=""><figcaption></figcaption></figure>

<figure><img src="/files/XZIm1f3xbsEEhwP2kWWc" alt=""><figcaption></figcaption></figure>

### ALCX Contract Addresses

Mainnet: 0xdBdb4d16EdA451D0503b854CF79D55697F90c8DF

Optimism: 0xe974b9b31dbff4369b94a1bab5e228f35ed44125

Arbitrum: 0x27b58d226fe8f792730a795764945cf146815aa7

<figure><img src="/files/BdJUe7Jx8opOv6RG7Udb" alt=""><figcaption></figcaption></figure>


# FAQ

<details>

<summary>W<strong>ha</strong>t is Alchemix?</summary>

Alchemix is a pioneering DeFi platform and community DAO that empowers users to unlock the potential of their assets through Self-Repaying, non-liquidating loans. Alchemix reimagines the traditional lending and borrowing experience, offering a secure and innovative way to balance spending and saving while mitigating liquidation risks.

</details>

<details>

<summary>How does the Alchemix self-repaying loan mechanism work?</summary>

Users can deposit supported assets into the platform and earn interest on their deposits. Through this process, users gain access to a credit-like facility that allows them to borrow up to 50% of the value of their assets. The interest earned on the total initial deposit automatically repays any outstanding debt, eliminating the need for monthly payments. Additionally, this innovative like-for-like asset borrowing mechanism ensures there is no risk of liquidation, providing users with peace of mind and a seamless DeFi experience.

</details>

<details>

<summary>What collateral types are supported by Alchemix?</summary>

Alchemix currently supports a variety of collateral types, including ETH, DAI, USDC, USDT, and FRAX. These assets can be used as collateral for obtaining self-repaying loans on the platform. You can also deposit yield-bearing tokens.

</details>

<details>

<summary>How much can I borrow against my deposited collateral?</summary>

When you deposit collateral on Alchemix, you can borrow up to 50% of the value of the corresponding synthetic alAsset. For example, if you deposit ETH, you can borrow alETH worth up to 50% of the value of your deposited ETH, even if the alETH to ETH ratio differs from 1:1.

</details>

<details>

<summary>Is it possible to exit or repay my loan before it is fully repaid?</summary>

Absolutely! Alchemix allows you the flexibility to exit or repay your loan at any time, even before it is fully self-repaid. We offer a self-liquidation feature that can only be triggered by the depositor that enables you to repay outstanding loans by using a portion of your deposited collateral. Once the loan is repaid, you can withdraw the remaining collateral. There are no lock-in periods or penalties at all with Alchemix.

</details>

<details>

<summary>How long will it take for my loan to fully repay itself?</summary>

The repayment timeline for Alchemix loans depends on the variable nature of DeFi yields. Consequently, providing an exact timeframe for the loan to fully repay itself is challenging. However, a rough estimate can be made based on the Loan-to-Value (LTV) ratio and the interest rate. For example, a 50% LTV loan at 10% APR would take approximately 5 years to repay.

0xDefi has a tool to calculate how long your loan will take to repay [here](https://dyor.fi/alcx/calculator). This is a third-party tool, so please use it at your own risk.

</details>

<details>

<summary>Is Alchemix audited?</summary>

Yes, Alchemix has undergone various audits, conducted by reputable auditing firms, including Runtime Verification, Code4rena, and Immunefi.

Alchemix v2 was audited by Runtime Verification as well as a[ Code4rena contest](https://code4rena.com/reports/2022-05-alchemix). Alchemix also has an ongoing[ bug bounty program through Immunifi](https://immunefi.com/bounty/alchemix/).

See our [Audits here](https://alchemix-finance.gitbook.io/user-docs/resources/audits-and-reports)

</details>

<details>

<summary>Can I be liquidated?</summary>

No, you cannot be liquidated by third parties on the Alchemix platform. Your debt is denominated in the same currency as the collateral, which means that the price fluctuations of the asset do not impact your vault position. Regardless of market volatility, your vault positions remain secure, and you can have peace of mind knowing that your assets are protected from liquidation.

</details>

<details>

<summary>On what networks is Alchemix available?</summary>

Alchemix is available on multiple networks, providing users with options for accessing its services. Currently, Alchemix can be accessed on Ethereum Mainnet, Optimism, and Arbitrum.

An up-to-date list of available networks may be viewed on the network selector at the upper-left of the UI.

</details>

<details>

<summary>What can I do with my alAssets?</summary>

The primary use case for your alAsset (e.g., alUSD, alETH) is to swap it for another asset. You can achieve this by utilizing decentralized exchanges, such as [curve.fi](https://curve.fi/), or popular swap aggregators like [Matcha](https://matcha.xyz/), [Zapper](https://zapper.xyz/), or [Paraswap](https://www.paraswap.io/). These platforms enable you to trade your alAssets for various other tokens, providing you with the flexibility to diversify your portfolios or acquire specific tokens based on your investment preferences.

In addition to swapping, you can leverage your alAssets to provide liquidity on certain decentralized exchanges, such as Curve, Saddle, and Velodrome, and earn gauge rewards. You can earn yield directly with your alAssets, should you choose. Keep up to date with the latest opportunities at <https://alchemix-stats.com/earn>

</details>

<details>

<summary>How can I participate in the governance of Alchemix?</summary>

Participating in the governance of Alchemix allows you to actively contribute to the decision-making process and shape the future direction of the protocol. To participate in governance, you need to use ALCX tokens to vote. You can also join discussions in the governance channels of the Alchemix Discord server.

</details>

<details>

<summary>What is the Transmuter?</summary>

The Transmuter is an alAsset price stability module. Users can deposit alAssets, and over time, the Transmuter will gradually convert the alAsset to the corresponding underlying token on a 1:1 basis. [Read more here](https://alchemix-finance.gitbook.io/user-docs/alchemix-ecosystem/transmuter).

</details>

<details>

<summary>Can I borrow any token against my Alchemix Deposit?</summary>

The short answer is no. When you deposit into an Alchemist contract in Alchemix, you can only borrow the corresponding synthetic alAsset against your deposit (e.g., alETH for ETH). However, you can take your alAsset and swap it in the market for whatever tokens you want.

</details>

<details>

<summary>When will 'Token X' be available as collateral on Alchemix? When will you be on 'Chain X'?</summary>

New collateral and new chains are subject to governance approval and must also overcome technical, financial, operational, and partnership hurdles. As a result, they do not have fixed timelines. Security and adherence to proper processes will always take precedence over meeting specific deadlines.

</details>

<details>

<summary>How can I contact the Alchemix team for support or inquiries?</summary>

Discord is the primary platform for engaging with the Alchemix team and the wider Alchemix community. Whether you have questions, comments, or suggestions about Alchemix, reaching out in the #support channel in our official Discord is the best way to receive prompt and helpful responses.

[Join our Discord here.](https://discord.com/invite/alchemix)

</details>

<figure><img src="/files/BdJUe7Jx8opOv6RG7Udb" alt=""><figcaption></figcaption></figure>


# Site Overview

## Site overview

Fellow Alchemists, welcome to the Alchemix v2 user interface.

This guide will help you familiarize yourself with the platform.

First and foremost, the v2 website is a place where you will be able to set up and manage your Alchemix loans, farm with your tokens, use the Transmuter, and vote on governance proposals. The first time you arrive at the site, you will see the introduction page that tells you about the product and shows you what base assets are supported, along with their current loan to values. This list will grow continuously as new assets are added. If you ever want to return here, just click on the Alchemix logo at the top left of the page or the Intro button in the footer.

First, you need to connect your wallet. Click the ‘Connect wallet’ button, and follow the prompts to select your wallet provider.

<figure><img src="/files/VgusH3pVb8n8ELk32cL1" alt=""><figcaption></figcaption></figure>

**Connect wallet button**

Once you have connected to your chosen wallet, you will be taken to the Vaults page that is associated with your connected address.

alAssets are a fundamental concept to understand when using Alchemix. Whenever you take a loan against your deposit, it will always be issued in the form of an alAsset. For example, alUSD is the asset you’d borrow against all stablecoin assets that you’ve deposited as collateral. The stablecoin collateral you’ve deposited could be composed of a variety of stablecoins. For example, you may have deposited a mixture of DAI, USDC and Tether. Since these are all dollar-pegged assets you’ll only need to borrow one asset, alUSD.

Let’s take a look at the vaults page.

Whether you have an existing loan or not, the vaults page will display the current available strategies. You can take advantage of any of these, as they cover the full range of assets that we currently support. This list will grow longer over time. To help manage what’s visible, you can use the toggles to filter for the alAssets that you’re most interested in.

Each vault listed will show the collateral assets you can deposit and the current APY.

<figure><img src="/files/pPy9VABu1momyTkUbvZQ" alt=""><figcaption></figcaption></figure>

Moving on, let’s check out the Transmuter page. This is where you can swap your alAssets at a guaranteed 1:1 ratio for equal value tokens. Unlike the open market where pegged assets can fluctuate in value by small amounts, the Transmuter ensures you won’t suffer any loss or slippage. The drawback, however, is that it takes time to swap your assets. So, if you need to exchange immediately, we recommend you use other exchanges. We’ve linked a few external swap providers at the top of the page.

Next, let's look at the Farms page. Here you can stake LP tokens and single-sided ALCX to earn rewards. You can also wrap your ALCX into gALCX which *automagically* stakes your ALCX into the single-sided pool and auto-compounding rewards. gALCX can also be used cross-chain and on layer 2 networks as we roll out our multi-chain strategy.

Moving on to Governance. Here you can see a list of all the previous and active Alchemix improvement proposals or AIPs. Holders of ALCX are eligible to vote on any active proposal.

<figure><img src="/files/1nDlYj9qG7DAfUL0Rp2q" alt=""><figcaption></figcaption></figure>

One last thing to draw your attention to. The website will store some user preferences on your computer’s local storage, should you wish to set your preferred display currency, gas defaults, and language. You can set them either at the top of any page or navigate to the settings page.

<figure><img src="/files/62rJVATrL47agfIgL2Zz" alt=""><figcaption></figcaption></figure>

If you have any support queries, please contact our team on the official [Discord channel](https://alchemix-finance.gitbook.io/user-docs/resources)

<figure><img src="/files/BdJUe7Jx8opOv6RG7Udb" alt=""><figcaption></figcaption></figure>


# How to

## Learn How to Navigate The Alchemix Platform

<table data-view="cards"><thead><tr><th></th><th></th><th></th><th data-hidden data-card-target data-type="content-ref"></th></tr></thead><tbody><tr><td>Deposit Funds</td><td></td><td></td><td><a href="/pages/fpecSSDIVjGp3pMNOGD0">/pages/fpecSSDIVjGp3pMNOGD0</a></td></tr><tr><td>Take a Self-Repaying Loan</td><td></td><td></td><td><a href="/pages/Zpf3KWk9jqpcatT1WCa3">/pages/Zpf3KWk9jqpcatT1WCa3</a></td></tr><tr><td>Repay your Loan</td><td></td><td></td><td><a href="/pages/0wqwieXelZSXPCSryxID">/pages/0wqwieXelZSXPCSryxID</a></td></tr><tr><td>Liquidate your Loan</td><td></td><td></td><td><a href="/pages/RIgwdi324FTrzi1n1hBJ">/pages/RIgwdi324FTrzi1n1hBJ</a></td></tr><tr><td>Withdraw Funds</td><td></td><td></td><td><a href="/pages/h4mUWemaOHOhgxh5o4S7">/pages/h4mUWemaOHOhgxh5o4S7</a></td></tr></tbody></table>

<figure><img src="/files/vjAqOwFhQTIthEzfdwcB" alt=""><figcaption></figcaption></figure>


# Deposit funds

The unique thing about Alchemix loans is that they allow you to leverage your wealth without any risk of liquidation. Another way to put this is that Alchemix lets you borrow against an asset without carrying the risk of losing your collateral in the event of a market crash.

To setup a new loan, first visit the Vaults page on the website. Here is a list of available vaults where users can deposit any of the supported collateral assets.

<figure><img src="/files/Uge2kL8Afe0IxsgXGuUf" alt=""><figcaption></figcaption></figure>

Each vault displays the tokens used as collateral. Users are able to deposit these tokens to take a loan.

Let’s see how you can borrow against some of your ETH holdings with a new alETH loan.

First, click on the + button on the Yearn wETH vault. This will open the deposit section which offers you several deposit options.

<figure><img src="/files/ShqvcwDkL7TehTp3qUQl" alt=""><figcaption></figcaption></figure>

Let’s go from the top. The LTV tells you how much you can borrow against your deposit. 50% means you’ll be able to borrow a maximum of half the deposited amount.

In this example, the vault accepts wETH or yvwETH. Luckily there is a handy conversion tool built into the wETH vault that allows you to convert your ETH to wETH during the deposit.

All you need to do is click the toggle and the input box allows you to input the ETH amount you’d like to deposit.

Let’s input a value of 1 ETH.

Next, we have slippage. For certain vaults, such as the Yearn vaults, when you deposit collateral, Alchemix converts it into the Yearn equivalent. This process allows Alchemix to earn yield on your deposit. For example, it will exchange wETH for yvWETH on your behalf. Because exchange rates fluctuate, your vault will receive a slightly different amount of yvwETH in return. This is usually minimal and not something you need to worry about. To protect our users, they are able to set your own slippage limits.

Now, you can press ‘deposit’ and authorize the transaction in your wallet. If it’s your first time depositing into one of our vaults, two transactions will need to be confirmed. The first is the token approval and the second will be the actual deposit.

Once your transaction has completed you’ll be able to see how much you’ve deposited in the vault.

<figure><img src="/files/oHCj8GZnu9rvASEv8LaT" alt=""><figcaption></figcaption></figure>

If you have any support queries, please contact our team on the official [Discord channel](https://alchemix-finance.gitbook.io/user-docs/resources).

Now let's look at how to take a Self-Repaying Loan on the next page.

<figure><img src="/files/BdJUe7Jx8opOv6RG7Udb" alt=""><figcaption></figcaption></figure>


# Take a Self-Repaying Loan

Now that you’ve made a deposit into Alchemix, your deposit will automatically start earning yield. You can choose to borrow against it or you can leave it to work earning credit.

We’re going to borrow against our deposit. The amount you can borrow depends on the value of the tokens you deposit.

You can see how much you have available to borrow by clicking the Vaults page, and looking at the 'Available Credit' amount.

<figure><img src="/files/tT75Mqr86paJ0W77EDeF" alt=""><figcaption><p>Available Credit</p></figcaption></figure>

If you have positions across several vaults, you can use the tab filters to see individual credit available on each vault.

<figure><img src="/files/S1nMmbU57uybv2N8bdgY" alt=""><figcaption><p>alAsset Tab Filters</p></figcaption></figure>

Total deposit is the total amount of collateral you have deposited into Alchemix. This may be across one, or multiple vaults depending on how many you have set up. Debt is the total amount you have borrowed against your deposited collateral. Interest indicates how much you’ve earned, which adds to the amount of available credit you can access. The difference between interest and debt is that interest taken as credit will not need to be repaid.

The debt limit indicates the total amount you will be able to borrow. Debt will need to be repaid either automatically over time or sooner by manual repayment using the repay function.

The amount you can borrow against your deposit depends on the collateral ratio of the tokens you deposited. You can borrow anything up to the total amount of debt your assets allow.

On this page, you will see more detail about how much debt you’ve currently taken and what the debt limits are per vault.

<figure><img src="/files/5tkGUwanGgMRroe2yn04" alt=""><figcaption><p>Debt limit</p></figcaption></figure>

To take your first self-repaying loan, click the ‘borrow’ button at the top of the page.

The borrow dialogue will open up allowing you to specify which alAssets you have access to borrow. In this example, since we only deposited wETH, we can only borrow alETH.

<figure><img src="/files/qmYte4okW6wKozOus3o4" alt=""><figcaption><p>The Borrow modal</p></figcaption></figure>

For our users' convenience, we’ve added the ability to transfer the proceeds of the loan to another wallet address. To do this, simply toggle the switch and enter the recipient's address.

<figure><img src="/files/7b0mjLknO5FTN7XlgIwC" alt=""><figcaption></figcaption></figure>

Type in the amount you'd like to borrow, or click the 'Max' button to borrow the maximum amount possible. When you’re happy with your loan request click borrow to initiate the transaction.

Follow the prompts in your wallet to authorize the transaction.

Once you’ve completed the borrow, you'll see your balance update in the wallet, unless you sent your proceeds to another address.

Now you are able to see that your debt has increased at the top of the Vaults page.

### alAssets <a href="#alassets" id="alassets"></a>

Now you have your alAssets, you can find out the most efficient ways to use them at <https://alchemix-stats.com/earn>

You can also swap them using one of the suggested links at the top of our swap page - <https://alchemix.fi/swap>, manually using [https://curve.fi](https://curve.fi/), or use any other supported DEX.

If you have any support queries, please contact our team on the official [Discord channel](https://alchemix-finance.gitbook.io/user-docs/resources)

Next, let’s look at how to repay your loan.

<figure><img src="/files/BdJUe7Jx8opOv6RG7Udb" alt=""><figcaption></figcaption></figure>


# Repay your loan

Alchemix loans are fully flexible. Your funds are never locked and there are always options that allow you to release your deposits.

Unlike loans in the traditional banking system, there are no fees or penalties for early repayments. Not only that, Alchemix loans "automagically" repay themselves over time.

You can also choose to repay your loan manually. Let’s look at how to do this.

On the vaults page, you can see that this account has a debt of $1050.35.

<figure><img src="/files/5IZmRPtp7eovqfIko80n" alt=""><figcaption></figcaption></figure>

Since both alUSD and alETH have been borrowed, we need to decide which loan to repay. Use the filters to display the debt owed for each alAsset type.

Let’s pay back the alUSD loan. Looking at the active vaults we can see that we have deposited USDC to borrow alUSD. Since alUSD is a dollar-pegged asset we can use any acceptable stable coin to repay the loan.

We only have DAI available in our wallet, but since Alchemix accepts DAI as a collateral type, that’s no problem.

Click on the repay button which opens the repay dialog.

<figure><img src="/files/cQsywQCGxgdvg1398neJ" alt=""><figcaption><p>Repay button</p></figcaption></figure>

Select alUSD from the first dropdown, then select DAI from the next dropdown. It’s worth noting that the alUSD loan can be repaid in alUSD, DAI, USDC, or USDT, regardless of which vault originated the loan.

<figure><img src="/files/wlIAQxrohHED7Esll1Ah" alt=""><figcaption></figcaption></figure>

We want to repay all of the alUSD loan, so we’ll click ‘max’ in the input field.

Now press ‘repay’ and complete the transaction in your web3 wallet.

And, we’re done.

If you have any support queries, please contact our team on the official [Discord channel](https://alchemix-finance.gitbook.io/user-docs/resources)

Next, let’s look at how to repay our alETH loan with our deposited collateral using the liquidate function.

<figure><img src="/files/BdJUe7Jx8opOv6RG7Udb" alt=""><figcaption></figcaption></figure>


# Liquidate your loan

One of the great advantages Alchemix loans bring is that there is always a way to exit your position, even if you don’t have funds in your wallet to make a repayment.

The liquidate function allows you to use your deposited collateral as a source of funds to repay your debt. Alchemix loans are always overcollateralized, meaning there are always enough funds in your account to cover your debt and allow you to exit.

To liquidate the alETH loan on this account we’ll open the liquidate dialog and choose the alETH from the first drop down menu. Since our deposit was made in WETH we’ll accept the default WETH in the second drop down.

<figure><img src="/files/1KKFlnM5K5Fvmhg08cTV" alt=""><figcaption><p>Select the debt you'd like to pay off</p></figcaption></figure>

We want to liquidate all of the loan so let’s choose ‘max’ in the input box.

As alETH is pegged to ETH there will be a small discrepancy in their value. To enable users to limit the effect of any slippage you can choose your preferred slippage tolerance here.

<figure><img src="/files/aVNaSlQIHZFrLo3Omw0a" alt=""><figcaption><p>Slippage options</p></figcaption></figure>

Once you’re happy with the liquidation parameters press liquidate.

If you have any support queries, please contact our team on the official [Discord channel](https://alchemix-finance.gitbook.io/user-docs/resources)

Now that we’ve liquidated our loan, our deposit is available to withdraw so let’s look at that in the next video.

<figure><img src="/files/BdJUe7Jx8opOv6RG7Udb" alt=""><figcaption></figcaption></figure>


# Withdraw funds

When you want to move your funds back into your wallet you’ll need to call the ‘withdraw’ function.

Something to bear in mind is that you can only withdraw funds that exceed the collateral requirements of any outstanding loans you have.

For example, if you have borrowed 50% of your deposit of a loan with a 50% loan-to-value ratio then you won’t be able to withdraw any funds unless you either repay your debt or liquidate it with your deposit.

In the previous guide, we liquidated our loan which releases the funds to be withdrawn.

Click the + button next to the vault you want to withdraw from and click the 'Withdraw' tab. You’ll notice the choice to receive the standard or yield bearing asset, in this example wETH or yvwETH.

<figure><img src="/files/DUgIHjbK32pVg0uaanPR" alt=""><figcaption></figcaption></figure>

Since we want ETH in our wallet following the withdrawal, we will toggle the wETH/ETH switch. The system will conveniently withdraw wETH and convert it to ETH for us.

In this case, we will choose ‘max’ since we want to completely exit the vault.

Like the liquidate and deposit functions, withdraw adds slippage protection control to allow users to limit the slippage as the system converts assets to unwind your position.

<figure><img src="/files/DubYiZUGkYyGjpV5UbR4" alt=""><figcaption></figcaption></figure>

Click ‘Withdraw’ and confirm the transactions in your wallet.

When you’ve successfully withdrawn you’ll see your updated balance reflected in your wallet.

If you have any support queries, please contact our team on the official [Discord channel](https://alchemix-finance.gitbook.io/user-docs/resources)

<figure><img src="/files/BdJUe7Jx8opOv6RG7Udb" alt=""><figcaption></figcaption></figure>


# Migrate between vaults

{% hint style="info" %}
Please note that it is currently not possible to migrate to our rETH vault.
{% endhint %}

Now that Alchemix supports multiple strategies per collateral type, you can use the Migrate tool to easily move funds between them in the most efficient way. Different strategies offer different APYs which regularly change.

To migrate your funds to a different strategy using the Migration tool, open the position you want to migrate by clicking the '+' button.

<figure><img src="/files/UvdllZrzr13W4MsqDvWm" alt=""><figcaption><p>Vault Overview</p></figcaption></figure>

From here, select the 'Migrate' tab.

<figure><img src="/files/DJJ9movL82tuWOPRORBA" alt=""><figcaption><p>Migrate tab</p></figcaption></figure>

Click the 'Target Vault' dropdown and select the vault into which you want to migrate your funds.

<figure><img src="/files/Jp38znmNbmxLS3xhytwa" alt=""><figcaption><p>Target vault selector</p></figcaption></figure>

Next, input the amount of funds you'd like to migrate. Click 'All' if you want to migrate everything. Finally, click 'Migrate' and follow the prompts in your wallet. Your funds will now automatically move to your chosen target strategy.

Note: You can also choose to manually unwind and restart your position in another strategy should you choose to.

If you have any support queries, please contact our team on the official [Discord channel](https://alchemix-finance.gitbook.io/user-docs/resources)

[<br>](https://alchemix-finance.gitbook.io/user-docs/how-to/withdraw-funds)

<figure><img src="/files/BdJUe7Jx8opOv6RG7Udb" alt=""><figcaption></figcaption></figure>


# Guides

<table data-view="cards"><thead><tr><th></th><th></th><th></th><th data-hidden data-card-target data-type="content-ref"></th></tr></thead><tbody><tr><td>The AMO: The Elixir</td><td></td><td></td><td><a href="/pages/tUVFXbO8IM0TEhipzVZE">/pages/tUVFXbO8IM0TEhipzVZE</a></td></tr><tr><td>Bridging Assets to Other Chains</td><td></td><td></td><td><a href="/pages/yLIhic2FurBHs1PMbFdd">/pages/yLIhic2FurBHs1PMbFdd</a></td></tr><tr><td>Risks and Counterparties</td><td></td><td></td><td><a href="/pages/07wAZ0lYCZxl82bsh2mA">/pages/07wAZ0lYCZxl82bsh2mA</a></td></tr><tr><td>The Transmuter, Elaborated</td><td></td><td></td><td><a href="/pages/BpLlb3jFs6OIM3SXrlF1">/pages/BpLlb3jFs6OIM3SXrlF1</a></td></tr><tr><td>Vault Losses and Collateral De-Pegging</td><td></td><td></td><td><a href="/pages/WkkuQ2QjuP9U09gtwxbx">/pages/WkkuQ2QjuP9U09gtwxbx</a></td></tr></tbody></table>

<figure><img src="/files/BdJUe7Jx8opOv6RG7Udb" alt=""><figcaption></figcaption></figure>


# The AMO: The Elixir

The Alchemix Algorithmic Market Operator

<figure><img src="/files/qmd8xWOqUOOOR1bPfbBY" alt="" width="563"><figcaption></figcaption></figure>

When Alchemix was originally launched, it was never anticipated that the peg stability module, the Transmuter, would build up a significant backstop of funds. To take advantage of this, in the V1 deployment of Alchemix, reserves were deployed in Yearn. The yield was passed from these deposits to DAI and ETH depositors in Alchemix. This enabled us to have a killer feature — boosted yield, which at times, doubled the amount of interest paid to Alchemix depositors.

While building V2, it dawned on the Alchemix team that these DAI and ETH reserves could be more intelligently deployed in order to better benefit the Alchemix ecosystem. Instead of these assets passively making money elsewhere in DeFi, it makes much more sense to use these funds actively in the market to earn the protocol income and to better manage the prices of the alAssets.

#### Introducing the Alchemix Elixir <a href="#id-8ab1" id="id-8ab1"></a>

![](https://alchemix-finance.gitbook.io/~gitbook/image?url=https:%2F%2F1843944683-files.gitbook.io%2F%7E%2Ffiles%2Fv0%2Fb%2Fgitbook-x-prod.appspot.com%2Fo%2Fspaces%252FzG9qcxzJ1K3kNTlZ81Xj%252Fuploads%252Fek0IvPNfsSNXWG2FjwfD%252FElixirQuoteBlock_01.png%3Falt=media%26token=7e2a3b01-050d-45bc-9fcb-81f32ac3f47e\&width=768\&dpr=4\&quality=100\&sign=25ae0dbd662295b59a63344c10e6163b8b87659e353acfb820a2127027c4e0a4)

The Alchemix Elixir is a contract inspired by FRAX’s Algorithmic Market Operator (AMO). Their AMO allows them to expand and contract the supply of FRAX in LP pools, with FRAX3CRV LP being the most predominant. They mint and deposit FRAX when the token price is above their peg, and withdraw and burn FRAX when the token price is below their peg. They also farm with the LP in Convex, earning the protocol income in the process.

Through its own automations, the Alchemix Elixir takes a similar approach to market operations, with the exception that **Alchemix cannot mint alUSD into the LP pools** (thus maintaining the overcollateralized nature of alAssets)**.**

See below for a diagram that shows how funds flow through the market.

![](https://alchemix-finance.gitbook.io/~gitbook/image?url=https:%2F%2F1843944683-files.gitbook.io%2F%7E%2Ffiles%2Fv0%2Fb%2Fgitbook-x-prod.appspot.com%2Fo%2Fspaces%252FzG9qcxzJ1K3kNTlZ81Xj%252Fuploads%252FIixliC4pWHrW3ZQnOlui%252FAMO_Graphic.png%3Falt=media%26token=8f40fb81-e19a-4f45-b0af-f52507f37517\&width=768\&dpr=4\&quality=100\&sign=8cab3928107c510f893cbc270b29b27177af59d8648ee77780b12c7051a918fe)

The Elixir was jump-started by migrating the v1 Transmuter TVL to it. From there, the additional will receive additional funds only when the Transmuters build up surpluses. The Elixir contract will supply liquidity in the primary Curve liquidity pools for alUSD and alETH. By depositing excess DAI, USDC, USDT, and ETH into Elixir, liquidity is deepened and the prices of alAssets are made more stable.

Curve allows for single sided withdrawals and deposits, and bases the exchange price on the relative balance between the tokens in the LP pool. If a pool is overbalanced with alUSD or alETH, it means we are below 1 USD for alUSD and 1 ETH for alETH. Alchemix can increase the price of the alAsset by single-sided withdrawals of alUSD or alETH, thus rebalancing the pool and increasing the alAsset price closer to 1:1. These withdrawn alUSD and alETH tokens would be removed from circulation, with the potential to be redeployed to their Curve pool should the price of the alAsset increase to the point where it is able to support the addition of alUSD with a negligible effect on the price of the asset.

The next function of Elixir is to generate revenue and build long-term liquidity for the protocol. The Elixir will do this by making a liquidity-driving asset accumulation strategy. Liquidity-driving assets, such as CVX and CRV, give the DAO power to direct rewards from the corresponding protocols. The more liquidity driving assets are owned, the more Alchemix can sustainably incentivize the primary alAsset liquidity pools. Alchemix also typically bribes voters to vote for emissions to these pools - where typically every $1 input results in greater than $1 emitted to the liquidity pool. Given the Elixir tends to own a significant share of the liquidity pools, this can result in a significant amount of value returned to the DAO in the form of CRV, CVX, and other assets. The more CVX Alchemix votes with, the more ALCX is returned as a rebate for voting for the alAsset pools. So between this multiple and the Votium rebates, it greatly enhances the efficiency and longevity of ALCX emissions.

![](https://alchemix-finance.gitbook.io/~gitbook/image?url=https:%2F%2F1843944683-files.gitbook.io%2F%7E%2Ffiles%2Fv0%2Fb%2Fgitbook-x-prod.appspot.com%2Fo%2Fspaces%252FzG9qcxzJ1K3kNTlZ81Xj%252Fuploads%252FQitn9F5FQ7w7ByFcwIZV%252FElixirQuoteBlock_03.png%3Falt=media%26token=d07d2fcb-5af5-4881-b5c1-816796734cf4\&width=768\&dpr=4\&quality=100\&sign=b9bdd31ccb2c89bdc7bee0608c843a8f47fceed0d17d55ff5c35cb0e920fb1b7)

When Alchemix stakes its own Curve LPs on Convex, it receives CRV and CVX rewards. The Elixir is able to use these rewards to benefit the DAO, with the current approach explained [here](https://alchemix-finance.gitbook.io/user-docs/components/elixir-amo).

The Elixir is a significant upgrade to our peg stability module. The concentrated management of our protocol-controlled value aligns it more closely to our interests.

The ancient tomes of alchemy describe a mysterious fluid known as “Elixir”. It was thought to have the power to turn base metals into gold and even grant immortality. In that sense, the Alchemix Elixir is true to its name, with the peg-stability mechanisms and CVX flywheel bringing long-term price stability and sustainability to Alchemix alUSD and alETH. It’s a new era for Alchemix, and we’re happy to be bringing magic to DeFi yet again.

#### Contracts: <a href="#id-9c75" id="id-9c75"></a>

alUSD Elixir: **0x9735f7d3ea56b454b24ffd74c58e9bd85cfad31b**

alETH Elixir: **0xe761bf731A06fE8259FeE05897B2687D56933110**

<figure><img src="/files/BdJUe7Jx8opOv6RG7Udb" alt=""><figcaption></figcaption></figure>


# Bridging assets to other chains

## Introduction to bridging <a href="#introduction-to-bridging" id="introduction-to-bridging"></a>

Users can send assets to wallets on other networks directly from a centralized exchange like Binance, or users can use a cross-chain bridge to perform the bridging transaction manually on-chain.

To send tokens from a centralized exchange, withdraw your supported token, ensuring that you specify the correct wallet address **and** blockchain.

To perform the bridge manually visit <https://bridge.connext.network/> or use your favorite bridge aggregator service.

## Bridging with Alchemix <a href="#bridging-with-alchemix" id="bridging-with-alchemix"></a>

You can also specifically bridge alAssets and gALCX easily on Alchemix.fi. First, navigate to the bridge page. In the ‘From’ field, input the amount and select the token from the dropdown list. In the ‘To’ field, select your target network from the dropdown. The numeric field will display how many tokens you’ll receive when the funds arrive on your target network.

<figure><img src="/files/NRmqiFta7jeZhctNwnCK" alt=""><figcaption></figcaption></figure>

Next you’ll need to approve the asset of your choice, then press the swap button to send the funds to the bridge.

The bridge transaction should take between 10-30 mins to complete. After that the funds will appear in your target wallet.

Lastly, you will need to swap your bridge tokens for the canonical token using step #4. Until you complete this task you will not be able to use your swapped tokens.

Now that you have your assets on the target network you can deposit, earn and take self-repaying loans on the new chain.

<figure><img src="/files/BdJUe7Jx8opOv6RG7Udb" alt=""><figcaption></figcaption></figure>


# Risk & Counterparties

A guide to the various counterparties that make up the Alchemix system and the risk each counterparty takes on.

The purpose of this article is to go over the risks that various types of users of the Alchemix system take on when the system is functioning as intended. This list is not intended to be exhaustive, as certain risks are inherent to DeFi and Crypto in general, such as smart contract risk. For information about other types of risks, see [Multisig Admin Rights](https://alchemix-finance.gitbook.io/user-docs/alchemix-dao/the-alchemix-dao/governance-process/multisig-admin-rights), [Audits](https://alchemix-finance.gitbook.io/user-docs/resources/audits-and-reports), and [Vault Losses and Collateral De-pegging](https://alchemix-finance.gitbook.io/user-docs/resources/guides/vault-losses-and-collateral-de-pegging).

## Depositors (Borrowers) <a href="#depositors-borrowers" id="depositors-borrowers"></a>

Depositors provide collateral to the yield strategies in the Alchemists in order to take alAsset loans. Unless a depositor also wishes to act as a liquidity provider, they will typically swap their alAsset to another asset soon after taking the loan. Therefore, they are not exposed to the price of alAssets over time.

The primary risk a depositor takes on is risk of having funds deposited in the underlying yield strategy, through Alchemix. If the strategy they deposit experiences a loss that exceeds the `maximumLoss` (a variable set by governance), then the yield strategy will be paused. This means users may not make any deposits, may not liquidate or repay, and may not take a new loan with this strategy. Harvests will also be disabled. Lastly, users will be unable to withdraw collateral in the form of the underlying asset. Users will still be able to repay their loan and withdraw the yield token, however. For example if the `maximumLoss` was exceeded, a user could not withdraw DAI from a strategy that uses yDAI, but they would still be able to repay their loan with DAI to withdraw their yDAI collateral).

In the scenario of an underlying strategy suffering a majority loss of funds (ie, greater than 50% of the strategy), then the user would actually have bad debt with Alchemix (the value of their debt would exceed the value of their collateral). In this scenario, the user actually suffered less of a loss by using Alchemix.

Note some yield strategies may require selling yielded tokens to harvest yield. In this scenario, a temporary depeg of the value of the harvested token would result in the user experiencing reduced yield for the period of time the token remains depegged. For more an examples of the protocol handles collateral depeg events and vault losses, see [Vault Losses and Collateral De-pegging](https://alchemix-finance.gitbook.io/user-docs/resources/guides/vault-losses-and-collateral-de-pegging).

## Liquidity Providers / Transmuter Users <a href="#liquidity-providers-transmuter-users" id="liquidity-providers-transmuter-users"></a>

alAsset liquidity providers are exposed to price fluctuations of alAssets. They create the liquidity for users to sell their alAssets for other tokens. alAssets can only be redeemed for underlying collateral in three ways:

1. Loan repayment (instant, 1 alAsset = 1 asset)
2. Selling through a liquidity pool (instant, price will fluctuate)
3. Depositing in the Transmuter (timeline is uncertain, 1 alAsset = 1 asset)

A liquidity provider / alUSD holder that does not have an Alchemix position in a yield strategy does not have option 1 at their disposal. A liquidity provider has three primary steps to consider when providing liquidity:

1. Price / balance of liquidity pool when entering the pool
2. Yield earned from providing liquidity over the life of the liquidity provision
3. Price / balance of liquidity pool when leaving the pool

If the balance of the pool moves favorably for the LPer over time, they can earn yield as well as a net positive slippage from the difference between their exit and entry position. If the balance of the pool moves unfavorably, then the net negative slippage would be subtracted from the yield earned during their liquidity provision over time.

A user can hedge this exposure by using the Transmuter, or by being a depositor within Alchemix. If the alAsset pool shifts less favorably for the depositor/LPer, they can withdraw alUSD instead of stablecoins for a bonus positive slippage and repay their debt. They could also use the same approach with the Transmuter, at the opportunity cost of waiting for the collateral to flow into the Transmuter. See [Transmuter](https://alchemix-finance.gitbook.io/user-docs/alchemix-ecosystem/transmuter) and [The Transmuter, Elaborated](https://alchemix-finance.gitbook.io/user-docs/resources/guides/the-transmuter-elaborated) for more information on how the Transmuter distributes collateral to alAsset stakers.

Lastly, alAssets could become undercollateralized if a large enough loss of funds of an underlying yield strategy occurred, as detailed in the [Depositors (Borrowers)](#depositors-borrowers) section.

## Alchemix DAO and ALCX Holders <a href="#alchemix-dao-and-alcx-holders" id="alchemix-dao-and-alcx-holders"></a>

As mentioned above, it is possible for bad debt to exist in Alchemix if a yield strategy suffers a significant loss of funds. Because ALCX liquidity and single staking pools are not locked, Alchemix cannot currently slash stakers to make the protocol whole. In the scenario of a full yield strategy loss above, the treasury could sell ALCX or other assets from the treasury to make the protocol whole if decided by governance, which would dilute ALCX holders.

<figure><img src="/files/BdJUe7Jx8opOv6RG7Udb" alt=""><figcaption></figcaption></figure>


# The Transmuter, Elaborated

A deeper dive into how the Transmuter functions

The Transmuter is actually composed of two separate components: The TransmuterBuffer and the Transmuter.

When funds enter the Transmuter, assuming there is at least a matching amount of the corresponding alAsset they will be immediately be claimable by users with alAssets staked in the Transmuter. The TransmuterBuffer sits between the Alchemist and Transmuter, limiting the available funds that are accessible for transmutation. The goal here is to delay the transmutability of funds so that the massive front-stop (ie, excess funds in the Transmuter buffer) cannot immediately be used to take advantage of extremely small (< 0.1%) arbitrage opportunities, thus burning protocol value for tiny gains. The longer the system can hold onto the front-stop, the longer it can supply liquidity and earn revenue through the Elixir/AMO, and the more Alchemist depositors Alchemix can sustain.

<figure><img src="/files/O20mqx6YtnEK1gX6NO2v" alt=""><figcaption></figcaption></figure>

### Transmuter Flowchart

In the Transmuter, user-exchanged and un-exchanged balances are updated in a stepwise manner, only when the exchange() function is called. The `exchange()` function sends the underlying asset (USDC, DAI, or USDT) to the Transmuter in exchange for the alUSD burned from the transmuter. The TransmuterBuffer receives a call to its `exchange()` function whenever `alchemist.harvest()`, `alchemist.liquidate()`, or `alchemist.repay()` are called - ie, whenever a yield harvest occurs, or when a user liquidates or repays their loan. `TransmuterBuffer.exchange()` will update the available amount of flow that is theoretically accessible by the transmuter, and subsequently call `Transmuter.exchange()` with the marginal amount of funds that need to be exchanged. Each Transmuter handles a single collateral type. Each TransmuterBuffer handles a single synthetic type, and all collateral types underlying that synthetic.

### Flow Rate <a href="#flow-rate" id="flow-rate"></a>

The flow rate is set by governance and is a per-second MAXIMUM rate of flow for funds to be sent from the TransmuterBuffer to the Transmuter. The main features of the flow are:

1. Flow-rate is constant and linear.
2. The flow-rate (measured in underlying collateral token per one second, ie 1 DAI/second) will continuously add to the available-flow (measured in the underlying collateral token, ie 1 DAI).
3. The available-flow is a measure of how much underlying collateral will immediately flow from the TransmuterBuffer to the Transmuter, upon a deposit to the TransmuterBuffer (ie, a call of the `exchange()` function). This means the available-flow can build up over time if the Transmuter flow-rate is being underutilized. A build-up of available flow makes it possible for the effective flow-rate over a period of time to exceed the flow-rate, thus ensuring the set flow-rate is acting as more of an average over time, rather than a hard cap.
4. Each underlying-token has its own flow-rate. The available-flow for a given underlying-token can exceed the total amount of funds denominated in that underlying-token (across all strategies) held by the transmuter-buffer in the Alchemist. However, when this is the case, the Transmuter will only be able to access the actual funds held by the Transmuter-buffer in the Alchemist (see Invariants 1 and 2)
   1. Figure 1 shows a scenario where available flow has exceeded the total buffered amount (total amount of underlying token controlled by the Transmuter buffer across all strategies in the alchemist).
   2. Figure 2 shows a scenario where the total buffered amount has exceeded the available flow.
   3. In both scenarios, the total amount exchanged to the Transmuter cannot surpass the lesser of the two values in question.
   4. In Figure 1, there will be an excess of available-flow. Should the flow of the underlying asset to the Transmuter increase beyond the defined flow-rate, the excess of available-flow would be used to absorb the faster rate (as described in Item 2 above).

<figure><img src="/files/BCqZVt0eO5eiSCMJ7NlW" alt=""><figcaption><p>Visualization of Transmuter Buffer Available Flow Scenarios</p></figcaption></figure>

<figure><img src="/files/BdJUe7Jx8opOv6RG7Udb" alt=""><figcaption></figcaption></figure>


# Vault Losses and Collateral De-pegging

Vault losses and collateral de-pegging events are two scenarios that can create a loss of alAsset backing, thus jeopardizing the health of the protocol. Vault losses are caused by the underlying yield strategy returning less of the underlying token than expected - for example, a strategy that is meant to earn 10% APR on ETH suddenly only being worth 0.9 ETH per 1 ETH deposited. Collateral de-pegging is caused by the underlying collateral being worth less than its expected value. This is only applicable to alUSD as it is the only alchemist that accepts multiple collateral types. For example, if USDT were to be worth $0.9 relative to DAI and USDC each being worth $1. This is not relevant to ETH as 1 ETH will always be worth 1 ETH.

Vault losses are handled automatically through the `maxloss()` parameter. Collateral de-pegging is handled manually through sentinels' ability to pause tokens (see [Multisig Admin Rights](https://alchemix-finance.gitbook.io/user-docs/alchemix-dao/the-alchemix-dao/governance-process/multisig-admin-rights)). See below for an example scenario where a yield-bearing asset experiences a 10% loss in underlying collateral, and another scenario where DAI drops to $0.80 relative to USDC and USDT.

### Vault Loss Scenario <a href="#vault-loss-scenario" id="vault-loss-scenario"></a>

**Scenario:** A yield-bearing asset experiences a loss in the underlying collateral. For this example, we will assume a 10% loss of DAI from the yvDAI vault that is unrecoverable.

After the transaction that causes the loss is committed to the chain, the `maxloss()` is triggered and the following happens:

* The following yvDAI Alchemist functions are automatically disabled:
  * `deposit()`
  * `depositUnderlying()`
  * `withdrawUnderlying()`
  * `withdrawUnderlyingFrom()`
  * `liquidate()`
  * `harvest()`
* The following yvDAI Alchemist functions are still useable:
  * `withdraw()`
  * `withdrawFrom()`
  * `repay()`
  * `mint()`
  * `burn()`

**Resolution:** In order to re-enable the disabled functions, the following needs to happen:

1. A proposal is created to call `snap()` on the Alchemist, targeting the yvDAI vault.
2. A vote takes place (we assume it passes)
3. `snap()` is called on the Alchemist, which accepts the 10% loss and resets the expected value of those yield tokens held in the Alchemist

**Damage:** The maximum damage is the total amount of funds lost from the vault. alUSD will still be overcollateralized and depositors will experience the loss, the same way they would experience the loss if they held the tokens outside of Alchemix or if they used `withdraw()` after `maxloss()` was triggered. The effective rate of yield flow to the transmuter buffer would also be slightly slower, as there would be slightly less collateral in the system earning yield relative to the alAsset supply. Note that if a loss of >50% were realized, this could lead to a loss in backing for alUSD.

While the risk of a vault losing collateral is low, the damage is still significant. However, Alchemix does not control the operations of 3rd party vaults, so the only way to minimize the risk is to carefully consider which yield-bearing strategies are added.

**Necessary Response Time:** The response time for this scenario does not need to be necessarily fast, because the functions that are affected by a vault loss will be automatically disabled. The team and the DAO should assess the loss to make sure that it is unrecoverable before taking the governance steps to remedy the situation by calling `snap()`.

### Collateral De-pegging <a href="#collateral-de-pegging" id="collateral-de-pegging"></a>

**Scenario:** One collateral token used by the Alchemist experiences a severe de-pegging against other collateral. For this example, we will assume DAI drops to 80 cents vs USDC & USDT. alUSD maintains its peg against USDC & USDT.

This de-pegging presents multiple arbitrage opportunities:

1. Users can buy DAI off the market, deposit it into the Alchemist, take a loan, and repeat this loop until the minting cap is reached.
2. Users can buy DAI off the market and use it to repay their loans until the repay cap is reached.
3. Users can liquidate their current yDAI position (paying off their outstanding debt at a discount), buy more DAI with their loan, deposit it into the Alchemist, take a loan, and repeat until the liquidation cap is reached.

These arbitrage opportunities will likely result in one or more of the mint / repay / liquidate caps being met.

**Resolution:** The only resolution that matters is getting DAI to reach peg again. This can take multiple avenues.

* The peg could re-stabilize on its own without any intervention.
* The collateral in question can be disabled by a sentinel or admin, buying the peg more time to re-stabilize. This would disable the following functions:
  * `deposit()`
  * `depositUnderlying()`
  * `repay()`
  * `liquidate()`

**Damage:** The de-pegging of DAI results in the price of the alAsset dropping towards the de-pegged asset. The sentinels exist to disable underlying tokens as soon as they experience a de-pegging event. The repay, liquidate, and mint caps are in place to limit the amount of de-pegging of the synthetic asset that can occur prior to sentinel action.

**Risk:** Given the interconnected nature of underlying collateral tokens and DeFi at large, there will likely be consistent, small arbitrage opportunities between collaterals and their pegged synthetics. In times of high volatility, these arbitrage opportunities can get exasperated as assets experience larger and longer de-pegging events. As a result, there is some risk that the repay/liquidate/mint caps get reached.

Note that if the peg does not restabilize, DAI would remain paused; there will be a loss in the backing of alUSD. The DAO will need to determine how to proceed in this scenario.

**Necessary Response Time:** The faster a sentinel can respond by disabling the de-pegged underlying token, the less the price of alAsset will be arbitraged down.

<figure><img src="/files/BdJUe7Jx8opOv6RG7Udb" alt=""><figcaption></figcaption></figure>


# Marketing Material

## Marketing Material

Our logos are for use in promo and marketing materials.

Please consult the brand book for more information.

For any questions, please contact @metalface in the official Discord.

## Brand book <a href="#brand-book" id="brand-book"></a>

An overview of how to use our brand in your material

{% file src="/files/3L1DzQyy7CyQkyfJa6fU" %}

## The Alchemix logo <a href="#the-alchemix-logo" id="the-alchemix-logo"></a>

**Bronze**

<figure><img src="/files/TnJBqNry5Vw4G6nRmDRo" alt="" width="375"><figcaption></figcaption></figure>

**White**

<figure><img src="/files/AsyThdH80nvqzKFmbz5A" alt="" width="375"><figcaption></figcaption></figure>

**Black**

<figure><img src="/files/6p1XbGTRZOWRZj4o4Q1u" alt="" width="375"><figcaption></figcaption></figure>

<figure><img src="/files/02ov8CxpqbZsjdtkiA3N" alt=""><figcaption></figcaption></figure>


# Alcx logo - Bronze

Our master logo for use in all situations unless contrast is an issue.

## SVG <a href="#svg" id="svg"></a>

{% file src="/files/H9v3MLzUgqJy1wiurGdb" %}

{% file src="/files/33UvZLg6CI8Bwsl3uxuP" %}

{% file src="/files/RI4DSuchQ8eb72EFy2X4" %}

{% file src="/files/vrF0uJsnIl3MqRoY1rgj" %}

{% file src="/files/GQRZm7nGHvrxekO5MKvK" %}

{% file src="/files/ROoMmFUKCpk919GquqUJ" %}

## PNG

{% file src="/files/IuTjies8Wa6bR48ya4RR" %}

{% file src="/files/TfBjdIJGy778mNmiQlXW" %}

{% file src="/files/SXza4MNeGQ3gEa1bnN6q" %}

{% file src="/files/TnJBqNry5Vw4G6nRmDRo" %}

## JPG

{% file src="/files/M2EqEtSVA8AzN7N1y2Kk" %}

<figure><img src="/files/02ov8CxpqbZsjdtkiA3N" alt=""><figcaption></figcaption></figure>


# Alcx logo - White

Our white logo for use where contrast is an issue.

## SVG <a href="#svg" id="svg"></a>

{% file src="/files/1dhNOj1iBgfrg9KQGBI1" %}

{% file src="/files/Rl0MfylaUblMc2XYTUcn" %}

{% file src="/files/dmjrOeE5i0BgUq0aMeSQ" %}

{% file src="/files/XbLjcpBsDuSLUIhpPueb" %}

## PNG

{% file src="/files/AsyThdH80nvqzKFmbz5A" %}

{% file src="/files/Ajvh4YsPmm9vYAfHqmAF" %}

{% file src="/files/xtqIG0bt15viFwyG45G7" %}

{% file src="/files/skjl8PTWx0G61EFB9WU2" %}

<figure><img src="/files/02ov8CxpqbZsjdtkiA3N" alt=""><figcaption></figcaption></figure>


# Alcx logo - Black

Our black logo for use where contrast is an issue.

## SVG

{% file src="/files/s7kYHcZCr3nKGDt0qen4" %}

{% file src="/files/naLsYUQnJyutIeEcR4Es" %}

{% file src="/files/jCq0PX05XMVMWqekY6di" %}

{% file src="/files/I7yV8ODRRnYgnGTJYX1g" %}

## PNG

{% file src="/files/kEhbO09nrk3GWhG2LiJj" %}

{% file src="/files/4Zqp2fKDJK3osUtuCCWe" %}

{% file src="/files/PNJvvlN0XY7M1jVLfOGv" %}

{% file src="/files/6p1XbGTRZOWRZj4o4Q1u" %}

<figure><img src="/files/02ov8CxpqbZsjdtkiA3N" alt=""><figcaption></figcaption></figure>


# alAssets

## alETH

{% file src="/files/BB7tS08pIi52nLU27c35" %}

{% file src="/files/3WI7cEI0Ej7GOsGrRe7w" %}

{% file src="/files/SviPnxbyMSCNs6wgZgxl" %}

{% file src="/files/rcURxKnWiApLblWzqf6o" %}

## alUSD

{% file src="/files/OX22NCofkWGQ8uYEyzBP" %}

{% file src="/files/t76GPjbbPVQxnGPvWGTC" %}

{% file src="/files/Vi0UwYPjsxwnd0jrZDFM" %}

{% file src="/files/71B2R0WcGdapeCqsWXXI" %}

<figure><img src="/files/02ov8CxpqbZsjdtkiA3N" alt=""><figcaption></figcaption></figure>


# Audits & Reports

## Audits

* Alchemix v2 was audited by Runtime Verification. Alchemix continues to engage Runtime Verification for additional audits on protocol changes. The v2 audit report can be found here: <https://github.com/runtimeverification/publications/blob/main/reports/smart-contracts/Alchemix_v2.pdf>​
* Alchemix offers a bug bounty program through ImmuneFI. The program can be found here: <https://immunefi.com/bounty/alchemix/>​
* Alchemix ran a one-off code4rena contest. The contest can be found here: <https://code4rena.com/contests/2022-05-alchemix-contest>

<figure><img src="/files/BdJUe7Jx8opOv6RG7Udb" alt=""><figcaption></figcaption></figure>


# Financial Reports

Quarterly financial reports.

### 2025 <a href="#id-2023" id="id-2023"></a>

{% file src="/files/yqcf08SrHu15CL9ltbHV" %}

{% file src="/files/7Izk8eSaEBFd25tdOgQi" %}

{% file src="/files/aIP1OnXk87PgP71m0kOF" %}

{% file src="/files/yL0wfxK6DFa7iGz5J0lP" %}

### 2024 <a href="#id-2023" id="id-2023"></a>

{% file src="/files/narpEYFyOu8xeWkae5ZQ" %}

{% file src="/files/Xzq6CdOKzn1JSruZJnnq" %}

{% file src="/files/GFaRqbmXy2mteRcHgarE" %}

{% file src="/files/QIOs98jWoFkdIfYJHVQQ" %}

### 2023 <a href="#id-2023" id="id-2023"></a>

{% file src="/files/WxlUh1HTEULqSCf9qycl" %}

{% file src="/files/onT7O8EnF70HF6iihZck" %}

{% file src="/files/C4pLIWNfyiyVa1JKw6J8" %}

{% file src="/files/lZPuFw4yk52CHk640uzF" %}

### 2022 <a href="#id-2022" id="id-2022"></a>

{% file src="/files/qZ3xtMCPVetetuGA1lz1" %}

{% file src="/files/9vlfF0xjz4eXl3zbtwWx" %}

{% file src="/files/xucqP8pyOoH3ASt2kxF1" %}

{% file src="/files/3eexgo0n2r1KHCamhNN5" %}

<figure><img src="/files/BdJUe7Jx8opOv6RG7Udb" alt=""><figcaption></figcaption></figure>


# Alchemix

Alchemix lets you instantly access loans representing your collateral's future yield. Over time, the interest your deposit earns is used to repay your debt automatically. Alchemix loans are self-repaying, interest-free, and non-liquidating.

> ***Alchemix gives you DeFi loans that transform future yield into present-day capital.***

Explore Alchemix's diverse collateral strategies to find the best self-repaying loan for you on our [main website](https://alchemix.fi/).

## **The Benefits of Alchemix**

* **Maximize Your Assets:** Maintain exposure to your yield-bearing assets while accessing immediate value—spend your future yield today.
* **Diverse Collateral Strategies:** Complete flexibility to choose between any integrated yield strategies.
* **No Forced Liquidations:** Your loan can't be forcibly closed by anyone, not even the protocol. You can self-liquidate anytime by repaying your debt with your collateral.
* **Complete Freedom:** Your position remains accessible at all times, with no locking or deposit/withdrawal fees. You can repay your debt whenever you choose or let it repay itself over time.

<figure><img src="/files/XZIm1f3xbsEEhwP2kWWc" alt=""><figcaption></figcaption></figure>

## **Get Your First Self-Repaying Loan**

* [Watch the Alchemix cinematic ad](https://www.youtube.com/embed/FlWP9FC8C3c?autoplay=1)
* [Borrow using Alchemix](https://alchemix.fi/)

## Quick Start Guide

1. **Deposit to Earn & Borrow**\
   Deposit your collateral into your preferred yield strategy to start earning interest, and be able to take out a loan. Use your deposit to borrow and receive alAssets while your deposit earns interest.
2. **Swap alAsset**\
   Swap the alAsset to any other token via a DEX or DEX Aggregator to access the value of your loan. alAssets can also be used directly on some DeFi protocols.
3. **Wait, Withdraw, Borrow, Repay, or Self-Liquidate**\
   Your chosen yield strategy will earn interest on the full initial deposit. When the chosen strategy earns yield, your share of the yield is used to repay your debt over time automatically. Manage your loan as needed, with the flexibility to withdraw principal, borrow more, repay, or self-liquidate at any time.

<figure><img src="/files/jy1y6OHfnz45lL1O2qqM" alt=""><figcaption><p><strong>The Alchemist Flow.</strong> Deposit your collateral to Alchemix to earn credit, borrow synthetic assets to spend, or save your capital and let your credit accrue.</p></figcaption></figure>

<figure><img src="/files/gmoNItXLUDfXNY7H5RPb" alt=""><figcaption><p><strong>Alchemix Collateral.</strong> These are the types of underlying collateral assets that Alchemix supports. Alchemix offers a diverse selection of yield strategies for each underlying asset.</p></figcaption></figure>

## Learn more

> * [Guides](/user-docs/alchemix-user-docs/resources/guides)
> * [How to](/user-docs/alchemix-user-docs/resources/how-to)

<figure><img src="/files/vjAqOwFhQTIthEzfdwcB" alt=""><figcaption></figcaption></figure>


# Overview

## How does Alchemix work? <a href="#what-does-alchemix-do" id="what-does-alchemix-do"></a>

Picture a bank where you deposit your assets and watch them grow via interest.

Now imagine that in addition to earning interest, the bank allows you to access an instant credit line without the burden of interest payments or liquidation risks, and the interest you earn repays your debt automatically.

Alchemix is like your personal DeFi bank that you control - where deposited assets generate yield that automatically pays off any debt accrued and increases your credit.

With Alchemix, your collateral becomes your credit card, allowing you to spend a portion of your assets upfront, all while your accrued interest effortlessly repays any borrowed amounts over time.

> ***There's no interest on the debt.***
>
> ***There are no monthly payments to make.***
>
> ***There are no liquidations.***

Alchemix offers an innovative DeFi protocol that provides self-repaying, interest-free, non-liquidating loans - giving you the freedom to do more with your capital.

{% hint style="info" %}
For detailed information and to learn how it works, see [Components](#the-components-of-alchemix), [How-to](/user-docs/alchemix-user-docs/resources/how-to), and [Guides and Explainers.](/user-docs/alchemix-user-docs/resources/guides)
{% endhint %}

<figure><img src="/files/XZIm1f3xbsEEhwP2kWWc" alt=""><figcaption></figcaption></figure>

## How to use Alchemix <a href="#how-do-i-use-it" id="how-do-i-use-it"></a>

<figure><img src="/files/xb5EH4W8BVM5OqVockyA" alt=""><figcaption><p><strong>The Alchemical Flow.</strong> This graph shows the series of steps users take when using Alchemix.</p></figcaption></figure>

{% hint style="info" %}
Alchemix accepts diverse collateral types used to mint alAssets and take out loans. Keep up to date with all of the current yield strategies and liquidity incentives on the [Alchemix Statistics page](https://alchemix-stats.com/).
{% endhint %}

**Step 1: Deposit, Earn & Borrow**

* **Deposit:** Users can select a yield strategy and then deposit collateral (e.g., stablecoins or ETH) into that strategy, which will start harvesting yield from their deposit.
* **Borrow:** Users can choose to borrow up to the maximum collateral value. The borrowing limit is determined by the collateral-to-debt ratio, which is the collateral value divided by the loan value. The maximum allowed is a 2:1 collateral-to-debt ratio, which means users can borrow up to 50% of the quantity of the collateral in alAssets.
* **Synthetic Assets:** alAssets are tokens that represent debt and the market price of alAssets fluctuates since it represents the future yield of the borrowed amount. The protocol treats alAssets as being equivalent to the underlying assets when borrowing and repaying debt

**Step 2: Market Swap**

* **Convert:** Swap alAssets to any other token via a DEX or DEX Aggregator. By design, alAssets can be priced at some discount relative to the underlying asset, so it is recommended to check the price of the alAsset before initiating a loan repayment. The discount can be viewed as the up-front cost to access your future yield today. alAssets can also be used directly on some DeFi protocols.
* **Spend:** You can do anything with the loan: buy more crypto, book a vacation, cash out savings, or any other way to spend money. Because there are no forced liquidations in Alchemix, you do not have to worry about being forced to repay your loan to avoid liquidation like many other lending protocols.
* **Wait:** The user's chosen collateral yield strategy will go to work earning interest on the full initial deposit. The harvested yield automatically repays the user's debt over time.

**Step 3: Withdraw & Repay**

* **Withdraw:** At any time, users can withdraw the principal amount (the amount deposited). The limits to withdrawals depend on the collateral-to-debt ratio. As long as a 2:1 ratio is maintained, users have two options: they can either wait for the yield from the chosen strategy to pay down the debt over time with the interest harvested, or they can use their deposited collateral to resolve their debt and self-liquidate.
* **Repay:** Users have the option to repay their loans using the respective alAsset or the underlying asset. They can also repay their debt at a discount by purchasing alAssets when trading at lower prices in the broader market compared to when the loan was taken out.

<figure><img src="/files/PVvwAq3Jb0UYs5L1AH38" alt=""><figcaption><p><strong>The Components of Alchemix.</strong> This graph shows the Alchemical Flow along with the components of the platform. Users interact with a diverse group of smart contracts to use Alchemix.</p></figcaption></figure>

<figure><img src="/files/XZIm1f3xbsEEhwP2kWWc" alt=""><figcaption></figcaption></figure>

## The Components of Alchemix

<figure><img src="/files/86T7EXnJIWzNOpJHVnCO" alt="" width="80"><figcaption><p>Alchemist</p></figcaption></figure>

### Alchemist

The Alchemists handle collateral deposits, issue synthetic assets, and manage yield strategies. There is one Alchemist for each alAsset on each chain.

*Read more -* [***Alchemist***](https://alchemix-finance.gitbook.io/user-docs/alchemix-ecosystem/alchemist)

<figure><img src="/files/t76GPjbbPVQxnGPvWGTC" alt="" width="75"><figcaption><p>alUSD, an alAsset</p></figcaption></figure>

### alAssets

alAssets are tokens that represent future yield. They can be used for market swaps, transmuting, liquidity provision, and loan repayments.

*Read more -* [***alAssets***](https://alchemix-finance.gitbook.io/user-docs/alchemix-ecosystem/alassets)

<figure><img src="/files/JDA1i8VGWfLs3jy4KSUZ" alt="" width="80"><figcaption><p>Transmuter</p></figcaption></figure>

### Transmuter

The Transmuter converts synthetic alAssets to their underlying assets on a 1:1 basis by gradually releasing yield from Alchemists to alAsset token stakers.

*Read more -* [***Transmuter***](https://alchemix-finance.gitbook.io/user-docs/alchemix-ecosystem/transmuter)

<figure><img src="/files/MZgGw7Twao1ohmAbunVs" alt="" width="80"><figcaption><p>Elixir AMO</p></figcaption></figure>

### Elixir AMO

The Elixir AMO (Automatic Market Operator) deposits surplus funds from the Transmuter into external liquidity pools, which supports alAsset prices and generates additional protocol revenue. The Elixir also has the flexibility to withdraw alAssets for price stabilization.

*Read more -* [***Elixir AMO***](https://alchemix-finance.gitbook.io/user-docs/alchemix-ecosystem/elixir-amo)

<figure><img src="/files/sstrzwA6e3293GUnbmNh" alt="" width="125"><figcaption><p>Alchemix DAO</p></figcaption></figure>

### AlchemixDAO

The Alchemix DAO is empowered by the governance token ALCX, which grants holders governance rights to signal their desires that help shape the protocol's direction and resource utilization.

*​Read more -* [***Alchemix DAO***](https://alchemix-finance.gitbook.io/user-docs/alchemix-dao/the-alchemix-dao)

<figure><img src="/files/TfBjdIJGy778mNmiQlXW" alt="" width="80"><figcaption><p>ALCX</p></figcaption></figure>

### ALCX Token

ALCX serves as both the governance and incentive token for Alchemix, facilitating community decision-making and rewarding liquidity providers within the ecosystem.

*Read more - ​*[***ALCX Token***](https://alchemix-finance.gitbook.io/user-docs/alchemix-dao/alcx-token)

<figure><img src="/files/BdJUe7Jx8opOv6RG7Udb" alt=""><figcaption></figcaption></figure>


# Alchemist

The Alchemists are the core smart contracts responsible for managing user accounts in Alchemix. They are used for various reasons, including depositing tokens, minting synthetic assets (alAssets), withdrawing tokens, engaging in yield farming strategies, and repaying debt.

Alchemist contracts primarily manage the yield strategies and then distribute the harvested yield to depositors. Whenever users deposit funds they can use those deposits to take out a loan via minting alAssets.

alAssets have several uses, such as exchanging them for other tokens in markets or using them in various DeFi protocols. Users also have the freedom to repay their debt using underlying tokens or alAssets.

Alchemists can have multiple yield strategies but can only issue one type of alAsset. For example, the alUSD Alchemist issues alUSD but can accept yield-bearing tokens for any approved stablecoin.

<figure><img src="/files/1sItwiuULh04m3xwmFSq" alt=""><figcaption><p>The Alchemist contracts utilize your deposits to harvest yield from deposits.</p></figcaption></figure>

{% hint style="info" %}
Each alAsset on each chain is managed by a dedicated Alchemist. Learn more about this here: [Alchemix on L2](/user-docs/alchemix-user-docs/alchemix-ecosystem/alchemix-on-l2)
{% endhint %}

## Key Features

### **Diverse Yield Farming Strategies**

Alchemists accept yield-bearing assets as collateral but also can accept underlying tokens as deposits, which are converted to third-party yield tokens and then deposited. Alchemix accepts different collateral types, such as ETH-denominated tokens and stablecoins.

### **Minting**

Users can mint alAssets by depositing collateral, effectively taking out a loan. Minting alAssets increases your debt by a corresponding amount, equivalent to borrowing against your deposited collateral.

### **Flexible Withdrawals**

Users can withdraw their original underlying assets, subject to certain limitations.

Withdrawals are limited by the minimum collateral-to-debt ratio (2:1, collateral must be at least twice the debt). Collateral withdrawals are not allowed if they cause the collateral-to-debt ratio to fall below the required minimum, ensuring system solvency and protection against defaults.

To withdraw collateral after taking out a loan, users must either:

* **Repay the Debt**: You can repay your debt by depositing alAssets (alUSD or alETH) or repaying with the associated underlying asset (stablecoin or ETH). Repaying debt with alAssets effectively burns the tokens which in turn eliminates the debt.
* **Wait for Yield**: The yield harvests generated by the deposited assets can reduce the debt over time. This debt reduction either allows you to take out a loan or, if you choose not to, enables you to withdraw additional collateral.
* **Self-Liquidation:** The deposited collateral can be used to repay the debt, provided the collateral-to-debt ratio (2:1) is maintained. This process involves using a portion of your collateral to settle the debt.

<figure><img src="/files/XZIm1f3xbsEEhwP2kWWc" alt=""><figcaption></figcaption></figure>

## How it works

Below is an example of how it works with the stablecoin DAI and the Alchemix synthetic stablecoin, alUSD, using the Yearn Finance DAI yVault vault. The system works the same for other accepted stablecoins, as well as ETH-denominated yield strategies:

1. **Depositing Assets:** Users can deposit a range of yield-bearing assets or their underlying counterparts. If the underlying asset is deposited, the protocol will convert it to the yield-bearing asset on behalf of the user before depositing it into Alchemix.
   * **Example:** If the user deposits DAI, the Alchemist will first convert the DAI into yvDAI through Yearn Finance and then accept the deposit.
2. **Earning & Borrowing:** Users take loans in synthetic alAssets: alETH can be borrowed against ETH-denominated yield token deposits, and alUSD can be borrowed against stablecoin-denominated yield token deposits. Users can borrow alAssets for up to 50% of the collateral's quantity (a minimum collateral-to-debt ratio of 2:1).
   * **Example:** The user borrows alUSD worth up to 50% of the amount of deposited collateral. Loans require a minimum collateralization ratio of 200%. For every 2 DAI a user deposits, they may borrow up to 1 alUSD.
3. **Yield Harvesting:** The user deposits are placed in a yield strategy and the accrued yield from your collateral contributes to repaying the borrowed amount. Each yield harvest reduces your debt, and this also causes an increase in your borrowing capacity.
   * **Example:** The yield that accrues to the yvDAI is periodically harvested to repay the debt of the depositors. With each harvest, the user's account is credited a proportional share of the harvest, thus reducing the user's debt. If you have deposited DAI, but have not borrowed alUSD, the harvest will increase your alUSD borrow limit.
4. **Debt Management & Repayment:** Users can repay their debt at any time, using the alAsset or underlying assets. As the protocol pays down the user's debt, the user can withdraw increasing amounts of DAI from the Alchemist or re-up their alUSD loan while maintaining a minimum 200% collateral ratio. Users can buy alAssets from the open market and pay off their debt at a discount. alAssets and the underlying tokens are treated as 1:1 by the Alchemist for repayment and self-liquidation.
   * **Example:** alUSD debt can be repaid with alUSD, DAI, USDC, and USDT. Repaying debt with alUSD is also a price-restoring mechanism because when the alUSD price is under $1, users can buy it from AMMs and pay off their debt at a discount.
5. **Self-Liquidation:** If users do not have the capital to repay their loan, they can self-liquidate. Self-liquidation will use a user's collateral to repay outstanding debt, at which point the user can withdraw all remaining collateral.
   * **Example:** Users can self-liquidate a portion or all of their collateral whenever needed. The contract will repay their alUSD debt using the DAI from their yvDAI collateral.
6. **Harvesting Fees:** As yield is harvested, it is transferred to the [Transmuter](https://alchemix-finance.gitbook.io/user-docs/alchemix-ecosystem/transmuter) contract from the Alchemist contracts. Alchemix charges a fee of 10% of all generated yield, which means that 90% of the interest your position earns will pay down your debt, or increase your debt allowance if you have no debt.

The Alchemists give users a flexible line of credit for their future yield. Users can enter and exit anytime without committing to long lockups. A user's collateral will never be liquidated unless they do it themselves, because their debt can only go down.

Alchemix has undergone multiple [audits](https://alchemix-finance.gitbook.io/user-docs/resources/audits-and-reports), hosts an ongoing [bug bounty program](https://immunefi.com/bounty/alchemix/), and utilizes internal security reviews and risk monitoring tools.

### **To protect deposits, Alchemists incorporate:**

* **Collateral Deposit Cap:** To limit the supply of alAssets and exposure to any single yield source, the amount of each collateral type used to mint alAssets is capped.
* **Operational Safeguards**: With Maximum Loss, Repay Cap, and Liquidate Cap limits, the protocol guards against instability from market fluctuations.
  * **Maximum Loss:** The maximum loss parameter limits how much a yield strategy can lose. If exceeded, the yield strategy is automatically paused for evaluation. See[ multisig admin rights ](/user-docs/alchemix-user-docs/alchemix-dao/the-alchemix-dao/governance-process/multisig-admin-rights)for more information.
  * **Repay and Liquidate Caps:** Time-bound limits that manage the quantity of debt that can be repaid and the amount of collateral that can be liquidated, limiting damage of any potential exploits.

{% hint style="info" %}
For detailed information about this topic, see [Vault Losses and Collateral De-pegging](/user-docs/alchemix-user-docs/resources/guides/vault-losses-and-collateral-de-pegging).
{% endhint %}

<figure><img src="/files/BdJUe7Jx8opOv6RG7Udb" alt=""><figcaption></figcaption></figure>


# alAssets

alAssets represent users' future yield from deposited yield-bearing collateral, functioning as tokenized loans for the different strategies (e.g., ETH for alETH, various stablecoins for alUSD).

alAssets can be swapped for other assets, paired with other assets to provide liquidity, converted to their underlying assets via the Transmuter, or used in various DeFi protocols such as the ones on [Alchemix Stats](https://alchemix-stats.com/earn).

Because alAssets represent *future* yield, they are typically expected to be valued by the market at a discount from 1:1 with their associated underlying asset. Thus, experienced DeFi users may wish to purchase alAssets directly (instead of taking a loan) to earn yield, speculate on the price of the alAsset, or profit by converting it back to its underlying asset via the Transmuter. This type of user is the counterparty that makes it possible to access self-repaying loans from Alchemix.

Governance mechanisms and systems, such as the Transmuter, Elixir AMO, and liquidity incentives provided by the DAO treasury, work together to influence the price and manage the supply of alAssets.

<figure><img src="/files/0P8KjE9IPYh5Y5uCUs99" alt=""><figcaption><p>alAssets are minted when users deposit collateral into the Alchemists and take out loans against those deposits. These assets can be used in market swaps or any type of transaction. alAssets can also be used in the Transmuter which will gradually convert these into the underlying from the harvested yields.</p></figcaption></figure>

## Key Features

### **Yield Representation**

alAssets represent future yield generated by deposited assets in the platform.

### **Discounted Trading**

alAssets typically trade at a discount to the underlying, reflecting their representation of future value.

### **Governance Oversight**

The alAsset supply and price are influenced by the Transmuter, Elixir AMO, and DAO-managed liquidity incentives (find more info about the incentives in [Staking Pool Incentives](/user-docs/alchemix-user-docs/alchemix-dao/the-alchemix-dao/staking-pool-incentives)).

### **Debt Repayment**

Enables users to repay debt or convert assets using alAssets.

### **Collateral Deposit Cap**

Ensures a predictable maximum global supply in addition to Alchemist collateral deposit caps.

<figure><img src="/files/XZIm1f3xbsEEhwP2kWWc" alt=""><figcaption></figcaption></figure>

## How it works

1. **Deposit Collateral:** Users deposit collateral assets into the Alchemix protocol.
2. **alAsset Issuance:** When users take out loans, they receive alAssets representing their future yield from the deposited assets.
3. **Market Accessibility:** Users can utilize alAssets for various on-chain transactions, including market swaps and loan repayments.
4. **Liquidity Management:** Users taking loans will expand the supply of alAssets. Loan repayments, Transmutation, and the Elixir AMO will all shrink the supply of alAssets. The price of the alAsset is representative of these mechanisms, as well as demand for loans, third-party liquidity providers, and Transmuter users.
5. **Transmuter Conversion:** Users can deposit alAssets into the Transmuter, gradually converting them into their underlying collateral assets over time.

{% hint style="info" %}
For detailed information, see this guide to learn how to[ Deposit collateral](/user-docs/alchemix-user-docs/resources/how-to/deposit-funds) & how to [Take a Self-repaying Loan](/user-docs/alchemix-user-docs/resources/how-to/take-a-self-repaying-loan).
{% endhint %}

<figure><img src="/files/BdJUe7Jx8opOv6RG7Udb" alt=""><figcaption></figcaption></figure>


# Transmuter

The Transmuter is the primary mechanism for restoring alAsset prices and reducing supply by converting alAssets into their underlying assets.

The Transmuter achieves this by receiving all harvested yields, self-liquidations, and repayments while gradually releasing them to alAsset depositors to be redeemed via a time-based formula.

Users that deposit alAssets to the Transmuter will gradually be credited with the corresponding assets proportional to the amount of alAssets that they have deposited in the Transmuter. The alAssets are burned when a user claims the transmuted token.

For example, if a user deposits 100 alUSD into the Transmuter, it will convert the alUSD to DAI over time. Once the 100 alUSD are fully redeemable for 100 DAI, the user can claim the corresponding 100 DAI, which will also burn the 100 alUSD.

<figure><img src="/files/uagiY0VI5xCEC4QaJ650" alt=""><figcaption></figcaption></figure>

## Key Features

### **1:1 Asset Conversion**

Enables the conversion of alAssets to underlying assets at a 1:1 rate.

### **Minimum Estimate of Flow**

The transmutation rate is dictated by the average yield earned by depositors, which provides a baseline estimation for the flow of yield into the Transmuter. The flow rate to the Transmuter increases with self-liquidations and loan repayments.

### **Protocol Synergy**

Receiving funds from Alchemists and redirecting excess funds to the Elixir AMO optimizes the capital efficiency within the ecosystem.

### **Governance-Controlled Parameters**

Transmuter parameters are managed based on governance decisions, aligning with the ecosystem's evolving needs.

### **Stabilization of alAssets**

The Transmuter provides an efficient mechanism to stabilize the price of the alAsset.

<figure><img src="/files/XZIm1f3xbsEEhwP2kWWc" alt=""><figcaption></figcaption></figure>

## How it works

1. **Deposit:** Users deposit alAssets (like alUSD) into the Transmuter.
2. **Accumulation & Exchange:** Over time the underlying asset is accumulated in the Transmuter via yield harvest, self-liquidations, and loan repayments. The asset is proportionally allocated to users based on their alAsset deposit. For example, the Transmuter will gradually allocate DAI based on how much alUSD has been deposited.
3. **Claim:** Users claim the alAssets equivalent to their deposited tokens and burn the alAssets at a 1:1 ratio. In this example, if the user deposited 100 alUSD the user will burn their 100 alUSD deposits when they claim the 100 DAI equivalent.

Users who deposit alUSD in the Transmuter would gradually be credited with DAI proportional to their alUSD deposit. Once the user decides to withdraw DAI, an equivalent amount of their deposit alUSD is burned, completing the transmutation cycle.

<figure><img src="/files/XZIm1f3xbsEEhwP2kWWc" alt=""><figcaption></figcaption></figure>

## Conversion Flow

The flow rate at which these assets can be converted from alAssets (alUSD) into the underlying tokens (DAI) is limited to ensure that the system is not drained by minor arbitrages while creating a front-stop or excess pool of funds for conversions when the price of the alAsset diverges further from the underlying. If the excess funds are significant, they are sent to the [Elixir AMO](https://alchemix-finance.gitbook.io/user-docs/alchemix-ecosystem/elixir-amo).

The minimum flow to the Transmuter may be estimated by the average yield earned by all depositors for the corresponding alAsset. Furthermore, repayments and self-liquidations are sent directly into the Transmuter, contributing to the conversion flow, which is part of the average yield.

{% hint style="info" %}
More information can be found in [The Transmuter, Elaborated](/user-docs/alchemix-user-docs/resources/guides/the-transmuter-elaborated)
{% endhint %}

<figure><img src="/files/BdJUe7Jx8opOv6RG7Udb" alt=""><figcaption></figcaption></figure>


# Elixir AMO

The Elixir AMO is a liquidity management tool designed to take advantage of the funds built up by the Transmuter. Excess underlying assets in the Transmuter are sent to third-party liquidity pools via the Elixir AMO to rebalance the alAsset price and generate yield.

The Elixir AMO removes assets from the liquidity pool when they fall below a target price, stabilizing the alAssets. The Elixir AMO enhances the sustainability of the Alchemix protocol by generating additional revenue streams and providing an additional lever for managing the system.

<figure><img src="/files/4DhW83aAfFacYDibBvsD" alt=""><figcaption></figcaption></figure>

## Key Features

### **Automated Market Operator**

The Elixir AMO automates liquidity management by deploying excess funds from the Transmuter into yield strategies, effectively rebalancing liquidity pools.

### **Price Stabilization**

The Elixir AMO can withdraw alAssets to stabilize prices when they fall below the target price, helping to mitigate volatility and increase stability.

### **Revenue Generation**

Deposits into liquidity pools to generate additional revenue for the protocol.

### **Flexible Withdrawal Mechanism**

The Elixir AMO offers the flexibility to withdraw alAssets and remove them from circulation when necessary, providing faster-acting influence over the alAsset supply than the Transmuter alone can offer.

### **Sustainability**

By enhancing alAsset management and generating additional revenue streams, the Elixir AMO contributes to the long-term sustainability of the Alchemix ecosystem.

<figure><img src="/files/XZIm1f3xbsEEhwP2kWWc" alt=""><figcaption></figcaption></figure>

## How it works

1. **Transmuter Accumulation:** Excess funds accumulate in the Transmuter.
2. **Transfer to Elixir AMO:** When significant, these funds are deployed to the Elixir AMO.
3. **Elixir AMO Deposits:** The Elixir AMO deposits the funds into corresponding liquidity pools, rebalancing the pools and increasing the alAsset prices.
4. **Yield Generation:** Yield generated from these deposits (such as CRV, CVX, or similar) creates additional revenue for the protocol.
5. **Removing Assets:** The AMO can also remove alAssets from circulation as a faster-acting method of influencing alAsset supply and price.

{% hint style="info" %}
For detailed information on how it works, see [The AMO: The Elixir](/user-docs/alchemix-user-docs/resources/guides/the-amo-the-elixir).
{% endhint %}

<figure><img src="/files/BdJUe7Jx8opOv6RG7Udb" alt=""><figcaption></figcaption></figure>


# Alchemix on L2

Differences between Mainnet Alchemix and other Layer 2 chains

Alchemix primarily operates on the Ethereum Mainnet but also maintains additional deployments on Optimism and Arbitrum. ALCX and alAssets in Layer 2 chains are sometimes called ‘xalAssets’, as they are not technically identical to the Mainnet assets. Below are the key differences between Mainnet components and their Layer 2 counterparts:

<figure><img src="/files/TfBjdIJGy778mNmiQlXW" alt="" width="80"><figcaption><p>ALCX</p></figcaption></figure>

## ALCX <a href="#alcx" id="alcx"></a>

ALCX can only be minted on the Ethereum Mainnet. Any amount of ALCX may be bridged to Arbitrum or Optimism through the Everclear (prev Connext) bridge. When ALCX is bridged from Mainnet, it is locked in a lockbox contract and xALCX (Layer 2 ALCX) is minted on the Layer 2 chain. To bridge back, xALCX may be burned on the Layer 2 chain to claim ALCX from the lockbox on Mainnet. So long as the system behaves as expected, there would be no reason that xALCX on any Layer 2 could not be burned/bridged to claim equivalent ALCX on Mainnet.

<figure><img src="/files/XZIm1f3xbsEEhwP2kWWc" alt=""><figcaption></figcaption></figure>

<div align="center"><figure><img src="/files/Mv5z6yDt5LbnvYNy3DXE" alt="" width="80"><figcaption><p>alETH</p></figcaption></figure></div>

## alAssets <a href="#alassets" id="alassets"></a>

Like xALCX, alUSD, and alETH can be locked/bridged in any quantity on/from Mainnet to earn equivalent credit to mint xalUSD and xalETH (Layer 2 alUSD and Layer 2 alETH). Additionally, xalUSD and xalETH can be minted on Arbitrum and Optimism by taking a self-repaying loan. Lastly, bridging xalAssets between L2s is unlimited, but bridging xalAssets to Mainnet can only be done up to the extent that the corresponding alAsset has been bridged from Mainnet to any L2.

For example, assuming no other bridging had ever taken place: if you were to bridge 10 alUSD from Mainnet to Optimism, and then someone else was to take an alUSD loan and bridge 10 OP-xalUSD from Optimism to Mainnet, you would no longer be able to bridge any xalUSD back from Optimism to Mainnet (someone else would have used the liquidity you created). However, you can bridge your 10 OP-xalUSD from Optimism to Arbitrum. Ultimately, xalAssets are backed by a mix of Mainnet alAssets (through bridging) and the yield sources of that specific chain. OP-xalUSD is backed by Optimism future yield and alUSD bridged from Mainnet. Mainnet alUSD is only backed by Mainnet future yield.

This system helps create more liquidity on L2 chains while ensuring that the primary Alchemix deployment (Mainnet) is insulated from the L2 chains. In that manner, xalAssets should generally be expected to have an equivalent or lesser value than Mainnet alAssets as bridging from Mainnet to L2s (and between L2s) is unrestricted while bridging from L2s to Mainnet is liquidity-based.

<figure><img src="/files/XZIm1f3xbsEEhwP2kWWc" alt=""><figcaption></figcaption></figure>

<figure><img src="/files/86T7EXnJIWzNOpJHVnCO" alt="" width="80"><figcaption><p>Alchemists</p></figcaption></figure>

## Alchemists <a href="#alchemists" id="alchemists"></a>

Loans on L2 chains behave the same as on Mainnet, but each chain has unique yield strategies.

<figure><img src="/files/XZIm1f3xbsEEhwP2kWWc" alt=""><figcaption></figcaption></figure>

<figure><img src="/files/JDA1i8VGWfLs3jy4KSUZ" alt="" width="80"><figcaption><p>Transmuter</p></figcaption></figure>

## Transmuter <a href="#transmuter" id="transmuter"></a>

The Transmuter behaves the same on L2 chains, where xalAssets can be redeemed over time at a 1:1 rate for the underlying assets. The flow to the Transmuter is based on the yield for each chain. Users can bridge alAssets from Mainnet to obtain xalAssets on an L2 and deposit them into the Transmuter.

<figure><img src="/files/XZIm1f3xbsEEhwP2kWWc" alt=""><figcaption></figcaption></figure>

<figure><img src="/files/MZgGw7Twao1ohmAbunVs" alt="" width="80"><figcaption><p>Elixir AMO</p></figcaption></figure>

## Elixir AMO <a href="#elixir-amo" id="elixir-amo"></a>

When available, the AMO functions on L2s in the same way as on Mainnet. The backing is held in the alAsset liquidity pool and can be withdrawn single-sided as alAssets to influence the price, according to governance. On some L2s, the AMO exists as a multisig rather than a contract.

<figure><img src="/files/XZIm1f3xbsEEhwP2kWWc" alt=""><figcaption></figcaption></figure>

## Appendix - Everclear Bridge <a href="#appendix-connext-bridge" id="appendix-connext-bridge"></a>

Alchemix uses the xERC20 + Lockbox standard pioneered by Everclear (prev Connext). Currently, Everclear is also the only whitelisted bridge. Bridging alAssets and ALCX is secured through Everclear's cross-chain message system through the Arbitrum and Optimism canonical bridges. Everclear has the right to pause its system. If bridging is ever paused for an unreasonable amount of time, Alchemix has the option to whitelist another bridging service to provide cross-chain messaging such that bridging can continue between chains. Because of this system, Alchemix is not exclusively dependent on Everclear for bridging services. The bridge contracts on each chain are owned by Alchemix, with the intent to turn ownership over to veALCX.

{% hint style="info" %}
For detailed information see this guide to learn how to [bridge assets to other chains](/user-docs/alchemix-user-docs/resources/guides/bridging-assets-to-other-chains).
{% endhint %}

<figure><img src="/files/BdJUe7Jx8opOv6RG7Udb" alt=""><figcaption></figcaption></figure>


# Utility Tools

Alchemix has utility tools that are built by 3rd parties. These tools have no guarantee of audit, review, ownership, or maintenance by Alchemix and you can find them on the [utilities page on the website](https://alchemix.fi/utilities).

### Statistics

Alchemix keeps an extensive statistical data dashboard where you can find all the information related to vaults, staking, treasury, and more!

{% embed url="<https://alchemix-stats.com/>" %}

Additionally, you can find more information about Alchemix at:

* [Revelo Intel - Alchemix Breakdown](https://revelointel.com/project-breakdown/alchemix)
* [Dashboard made by Alphaday](https://app.alphaday.com/b/alchemix/)
* [DeFi Llama](https://defillama.com/protocol/alchemix#information)

<figure><img src="/files/02ov8CxpqbZsjdtkiA3N" alt=""><figcaption></figcaption></figure>


# Links & Resources

* [**Website**](https://www.alchemix.fi/)
* [**Discord**](https://discord.com/invite/alchemix)
* [**Twitter**](https://twitter.com/AlchemixFi)
* [**Medium**](https://alchemixfi.medium.com/)
* [**Newsletter**](https://alchemixfi.substack.com/)
* [**YouTube**](https://www.youtube.com/c/AlchemixFinance)
* [**Github**](https://github.com/alchemix-finance/)
  * [**Front End Repository**](https://github.com/alchemix-finance/alchemix-v2-frontend)
  * [**Contract Deployments**](https://github.com/alchemix-finance/deployments)
* [**Grants Program**](https://alchemix.questbook.app/)
* [**Developer Docs**](https://alchemix-finance.gitbook.io/v2/)
* [**Stats and data**](https://alchemix-stats.com/)

## Learn more

> * [Guides](/user-docs/alchemix-user-docs/resources/guides)
> * [How to](/user-docs/alchemix-user-docs/resources/how-to)

<figure><img src="/files/02ov8CxpqbZsjdtkiA3N" alt=""><figcaption></figcaption></figure>


# The Alchemix DAO

## Empowering Community Governance

The Alchemix DAO serves as the governance backbone for the Alchemix ecosystem. Its primary objectives include:

1. **Treasury Management:** The DAO receives protocol income from fees and allocates funds for development, maintenance, audits, and community initiatives.
2. **Ecosystem Project Funding:** The DAO supports projects that enhance Alchemix or utilize Alchemix components.
3. **Bug Bounty:** A significant portion of ALCX tokens is reserved for bug bounties, ensuring protocol security. Vulnerabilities can be reported via the [Alchemix website](https://app.alchemix.fi/) or the [Immunefi Bug Bounty](https://bugs.immunefi.com/program-reports) program.
4. **Supporting Ethereum Community:** The DAO occasionally allocates treasury income to initiatives like Gitcoin grants and charitable programs, fostering broader community support.
5. **Governance Voting:** ALCX token holders influence protocol direction and treasury usage through governance voting, ensuring community representation.

<figure><img src="/files/anKC1XiKqNfiHTd2iGiN" alt=""><figcaption></figcaption></figure>

## The Future

As the Alchemix protocol and DAO advance, there will be a progressive shift to empower community governance through a transparent and open process. The team values community feedback and recognizes the wealth of knowledge and diverse skill sets within the community, anticipating that this will significantly shape the DAO's direction and design.

<figure><img src="/files/XZIm1f3xbsEEhwP2kWWc" alt=""><figcaption></figcaption></figure>

## **Bug Bounty Program**

Alchemix offers a bug bounty program to maintain protocol security. The program encourages users to report vulnerabilities for bug bounty rewards. Vulnerabilities can be reported via the [Alchemix website](https://app.alchemix.fi/) or the [Immunefi Bug Bounty](https://bugs.immunefi.com/program-reports) program.

## **DAO Grants Program**

The Alchemix Grants program, launched to fund various Alchemix-related projects, is hosted through Questbook: [alchemix.questbook.app](https://t.co/SUDI85lFzB).

<figure><img src="/files/BdJUe7Jx8opOv6RG7Udb" alt=""><figcaption></figcaption></figure>


# Governance Process

The Alchemix DAO is run through a developer multisig, signaling through the Snapshot app.

ALCX Tokens give holders governance rights over the direction of the protocol and use of the treasury. Community members may create proposals by following the community governance process. If you are interested in submitting a proposal to the Alchemix DAO, you must follow the process below. If you want to apply directly for a grant, please see [Questbook.](https://alchemix.questbook.app/)

## Community Governance Process

### Step 0 - Draft Proposal Discussion <a href="#step-0" id="step-0"></a>

Gather sentiment for your proposal idea through discussion with the community in the Discord server, fireside chats, DMs with other community members, and writing a draft document to share. Refine your proposals with the comments and interests of the community.

### Step 1 - Proposal Draft <a href="#step-1" id="step-1"></a>

Post your proposal as a new thread in the #governance-proposals channel of the Discord server.

### Step 2 - Community Discussion <a href="#step-2" id="step-2"></a>

Ping any relevant contributors thus far in the thread and engage in discussion related to the proposal. This step is important, as you want your proposal to gather as much feedback as possible.

### Step 3 - Off-Chain Signaling Via Snapshot <a href="#step-3" id="step-3"></a>

After a minimum of 5 days after completing Step 1 AND Step 2, you may post your proposal to the “Alchemixed Opinions” Snapshot (the platform for Alchemix governance temperature checks). Snapshot link: <https://snapshot.org/#/alchemixedopinions.eth>

1. A minimum of 50 ALCX is necessary to post a proposal. If you do not have 50 ALCX, you can ask someone with 50 ALCX to post on your behalf.
2. Proposals will be live for 3 days.
3. Voting options must only be For, Against, or Abstain.

### Step 4 - AIP <a href="#step-4" id="step-4"></a>

If greater than 50% of the non-abstain vote is “For” and a quorum of 5k ALCX voting is met, the proposal will move to the official Alchemix Proposal Snapshot as an AIP (Alchemix Improvement Proposal) at <https://snapshot.org/#/alchemixstakers.eth>

### Step 5 - AIP Vote <a href="#step-5" id="step-5"></a>

Official AIPs will have a quorum of 35k ALCX. If the quorum is met, then the multisig will be directed to execute the most popular voting option unless directed otherwise by the voting parameters.

<figure><img src="/files/XZIm1f3xbsEEhwP2kWWc" alt=""><figcaption></figcaption></figure>

## Supplementary Information <a href="#supplementary-information" id="supplementary-information"></a>

### Common Proposal Types <a href="#common-proposal-types" id="common-proposal-types"></a>

1. A change to the protocol treasury and how it is utilized.
2. A change to protocol parameters (such as Transmuter flow rate).
3. A grant, donation, or funding request for a specific feature.
4. Deploying a new protocol-related contract or upgrading an existing one by the core team (e.g., introducing a new yield strategy or launching on a new chain).

### What Makes a Good Proposal? <a href="#what-makes-a-good-proposal" id="what-makes-a-good-proposal"></a>

1. The proposals should have a structure or format that makes giving context and background information easy.
2. The first item in the proposal should summarize only the action items on what is being proposed. To be as brief as possible, it should not include any justification. This section intends to detail every step necessary to execute the proposal.
3. The introduction of the proposal should be an introduction giving context to the reason for the proposal and what the body of the proposal contains. This section should include the necessary background information or minimum context to understand the proposal.
4. The body of the proposal should include an in-depth analysis and justification for what is being proposed. This section should include the area of impact, justification, charts and analysis, in-depth technical specifications, budget allocations, and implementation.
5. The end of the proposal should state the voting options that will appear on the snapshot and what they mean (For, Against, Abstain). This section should clarify what each voting option means in precise and direct language.
6. Any proposal that requires a high level of effort (new features, new deployments, grant requests etc) should identify who will do the work or who exactly will implement the proposal. For example, a poorly written proposal might suggest a new feature, while a well-written proposal would not only suggest the feature but also provide verification that the Core team is willing and able to build it, or specify who will build it if a third party is involved. If a grant request is included, then there is more onus on the proposer to justify why they will be able to build the feature. Treasury actions and changing protocol parameters will typically only take a handful of multi-sig transactions - in these cases, it can be assumed that the multi-sig will carry out the proposal if passed.

<figure><img src="/files/BdJUe7Jx8opOv6RG7Udb" alt=""><figcaption></figcaption></figure>


# Development of New Adapters

Technical contributions to the Alchemix ecosystem can come in many forms, including:

* Token adapters for new yield sources
* Integration with other DeFi protocols
* Alchemix-specific tools and utilities

However, to integrate any new smart contracts into an AlchemixV2 debt system, some governance actions will be required. Contributors should use the following procedures to guide them as they prepare to build and integrate code into the Alchemix ecosystem.

## Token Adapters

Alchemix token adapters are standardized methods used to interact with different yield-bearing assets or vaults. Alchemix uses token adapters to integrate and manage the various assets seamlessly.

The following details the steps are necessary for integrating a new adapter into the Alchemix V2 protocol.

### Token Adapter Governance Process <a href="#token-adapter-governance-process" id="token-adapter-governance-process"></a>

There are three steps, including 2 separate AIPs (Alchemix Improvement Proposals), needed to get an adapter approved and connected in an Alchemix V2 debt system. The first AIP is technically optional, as both AIPs could be condensed into a single AIP if the integration developer is comfortable putting in the development work upfront without pre-approval.

The [Community Governance Process](https://alchemix-finance.gitbook.io/user-docs/alchemix-dao/the-alchemix-dao/governance-process) details the general governance steps that should be followed for each AIP.

#### *Step 1 - Propose the new yield source for integration, and request grant funding.* <a href="#step-1" id="step-1"></a>

The purpose of this step is for the integrator/proposer to verify that the Alchemix DAO wants to integrate the proposed yield strategy. Additionally, the integrator/proposer can request a pre-approved grant of ALCX tokens, to be paid out when the Adapter is deployed in step 2.

A template for Step 1 proposals will be provided in the future.

#### *Step 2 - Write, deploy, and verify the ITokenAdapter compliant adapter. See Technical Requirements below at the end of section.* <a href="#step-2" id="step-2"></a>

#### *Step 3 - Propose integration of the new yield source using the new adapter.* <a href="#step-3" id="step-3"></a>

The following parameters need to be approved in at least one of the two AIPs:

* Target network (eg. ETH Mainnet, Optimism, etc…)
* Yield bearing asset name & address (include Etherscan & Github links)
* Collateral asset name & address (include Etherscan & Github links)
* [Maximum Loss](https://alchemix-finance.gitbook.io/v2/docs/alchemistv2#setmaximumloss) is expressed in basis points (eg., 50 for 0.5%) [more info](https://github.com/alchemix-finance/v2-foundry/blob/master/src/interfaces/alchemist/IAlchemistV2AdminActions.sol#L49)
* Deposit cap (expressed in units of underlying collateral) [more info](https://github.com/alchemix-finance/v2-foundry/blob/master/src/interfaces/alchemist/IAlchemistV2AdminActions.sol#L49)
* Credit unlock blocks (how long after a harvest does it take for the yield to be distributed to depositors) [more info](https://github.com/alchemix-finance/v2-foundry/blob/master/src/interfaces/alchemist/IAlchemistV2AdminActions.sol#L49)

The following needs to be approved as well, once development and deployment are complete:

* Adapter name & address
  * include Etherscan link
  * include Github link to solidity code in the [v2-foundry repo](https://github.com/alchemix-finance/v2-foundry)
  * include Github link to deployment artifacts in [deployments repo](https://github.com/alchemix-finance/deployments)
* Multisig transaction details that should be executed by the Alchemix dev multisig, detailed [here](https://alchemix-fi.atlassian.net/wiki/spaces/AL/pages/679608321/Adapter+Integration#Dev-Multisig-Transactions)

NOTE: To be clear, all of the above bullet points only need to be approved ONCE by governance. It is up to the builder whether or not they want pre-approval before creating and deploying the new adapter, or if they want to make a single AIP for approval once the adapter is built, deployed, and verified.

<figure><img src="/files/XZIm1f3xbsEEhwP2kWWc" alt=""><figcaption></figcaption></figure>

## Technical Requirements <a href="#technical-requirements" id="technical-requirements"></a>

1. Build a token adapter that is compliant with the [**ITokenAdapter** interface](https://github.com/alchemix-finance/v2-foundry/blob/master/src/interfaces/ITokenAdapter.sol), along with a set of unit & integration tests, and make a PR against the master branch of the [Alchemix V2 Repo](https://github.com/alchemix-finance/v2-foundry).
2. Once the Pull Request is approved and merged by the core team, you can deploy the contract to the target network.
3. Make a pr against the master branch of the [deployments repo](https://github.com/alchemix-finance/deployments) that includes the artifacts from the deployment (.json file containing, at a minimum, the **abi** & **address** of the deployed adapter).

## Dev Multisig Transactions <a href="#dev-multisig-transactions" id="dev-multisig-transactions"></a>

Relevant addresses for already-deployed Alchemix contracts can be found in the [deployments repo](https://github.com/alchemix-finance/deployments).

## **Enable a new adapter**

1. TARGET\_ALCHEMIST\_ADDRESS.addYieldToken(YIELD\_TOKEN\_ADDRESS, (ADAPTER\_ADDRESS, MAXIMUM\_LOSS, MAXIMUM\_EXPECTED\_VALUE, CREDIT\_UNLOCK\_BLOCKS));
   1. YIELD\_TOKEN\_ADDRESS = the address of the yield token being integrated
   2. ADAPTER\_ADDRESS = the address of the newly deployed adapter
   3. MAXIMUM\_LOSS = the maximum loss value (in bps) from the AIP
   4. MAXIMUM\_EXPECTED\_VALUE = the deposit cap value (in units of underlying collateral) from the AIP
   5. CREDIT\_UNLOCK\_BLOCKS = the credit unlock blocks value from the AIP
2. TARGET\_ALCHEMIST\_ADDRESS.setYieldTokenEnabled(YIELD\_TOKEN\_ADDRESS, true);
   1. YIELD\_TOKEN\_ADDRESS = the address of the yield token being integrated

## **Upgrade an adapter**

(If the newly deployed adapter is an upgraded adapter for an existing yield token)

1. TARGET\_ALCHEMIST\_ADDRESS.setTokenAdapter(YIELD\_TOKEN\_ADDRESS, ADAPTER\_ADDRESS);
   1. YIELD\_TOKEN\_ADDRESS = the address of the yield token being integrated
   2. ADAPTER\_ADDRESS = the address of the newly deployed adapter

## **Create a harvest job for the Alchemix Keeper**

1. HARVEST\_RESOLVER\_ADDRESS.addHarvestJob(true, YIELD\_TOKEN\_ADDRESS, ALCHEMIST\_ADDRESS, MINIMUM\_HARVEST\_AMOUNT, MINIMUM\_DELAY, SLIPPAGE\_BPS);
   1. details on these parameters can be found [here](https://github.com/alchemix-finance/v2-foundry/blob/master/src/keepers/HarvestResolver.sol#L92)
   2. MINIMUM\_HARVEST\_AMOUNT should be set to a value that can be expected to be harvested every 1-2 days
   3. MINIMUM\_DELAY should be set to 1-2 days

<figure><img src="/files/BdJUe7Jx8opOv6RG7Udb" alt=""><figcaption></figcaption></figure>


# Multisig Admin Rights

## Multisig Admin Rights

### Access Control <a href="#access-control" id="access-control"></a>

#### Alchemist Contracts <a href="#alchemist-contracts" id="alchemist-contracts"></a>

Alchemist contracts for alUSD and alETH allow the user to create a debt position by depositing tokens as collateral and taking debt against the collateral by minting alUSD or alETH.

Each Alchemist Contract has the following privileged roles: Admin, Sentinel, and Keeper, with the following privileges:

1. **Admin**
   * Add tokens to the list of underlying and yield tokens supported by the Alchemist
   * Enable and disable tokens from this list
   * Add and remove sentinels and keepers
   * Transfer the admin role to a different address (must be accepted by the new admin)
   * Configure the Alchemist's parameters, including limits, fees, and the addresses of the Transmuter and protocol fee receiver
   * Reset ("snap") the expected value of a yield token to the current value. Since deposits, withdrawals of the underlying, and liquidations are blocked if the value of a yield token suddenly drops significantly below its expected value, this can prevent the contract from becoming unusable if the yield token doesn't recover, or takes too long to recover.
   * Disable or enable whitelisting requirements
2. **Sentinel**
   * Sentinels can disable (ie, pause) underlying and yield tokens. `pauseUnderlyingToken()` will disable `deposit()`, `depositUnderlying()`, `repay()`, and `liquidate()` functionality for the given underlying token. `pauseYieldToken()` will disable `deposit()`, `depositUnderlying()`, `withdraw()`, `withdrawUnderlying()`, `liquidate()` , and `harvest()`for the given yield token (ie, given yield strategy). See Pause Control below for more information.
3. **Keeper**
   * Keepers can trigger harvests of the yield tokens.

### Upgradeability <a href="#upgradeability" id="upgradeability"></a>

One major design choice of note in Alchemix v2 is upgradeability. All 3 major contracts (AlchemistV2, TransmuterV2, and TransmuterBuffer) are built to be used via upgradeable proxies. This entrusts the Alchemix DAO with the ability and responsibility to upgrade the functionality whenever needed.

### Pause Control <a href="#pause-control" id="pause-control"></a>

Sentinels have the ability to pause yield tokens should there be an issue. Admins may then unpause the tokens. When an underlying token is disabled, it should be noted that the `withdraw()`, `withdrawUnderlying()`, `repay()`, `mint()`, and `burn()` (ie, repay debt with alAssets) functions can still be called - allowing users to settle their debt and withdraw the yield token or underlying token.

Each accepted yield token has a configured maximum amount of loss that it can experience and still function normally. If the yield strategy loses more than the specified `maximumLoss`, then the yield strategy is paused automatically, meaning users may not make any deposits, may not liquidate or repay, and may not take a new loan with these strategies. Harvests will also be disabled. Lastly, users will be unable to withdraw collateral as the underlying asset. However, they will still be able to repay their loan and withdraw the yield token. For example, if the `maximumLoss` were exceeded, a user could not withdraw DAI from a strategy that uses yDAI. However, they could still repay their loan with DAI to withdraw their yDAI collateral.

Sentinels also have the ability to pause underlying tokens if issues arise. This applies only to alAssets with multiple underlying tokens, such as alUSD.If an underlying token is paused, the `deposit()`, `depositUnderlying()`, `liquidate()`, and `repay()` functions would be disabled for that token. Notably, debts may still be paid down by harvests and users may repay debt with alAssets or other underlying tokens and withdraw their funds.

### Multisigs, Timelock, and veALCX <a href="#multisigs-timelock-and-vealcx" id="multisigs-timelock-and-vealcx"></a>

The Alchemix Developer Multisig serves as the administrator for the Alchemix contracts and manages the protocol’s operational budget. Separately, the timelock multisig holds the majority of DAO-owned ALCX and owns the sweep functions of the AMO contracts (i.e., AMO funds can only be removed from the AMO contracts by the timelock multisig). The timelock is currently 600 seconds, reduced from 24 hours in response to the July 30th Curve Exploit. In the future, the timelock will likely be retired and all admin controls will be assigned to a mix of veALCX and the dev multisig, with a goal of shifting more power to veALCX and away from the dev multisig over time.

### More Information <a href="#more-information" id="more-information"></a>

For more in-depth information on admin controls and contract features, see the [v2 audit](https://github.com/runtimeverification/publications/blob/main/reports/smart-contracts/Alchemix_v2.pdf) and [developer docs](https://alchemix-finance.gitbook.io/v2/).

<figure><img src="/files/02ov8CxpqbZsjdtkiA3N" alt=""><figcaption></figcaption></figure>


# Staking Pool Incentives

{% hint style="info" %}
Take a look at the current Staking & Incentives program[ here](https://alchemix-stats.com/earn).
{% endhint %}

Alchemix alAssets require deep liquidity to be maximally effective.

The Staking Pools' primary purpose is to distribute ALCX tokens to community members who provide liquidity to the Alchemix ecosystem.

The emissions distribution is modified through governance proposals. Below are the types of pools, how they are incentivized, and their reasoning for existing:

1. alUSD and alETH LP tokens: Users may provide alAsset liquidity pools on 3rd-party decentralized exchanges, and stake their liquidity with these exchanges. These third-party pools aim to establish prices closer to 1:1 than the market would naturally allow, ensuring deep liquidity for alUSD and alETH. This enhances Alchemix's value proposition and boosts liquidity provider confidence. Incentives include protocol liquidity assets (vlCVX, sdCRV, veRAM, veVELO), ALCX emissions, and vote incentivization platforms.
2. ALCX/ETH LP tokens: Users may provide ALCX/ETH liquidity on Balancer, with the option to stake for additional yield on Balancer and Aura Finance, among other platforms.
3. ALCX single token staking: This Alchemix-owned pool rewards ALCX holders who may be too risk-averse to participate in the ALCX/ETH pool. It also acts as an anti-dilutive measure for ALCX holders. The community will determine the longevity of this pool.

These pools and their weights will be adjusted as Alchemix introduces additional alchemical synthetic tokens to the market. The priority will be to incentivize synthetic pairs with their base asset.

<figure><img src="/files/BdJUe7Jx8opOv6RG7Udb" alt=""><figcaption></figcaption></figure>


# ALCX Token

## **ALCX Token Overview**

The ALCX token is an ERC-20 token that serves as both the governance and incentive token for the Alchemix platform.

The token was launched without presales or external funding. ALCX does not have a hard cap but does have a carefully crafted emissions schedule (token mints). Emissions are the rate at which new ALCX tokens are minted. The token emissions are distributed to liquidity providers, the treasury, and to contributors to the protocol.

The ALCX emissions (slow minting) gradually reduce issuance over three years, continuing with a long tail of fixed weekly emissions. Alchemix is now in the long-tail period, where 2200 ALCX are minted per week indefinitely.

<figure><img src="/files/XZIm1f3xbsEEhwP2kWWc" alt=""><figcaption></figcaption></figure>

### **The ALCX Token Distribution & Emissions were distributed as:**

* 15% pre-mine for the Alchemix DAO
* 5% for Bug Bounties
* 80% of tokens available through LP staking
  * Founders, developers, and community contributors can access an exclusive staking pool that will receive 20% of the current ALCX emissions. This equates to 16% of the supply after 3 years.
  * Stakers and liquidity providers are eligible to obtain 80% of the ALCX block reward, which will equate to 64% of the supply after 3 years. Currently, a portion of these emissions are sent to the treasury.

<figure><img src="/files/JefZmIqUOmpYdoiMVhML" alt=""><figcaption></figcaption></figure>

This token distribution allocates the majority of tokens to those who contribute to the Alchemix protocol through working or liquidity provision. It assures that no one from the development team will have enough tokens to control the protocol while rewarding them for their work and incentivizing them to continue working on it.

<figure><img src="/files/T2JImx1cGZ53iPPd7cBd" alt="" width="563"><figcaption></figcaption></figure>

An initial supply of 478,612 $ALCX was minted as a pre-mine. Alchemix calculated that there would be 2,393,060 $ALCX in circulation after 3 years in the following distribution:

* 15% (358,959 tokens) to the DAO treasury
* 5% (119,653 tokens) to the bug bounty program

The staking pools distributed approximately 22,344 $ALCX tokens in their first week, with a 130 $ALCX weekly decrease for the first 3 years. Calculations are approximate as $ALCX rewards are calculated per block, and network conditions, although negligible, may slightly affect the schedule.

Alchemix is over three years old, which means a fixed 2200 $ALCX is emitted weekly, increasing the total supply by 114,400 $ALCX annually. This will lead to a gradual decrease in inflation over time.

At the three-year point, there was approximately a 4.5% annual inflation of supply, which has gradually decreased over time.

<figure><img src="/files/q9Aq6myS87x4fC76YMGj" alt=""><figcaption></figcaption></figure>

<figure><img src="/files/XZIm1f3xbsEEhwP2kWWc" alt=""><figcaption></figcaption></figure>

### ALCX Contract Addresses

Mainnet: 0xdBdb4d16EdA451D0503b854CF79D55697F90c8DF

Optimism: 0xe974b9b31dbff4369b94a1bab5e228f35ed44125

Arbitrum: 0x27b58d226fe8f792730a795764945cf146815aa7

<figure><img src="/files/BdJUe7Jx8opOv6RG7Udb" alt=""><figcaption></figcaption></figure>


# FAQ

<details>

<summary>W<strong>ha</strong>t is Alchemix?</summary>

Alchemix is a pioneering DeFi platform and community DAO that empowers users to unlock the potential of their assets through Self-Repaying, non-liquidating loans. Alchemix reimagines the traditional lending and borrowing experience, offering a secure and innovative way to balance spending and saving while mitigating liquidation risks.

</details>

<details>

<summary>How does the Alchemix self-repaying loan mechanism work?</summary>

Users can deposit supported assets into the platform and earn interest on their deposits. Through this process, users gain access to a credit-like facility that allows them to borrow up to 50% of the value of their assets. The interest earned on the total initial deposit automatically repays any outstanding debt, eliminating the need for monthly payments. Additionally, this innovative like-for-like asset borrowing mechanism ensures there is no risk of liquidation, providing users with peace of mind and a seamless DeFi experience.

</details>

<details>

<summary>What collateral types are supported by Alchemix?</summary>

Alchemix currently supports a variety of collateral types, including ETH, DAI, USDC, USDT, and FRAX. These assets can be used as collateral for obtaining self-repaying loans on the platform. You can also deposit yield-bearing tokens.

</details>

<details>

<summary>How much can I borrow against my deposited collateral?</summary>

When you deposit collateral on Alchemix, you can borrow up to 50% of the value of the corresponding synthetic alAsset. For example, if you deposit ETH, you can borrow alETH worth up to 50% of the value of your deposited ETH, even if the alETH to ETH ratio differs from 1:1.

</details>

<details>

<summary>Is it possible to exit or repay my loan before it is fully repaid?</summary>

Absolutely! Alchemix allows you the flexibility to exit or repay your loan at any time, even before it is fully self-repaid. We offer a self-liquidation feature that can only be triggered by the depositor that enables you to repay outstanding loans by using a portion of your deposited collateral. Once the loan is repaid, you can withdraw the remaining collateral. There are no lock-in periods or penalties at all with Alchemix.

</details>

<details>

<summary>How long will it take for my loan to fully repay itself?</summary>

The repayment timeline for Alchemix loans depends on the variable nature of DeFi yields. Consequently, providing an exact timeframe for the loan to fully repay itself is challenging. However, a rough estimate can be made based on the Loan-to-Value (LTV) ratio and the interest rate. For example, a 50% LTV loan at 10% APR would take approximately 5 years to repay.

0xDefi has a tool to calculate how long your loan will take to repay [here](https://dyor.fi/alcx/calculator). This is a third-party tool, so please use it at your own risk.

</details>

<details>

<summary>Is Alchemix audited?</summary>

Yes, Alchemix has undergone various audits, conducted by reputable auditing firms, including Runtime Verification, Code4rena, and Immunefi.

Alchemix v2 was audited by Runtime Verification as well as a[ Code4rena contest](https://code4rena.com/reports/2022-05-alchemix). Alchemix also has an ongoing[ bug bounty program through Immunifi](https://immunefi.com/bounty/alchemix/).

See our [Audits here](https://alchemix-finance.gitbook.io/user-docs/resources/audits-and-reports)

</details>

<details>

<summary>Can I be liquidated?</summary>

No, you cannot be liquidated by third parties on the Alchemix platform. Your debt is denominated in the same currency as the collateral, which means that the price fluctuations of the asset do not impact your vault position. Regardless of market volatility, your vault positions remain secure, and you can have peace of mind knowing that your assets are protected from liquidation.

</details>

<details>

<summary>On what networks is Alchemix available?</summary>

Alchemix is available on multiple networks, providing users with options for accessing its services. Currently, Alchemix can be accessed on Ethereum Mainnet, Optimism, and Arbitrum.

An up-to-date list of available networks may be viewed on the network selector at the upper-left of the UI.

</details>

<details>

<summary>What can I do with my alAssets?</summary>

The primary use case for your alAsset (e.g., alUSD, alETH) is to swap it for another asset. You can achieve this by utilizing decentralized exchanges, such as [curve.fi](https://curve.fi/), or popular swap aggregators like [Matcha](https://matcha.xyz/), [Zapper](https://zapper.xyz/), or [Paraswap](https://www.paraswap.io/). These platforms enable you to trade your alAssets for various other tokens, providing you with the flexibility to diversify your portfolios or acquire specific tokens based on your investment preferences.

In addition to swapping, you can leverage your alAssets to provide liquidity on certain decentralized exchanges, such as Curve, Saddle, and Velodrome, and earn gauge rewards. You can earn yield directly with your alAssets, should you choose. Keep up to date with the latest opportunities at <https://alchemix-stats.com/earn>

</details>

<details>

<summary>How can I participate in the governance of Alchemix?</summary>

Participating in the governance of Alchemix allows you to actively contribute to the decision-making process and shape the future direction of the protocol. To participate in governance, you need to use ALCX tokens to vote. You can also join discussions in the governance channels of the Alchemix Discord server.

</details>

<details>

<summary>What is the Transmuter?</summary>

The Transmuter is an alAsset price stability module. Users can deposit alAssets, and over time, the Transmuter will gradually convert the alAsset to the corresponding underlying token on a 1:1 basis. [Read more here](https://alchemix-finance.gitbook.io/user-docs/alchemix-ecosystem/transmuter).

</details>

<details>

<summary>Can I borrow any token against my Alchemix Deposit?</summary>

The short answer is no. When you deposit into an Alchemist contract in Alchemix, you can only borrow the corresponding synthetic alAsset against your deposit (e.g., alETH for ETH). However, you can take your alAsset and swap it in the market for whatever tokens you want.

</details>

<details>

<summary>When will 'Token X' be available as collateral on Alchemix? When will you be on 'Chain X'?</summary>

New collateral and new chains are subject to governance approval and must also overcome technical, financial, operational, and partnership hurdles. As a result, they do not have fixed timelines. Security and adherence to proper processes will always take precedence over meeting specific deadlines.

</details>

<details>

<summary>How can I contact the Alchemix team for support or inquiries?</summary>

Discord is the primary platform for engaging with the Alchemix team and the wider Alchemix community. Whether you have questions, comments, or suggestions about Alchemix, reaching out in the #support channel in our official Discord is the best way to receive prompt and helpful responses.

[Join our Discord here.](https://discord.com/invite/alchemix)

</details>

<figure><img src="/files/BdJUe7Jx8opOv6RG7Udb" alt=""><figcaption></figcaption></figure>


# Site Overview

## Site overview

Fellow Alchemists, welcome to the Alchemix v2 user interface.

This guide will help you familiarize yourself with the platform.

First and foremost, the v2 website is a place where you will be able to set up and manage your Alchemix loans, farm with your tokens, use the Transmuter, and vote on governance proposals. The first time you arrive at the site, you will see the introduction page that tells you about the product and shows you what base assets are supported, along with their current loan to values. This list will grow continuously as new assets are added. If you ever want to return here, just click on the Alchemix logo at the top left of the page or the Intro button in the footer.

First, you need to connect your wallet. Click the ‘Connect wallet’ button, and follow the prompts to select your wallet provider.

<figure><img src="/files/VgusH3pVb8n8ELk32cL1" alt=""><figcaption></figcaption></figure>

**Connect wallet button**

Once you have connected to your chosen wallet, you will be taken to the Vaults page that is associated with your connected address.

alAssets are a fundamental concept to understand when using Alchemix. Whenever you take a loan against your deposit, it will always be issued in the form of an alAsset. For example, alUSD is the asset you’d borrow against all stablecoin assets that you’ve deposited as collateral. The stablecoin collateral you’ve deposited could be composed of a variety of stablecoins. For example, you may have deposited a mixture of DAI, USDC and Tether. Since these are all dollar-pegged assets you’ll only need to borrow one asset, alUSD.

Let’s take a look at the vaults page.

Whether you have an existing loan or not, the vaults page will display the current available strategies. You can take advantage of any of these, as they cover the full range of assets that we currently support. This list will grow longer over time. To help manage what’s visible, you can use the toggles to filter for the alAssets that you’re most interested in.

Each vault listed will show the collateral assets you can deposit and the current APY.

<figure><img src="/files/pPy9VABu1momyTkUbvZQ" alt=""><figcaption></figcaption></figure>

Moving on, let’s check out the Transmuter page. This is where you can swap your alAssets at a guaranteed 1:1 ratio for equal value tokens. Unlike the open market where pegged assets can fluctuate in value by small amounts, the Transmuter ensures you won’t suffer any loss or slippage. The drawback, however, is that it takes time to swap your assets. So, if you need to exchange immediately, we recommend you use other exchanges. We’ve linked a few external swap providers at the top of the page.

Next, let's look at the Farms page. Here you can stake LP tokens and single-sided ALCX to earn rewards. You can also wrap your ALCX into gALCX which *automagically* stakes your ALCX into the single-sided pool and auto-compounding rewards. gALCX can also be used cross-chain and on layer 2 networks as we roll out our multi-chain strategy.

Moving on to Governance. Here you can see a list of all the previous and active Alchemix improvement proposals or AIPs. Holders of ALCX are eligible to vote on any active proposal.

<figure><img src="/files/1nDlYj9qG7DAfUL0Rp2q" alt=""><figcaption></figcaption></figure>

One last thing to draw your attention to. The website will store some user preferences on your computer’s local storage, should you wish to set your preferred display currency, gas defaults, and language. You can set them either at the top of any page or navigate to the settings page.

<figure><img src="/files/62rJVATrL47agfIgL2Zz" alt=""><figcaption></figcaption></figure>

If you have any support queries, please contact our team on the official [Discord channel](https://alchemix-finance.gitbook.io/user-docs/resources)

<figure><img src="/files/BdJUe7Jx8opOv6RG7Udb" alt=""><figcaption></figcaption></figure>


# How to

## Learn How to Navigate The Alchemix Platform

<table data-view="cards"><thead><tr><th></th><th></th><th></th><th data-hidden data-card-target data-type="content-ref"></th></tr></thead><tbody><tr><td>Deposit Funds</td><td></td><td></td><td><a href="/pages/fpecSSDIVjGp3pMNOGD0">/pages/fpecSSDIVjGp3pMNOGD0</a></td></tr><tr><td>Take a Self-Repaying Loan</td><td></td><td></td><td><a href="/pages/Zpf3KWk9jqpcatT1WCa3">/pages/Zpf3KWk9jqpcatT1WCa3</a></td></tr><tr><td>Repay your Loan</td><td></td><td></td><td><a href="/pages/0wqwieXelZSXPCSryxID">/pages/0wqwieXelZSXPCSryxID</a></td></tr><tr><td>Liquidate your Loan</td><td></td><td></td><td><a href="/pages/RIgwdi324FTrzi1n1hBJ">/pages/RIgwdi324FTrzi1n1hBJ</a></td></tr><tr><td>Withdraw Funds</td><td></td><td></td><td><a href="/pages/h4mUWemaOHOhgxh5o4S7">/pages/h4mUWemaOHOhgxh5o4S7</a></td></tr></tbody></table>

<figure><img src="/files/vjAqOwFhQTIthEzfdwcB" alt=""><figcaption></figcaption></figure>


# Deposit funds

The unique thing about Alchemix loans is that they allow you to leverage your wealth without any risk of liquidation. Another way to put this is that Alchemix lets you borrow against an asset without carrying the risk of losing your collateral in the event of a market crash.

To setup a new loan, first visit the Vaults page on the website. Here is a list of available vaults where users can deposit any of the supported collateral assets.

<figure><img src="/files/Uge2kL8Afe0IxsgXGuUf" alt=""><figcaption></figcaption></figure>

Each vault displays the tokens used as collateral. Users are able to deposit these tokens to take a loan.

Let’s see how you can borrow against some of your ETH holdings with a new alETH loan.

First, click on the + button on the Yearn wETH vault. This will open the deposit section which offers you several deposit options.

<figure><img src="/files/ShqvcwDkL7TehTp3qUQl" alt=""><figcaption></figcaption></figure>

Let’s go from the top. The LTV tells you how much you can borrow against your deposit. 50% means you’ll be able to borrow a maximum of half the deposited amount.

In this example, the vault accepts wETH or yvwETH. Luckily there is a handy conversion tool built into the wETH vault that allows you to convert your ETH to wETH during the deposit.

All you need to do is click the toggle and the input box allows you to input the ETH amount you’d like to deposit.

Let’s input a value of 1 ETH.

Next, we have slippage. For certain vaults, such as the Yearn vaults, when you deposit collateral, Alchemix converts it into the Yearn equivalent. This process allows Alchemix to earn yield on your deposit. For example, it will exchange wETH for yvWETH on your behalf. Because exchange rates fluctuate, your vault will receive a slightly different amount of yvwETH in return. This is usually minimal and not something you need to worry about. To protect our users, they are able to set your own slippage limits.

Now, you can press ‘deposit’ and authorize the transaction in your wallet. If it’s your first time depositing into one of our vaults, two transactions will need to be confirmed. The first is the token approval and the second will be the actual deposit.

Once your transaction has completed you’ll be able to see how much you’ve deposited in the vault.

<figure><img src="/files/oHCj8GZnu9rvASEv8LaT" alt=""><figcaption></figcaption></figure>

If you have any support queries, please contact our team on the official [Discord channel](https://alchemix-finance.gitbook.io/user-docs/resources).

Now let's look at how to take a Self-Repaying Loan on the next page.

<figure><img src="/files/BdJUe7Jx8opOv6RG7Udb" alt=""><figcaption></figcaption></figure>


# Take a Self-Repaying Loan

Now that you’ve made a deposit into Alchemix, your deposit will automatically start earning yield. You can choose to borrow against it or you can leave it to work earning credit.

We’re going to borrow against our deposit. The amount you can borrow depends on the value of the tokens you deposit.

You can see how much you have available to borrow by clicking the Vaults page, and looking at the 'Available Credit' amount.

<figure><img src="/files/tT75Mqr86paJ0W77EDeF" alt=""><figcaption><p>Available Credit</p></figcaption></figure>

If you have positions across several vaults, you can use the tab filters to see individual credit available on each vault.

<figure><img src="/files/S1nMmbU57uybv2N8bdgY" alt=""><figcaption><p>alAsset Tab Filters</p></figcaption></figure>

Total deposit is the total amount of collateral you have deposited into Alchemix. This may be across one, or multiple vaults depending on how many you have set up. Debt is the total amount you have borrowed against your deposited collateral. Interest indicates how much you’ve earned, which adds to the amount of available credit you can access. The difference between interest and debt is that interest taken as credit will not need to be repaid.

The debt limit indicates the total amount you will be able to borrow. Debt will need to be repaid either automatically over time or sooner by manual repayment using the repay function.

The amount you can borrow against your deposit depends on the collateral ratio of the tokens you deposited. You can borrow anything up to the total amount of debt your assets allow.

On this page, you will see more detail about how much debt you’ve currently taken and what the debt limits are per vault.

<figure><img src="/files/5tkGUwanGgMRroe2yn04" alt=""><figcaption><p>Debt limit</p></figcaption></figure>

To take your first self-repaying loan, click the ‘borrow’ button at the top of the page.

The borrow dialogue will open up allowing you to specify which alAssets you have access to borrow. In this example, since we only deposited wETH, we can only borrow alETH.

<figure><img src="/files/qmYte4okW6wKozOus3o4" alt=""><figcaption><p>The Borrow modal</p></figcaption></figure>

For our users' convenience, we’ve added the ability to transfer the proceeds of the loan to another wallet address. To do this, simply toggle the switch and enter the recipient's address.

<figure><img src="/files/7b0mjLknO5FTN7XlgIwC" alt=""><figcaption></figcaption></figure>

Type in the amount you'd like to borrow, or click the 'Max' button to borrow the maximum amount possible. When you’re happy with your loan request click borrow to initiate the transaction.

Follow the prompts in your wallet to authorize the transaction.

Once you’ve completed the borrow, you'll see your balance update in the wallet, unless you sent your proceeds to another address.

Now you are able to see that your debt has increased at the top of the Vaults page.

### alAssets <a href="#alassets" id="alassets"></a>

Now you have your alAssets, you can find out the most efficient ways to use them at <https://alchemix-stats.com/earn>

You can also swap them using one of the suggested links at the top of our swap page - <https://alchemix.fi/swap>, manually using [https://curve.fi](https://curve.fi/), or use any other supported DEX.

If you have any support queries, please contact our team on the official [Discord channel](https://alchemix-finance.gitbook.io/user-docs/resources)

Next, let’s look at how to repay your loan.

<figure><img src="/files/BdJUe7Jx8opOv6RG7Udb" alt=""><figcaption></figcaption></figure>


# Repay your loan

Alchemix loans are fully flexible. Your funds are never locked and there are always options that allow you to release your deposits.

Unlike loans in the traditional banking system, there are no fees or penalties for early repayments. Not only that, Alchemix loans "automagically" repay themselves over time.

You can also choose to repay your loan manually. Let’s look at how to do this.

On the vaults page, you can see that this account has a debt of $1050.35.

<figure><img src="/files/5IZmRPtp7eovqfIko80n" alt=""><figcaption></figcaption></figure>

Since both alUSD and alETH have been borrowed, we need to decide which loan to repay. Use the filters to display the debt owed for each alAsset type.

Let’s pay back the alUSD loan. Looking at the active vaults we can see that we have deposited USDC to borrow alUSD. Since alUSD is a dollar-pegged asset we can use any acceptable stable coin to repay the loan.

We only have DAI available in our wallet, but since Alchemix accepts DAI as a collateral type, that’s no problem.

Click on the repay button which opens the repay dialog.

<figure><img src="/files/cQsywQCGxgdvg1398neJ" alt=""><figcaption><p>Repay button</p></figcaption></figure>

Select alUSD from the first dropdown, then select DAI from the next dropdown. It’s worth noting that the alUSD loan can be repaid in alUSD, DAI, USDC, or USDT, regardless of which vault originated the loan.

<figure><img src="/files/wlIAQxrohHED7Esll1Ah" alt=""><figcaption></figcaption></figure>

We want to repay all of the alUSD loan, so we’ll click ‘max’ in the input field.

Now press ‘repay’ and complete the transaction in your web3 wallet.

And, we’re done.

If you have any support queries, please contact our team on the official [Discord channel](https://alchemix-finance.gitbook.io/user-docs/resources)

Next, let’s look at how to repay our alETH loan with our deposited collateral using the liquidate function.

<figure><img src="/files/BdJUe7Jx8opOv6RG7Udb" alt=""><figcaption></figcaption></figure>


# Liquidate your loan

One of the great advantages Alchemix loans bring is that there is always a way to exit your position, even if you don’t have funds in your wallet to make a repayment.

The liquidate function allows you to use your deposited collateral as a source of funds to repay your debt. Alchemix loans are always overcollateralized, meaning there are always enough funds in your account to cover your debt and allow you to exit.

To liquidate the alETH loan on this account we’ll open the liquidate dialog and choose the alETH from the first drop down menu. Since our deposit was made in WETH we’ll accept the default WETH in the second drop down.

<figure><img src="/files/1KKFlnM5K5Fvmhg08cTV" alt=""><figcaption><p>Select the debt you'd like to pay off</p></figcaption></figure>

We want to liquidate all of the loan so let’s choose ‘max’ in the input box.

As alETH is pegged to ETH there will be a small discrepancy in their value. To enable users to limit the effect of any slippage you can choose your preferred slippage tolerance here.

<figure><img src="/files/aVNaSlQIHZFrLo3Omw0a" alt=""><figcaption><p>Slippage options</p></figcaption></figure>

Once you’re happy with the liquidation parameters press liquidate.

If you have any support queries, please contact our team on the official [Discord channel](https://alchemix-finance.gitbook.io/user-docs/resources)

Now that we’ve liquidated our loan, our deposit is available to withdraw so let’s look at that in the next video.

<figure><img src="/files/BdJUe7Jx8opOv6RG7Udb" alt=""><figcaption></figcaption></figure>


# Withdraw funds

When you want to move your funds back into your wallet you’ll need to call the ‘withdraw’ function.

Something to bear in mind is that you can only withdraw funds that exceed the collateral requirements of any outstanding loans you have.

For example, if you have borrowed 50% of your deposit of a loan with a 50% loan-to-value ratio then you won’t be able to withdraw any funds unless you either repay your debt or liquidate it with your deposit.

In the previous guide, we liquidated our loan which releases the funds to be withdrawn.

Click the + button next to the vault you want to withdraw from and click the 'Withdraw' tab. You’ll notice the choice to receive the standard or yield bearing asset, in this example wETH or yvwETH.

<figure><img src="/files/DUgIHjbK32pVg0uaanPR" alt=""><figcaption></figcaption></figure>

Since we want ETH in our wallet following the withdrawal, we will toggle the wETH/ETH switch. The system will conveniently withdraw wETH and convert it to ETH for us.

In this case, we will choose ‘max’ since we want to completely exit the vault.

Like the liquidate and deposit functions, withdraw adds slippage protection control to allow users to limit the slippage as the system converts assets to unwind your position.

<figure><img src="/files/DubYiZUGkYyGjpV5UbR4" alt=""><figcaption></figcaption></figure>

Click ‘Withdraw’ and confirm the transactions in your wallet.

When you’ve successfully withdrawn you’ll see your updated balance reflected in your wallet.

If you have any support queries, please contact our team on the official [Discord channel](https://alchemix-finance.gitbook.io/user-docs/resources)

<figure><img src="/files/BdJUe7Jx8opOv6RG7Udb" alt=""><figcaption></figcaption></figure>


# Migrate between vaults

{% hint style="info" %}
Please note that it is currently not possible to migrate to our rETH vault.
{% endhint %}

Now that Alchemix supports multiple strategies per collateral type, you can use the Migrate tool to easily move funds between them in the most efficient way. Different strategies offer different APYs which regularly change.

To migrate your funds to a different strategy using the Migration tool, open the position you want to migrate by clicking the '+' button.

<figure><img src="/files/UvdllZrzr13W4MsqDvWm" alt=""><figcaption><p>Vault Overview</p></figcaption></figure>

From here, select the 'Migrate' tab.

<figure><img src="/files/DJJ9movL82tuWOPRORBA" alt=""><figcaption><p>Migrate tab</p></figcaption></figure>

Click the 'Target Vault' dropdown and select the vault into which you want to migrate your funds.

<figure><img src="/files/Jp38znmNbmxLS3xhytwa" alt=""><figcaption><p>Target vault selector</p></figcaption></figure>

Next, input the amount of funds you'd like to migrate. Click 'All' if you want to migrate everything. Finally, click 'Migrate' and follow the prompts in your wallet. Your funds will now automatically move to your chosen target strategy.

Note: You can also choose to manually unwind and restart your position in another strategy should you choose to.

If you have any support queries, please contact our team on the official [Discord channel](https://alchemix-finance.gitbook.io/user-docs/resources)

[<br>](https://alchemix-finance.gitbook.io/user-docs/how-to/withdraw-funds)

<figure><img src="/files/BdJUe7Jx8opOv6RG7Udb" alt=""><figcaption></figcaption></figure>


# Guides

<table data-view="cards"><thead><tr><th></th><th></th><th></th><th data-hidden data-card-target data-type="content-ref"></th></tr></thead><tbody><tr><td>The AMO: The Elixir</td><td></td><td></td><td><a href="/pages/tUVFXbO8IM0TEhipzVZE">/pages/tUVFXbO8IM0TEhipzVZE</a></td></tr><tr><td>Bridging Assets to Other Chains</td><td></td><td></td><td><a href="/pages/yLIhic2FurBHs1PMbFdd">/pages/yLIhic2FurBHs1PMbFdd</a></td></tr><tr><td>Risks and Counterparties</td><td></td><td></td><td><a href="/pages/07wAZ0lYCZxl82bsh2mA">/pages/07wAZ0lYCZxl82bsh2mA</a></td></tr><tr><td>The Transmuter, Elaborated</td><td></td><td></td><td><a href="/pages/BpLlb3jFs6OIM3SXrlF1">/pages/BpLlb3jFs6OIM3SXrlF1</a></td></tr><tr><td>Vault Losses and Collateral De-Pegging</td><td></td><td></td><td><a href="/pages/WkkuQ2QjuP9U09gtwxbx">/pages/WkkuQ2QjuP9U09gtwxbx</a></td></tr></tbody></table>

<figure><img src="/files/BdJUe7Jx8opOv6RG7Udb" alt=""><figcaption></figcaption></figure>


# The AMO: The Elixir

The Alchemix Algorithmic Market Operator

<figure><img src="/files/qmd8xWOqUOOOR1bPfbBY" alt="" width="563"><figcaption></figcaption></figure>

When Alchemix was originally launched, it was never anticipated that the peg stability module, the Transmuter, would build up a significant backstop of funds. To take advantage of this, in the V1 deployment of Alchemix, reserves were deployed in Yearn. The yield was passed from these deposits to DAI and ETH depositors in Alchemix. This enabled us to have a killer feature — boosted yield, which at times, doubled the amount of interest paid to Alchemix depositors.

While building V2, it dawned on the Alchemix team that these DAI and ETH reserves could be more intelligently deployed in order to better benefit the Alchemix ecosystem. Instead of these assets passively making money elsewhere in DeFi, it makes much more sense to use these funds actively in the market to earn the protocol income and to better manage the prices of the alAssets.

#### Introducing the Alchemix Elixir <a href="#id-8ab1" id="id-8ab1"></a>

![](https://alchemix-finance.gitbook.io/~gitbook/image?url=https:%2F%2F1843944683-files.gitbook.io%2F%7E%2Ffiles%2Fv0%2Fb%2Fgitbook-x-prod.appspot.com%2Fo%2Fspaces%252FzG9qcxzJ1K3kNTlZ81Xj%252Fuploads%252Fek0IvPNfsSNXWG2FjwfD%252FElixirQuoteBlock_01.png%3Falt=media%26token=7e2a3b01-050d-45bc-9fcb-81f32ac3f47e\&width=768\&dpr=4\&quality=100\&sign=25ae0dbd662295b59a63344c10e6163b8b87659e353acfb820a2127027c4e0a4)

The Alchemix Elixir is a contract inspired by FRAX’s Algorithmic Market Operator (AMO). Their AMO allows them to expand and contract the supply of FRAX in LP pools, with FRAX3CRV LP being the most predominant. They mint and deposit FRAX when the token price is above their peg, and withdraw and burn FRAX when the token price is below their peg. They also farm with the LP in Convex, earning the protocol income in the process.

Through its own automations, the Alchemix Elixir takes a similar approach to market operations, with the exception that **Alchemix cannot mint alUSD into the LP pools** (thus maintaining the overcollateralized nature of alAssets)**.**

See below for a diagram that shows how funds flow through the market.

![](https://alchemix-finance.gitbook.io/~gitbook/image?url=https:%2F%2F1843944683-files.gitbook.io%2F%7E%2Ffiles%2Fv0%2Fb%2Fgitbook-x-prod.appspot.com%2Fo%2Fspaces%252FzG9qcxzJ1K3kNTlZ81Xj%252Fuploads%252FIixliC4pWHrW3ZQnOlui%252FAMO_Graphic.png%3Falt=media%26token=8f40fb81-e19a-4f45-b0af-f52507f37517\&width=768\&dpr=4\&quality=100\&sign=8cab3928107c510f893cbc270b29b27177af59d8648ee77780b12c7051a918fe)

The Elixir was jump-started by migrating the v1 Transmuter TVL to it. From there, the additional will receive additional funds only when the Transmuters build up surpluses. The Elixir contract will supply liquidity in the primary Curve liquidity pools for alUSD and alETH. By depositing excess DAI, USDC, USDT, and ETH into Elixir, liquidity is deepened and the prices of alAssets are made more stable.

Curve allows for single sided withdrawals and deposits, and bases the exchange price on the relative balance between the tokens in the LP pool. If a pool is overbalanced with alUSD or alETH, it means we are below 1 USD for alUSD and 1 ETH for alETH. Alchemix can increase the price of the alAsset by single-sided withdrawals of alUSD or alETH, thus rebalancing the pool and increasing the alAsset price closer to 1:1. These withdrawn alUSD and alETH tokens would be removed from circulation, with the potential to be redeployed to their Curve pool should the price of the alAsset increase to the point where it is able to support the addition of alUSD with a negligible effect on the price of the asset.

The next function of Elixir is to generate revenue and build long-term liquidity for the protocol. The Elixir will do this by making a liquidity-driving asset accumulation strategy. Liquidity-driving assets, such as CVX and CRV, give the DAO power to direct rewards from the corresponding protocols. The more liquidity driving assets are owned, the more Alchemix can sustainably incentivize the primary alAsset liquidity pools. Alchemix also typically bribes voters to vote for emissions to these pools - where typically every $1 input results in greater than $1 emitted to the liquidity pool. Given the Elixir tends to own a significant share of the liquidity pools, this can result in a significant amount of value returned to the DAO in the form of CRV, CVX, and other assets. The more CVX Alchemix votes with, the more ALCX is returned as a rebate for voting for the alAsset pools. So between this multiple and the Votium rebates, it greatly enhances the efficiency and longevity of ALCX emissions.

![](https://alchemix-finance.gitbook.io/~gitbook/image?url=https:%2F%2F1843944683-files.gitbook.io%2F%7E%2Ffiles%2Fv0%2Fb%2Fgitbook-x-prod.appspot.com%2Fo%2Fspaces%252FzG9qcxzJ1K3kNTlZ81Xj%252Fuploads%252FQitn9F5FQ7w7ByFcwIZV%252FElixirQuoteBlock_03.png%3Falt=media%26token=d07d2fcb-5af5-4881-b5c1-816796734cf4\&width=768\&dpr=4\&quality=100\&sign=b9bdd31ccb2c89bdc7bee0608c843a8f47fceed0d17d55ff5c35cb0e920fb1b7)

When Alchemix stakes its own Curve LPs on Convex, it receives CRV and CVX rewards. The Elixir is able to use these rewards to benefit the DAO, with the current approach explained [here](https://alchemix-finance.gitbook.io/user-docs/components/elixir-amo).

The Elixir is a significant upgrade to our peg stability module. The concentrated management of our protocol-controlled value aligns it more closely to our interests.

The ancient tomes of alchemy describe a mysterious fluid known as “Elixir”. It was thought to have the power to turn base metals into gold and even grant immortality. In that sense, the Alchemix Elixir is true to its name, with the peg-stability mechanisms and CVX flywheel bringing long-term price stability and sustainability to Alchemix alUSD and alETH. It’s a new era for Alchemix, and we’re happy to be bringing magic to DeFi yet again.

#### Contracts: <a href="#id-9c75" id="id-9c75"></a>

alUSD Elixir: **0x9735f7d3ea56b454b24ffd74c58e9bd85cfad31b**

alETH Elixir: **0xe761bf731A06fE8259FeE05897B2687D56933110**

<figure><img src="/files/BdJUe7Jx8opOv6RG7Udb" alt=""><figcaption></figcaption></figure>


# Bridging assets to other chains

## Introduction to bridging <a href="#introduction-to-bridging" id="introduction-to-bridging"></a>

Users can send assets to wallets on other networks directly from a centralized exchange like Binance, or users can use a cross-chain bridge to perform the bridging transaction manually on-chain.

To send tokens from a centralized exchange, withdraw your supported token, ensuring that you specify the correct wallet address **and** blockchain.

To perform the bridge manually visit <https://bridge.connext.network/> or use your favorite bridge aggregator service.

## Bridging with Alchemix <a href="#bridging-with-alchemix" id="bridging-with-alchemix"></a>

You can also specifically bridge alAssets and gALCX easily on Alchemix.fi. First, navigate to the bridge page. In the ‘From’ field, input the amount and select the token from the dropdown list. In the ‘To’ field, select your target network from the dropdown. The numeric field will display how many tokens you’ll receive when the funds arrive on your target network.

<figure><img src="/files/NRmqiFta7jeZhctNwnCK" alt=""><figcaption></figcaption></figure>

Next you’ll need to approve the asset of your choice, then press the swap button to send the funds to the bridge.

The bridge transaction should take between 10-30 mins to complete. After that the funds will appear in your target wallet.

Lastly, you will need to swap your bridge tokens for the canonical token using step #4. Until you complete this task you will not be able to use your swapped tokens.

Now that you have your assets on the target network you can deposit, earn and take self-repaying loans on the new chain.

<figure><img src="/files/BdJUe7Jx8opOv6RG7Udb" alt=""><figcaption></figcaption></figure>


# Risk & Counterparties

A guide to the various counterparties that make up the Alchemix system and the risk each counterparty takes on.

The purpose of this article is to go over the risks that various types of users of the Alchemix system take on when the system is functioning as intended. This list is not intended to be exhaustive, as certain risks are inherent to DeFi and Crypto in general, such as smart contract risk. For information about other types of risks, see [Multisig Admin Rights](https://alchemix-finance.gitbook.io/user-docs/alchemix-dao/the-alchemix-dao/governance-process/multisig-admin-rights), [Audits](https://alchemix-finance.gitbook.io/user-docs/resources/audits-and-reports), and [Vault Losses and Collateral De-pegging](https://alchemix-finance.gitbook.io/user-docs/resources/guides/vault-losses-and-collateral-de-pegging).

## Depositors (Borrowers) <a href="#depositors-borrowers" id="depositors-borrowers"></a>

Depositors provide collateral to the yield strategies in the Alchemists in order to take alAsset loans. Unless a depositor also wishes to act as a liquidity provider, they will typically swap their alAsset to another asset soon after taking the loan. Therefore, they are not exposed to the price of alAssets over time.

The primary risk a depositor takes on is risk of having funds deposited in the underlying yield strategy, through Alchemix. If the strategy they deposit experiences a loss that exceeds the `maximumLoss` (a variable set by governance), then the yield strategy will be paused. This means users may not make any deposits, may not liquidate or repay, and may not take a new loan with this strategy. Harvests will also be disabled. Lastly, users will be unable to withdraw collateral in the form of the underlying asset. Users will still be able to repay their loan and withdraw the yield token, however. For example if the `maximumLoss` was exceeded, a user could not withdraw DAI from a strategy that uses yDAI, but they would still be able to repay their loan with DAI to withdraw their yDAI collateral).

In the scenario of an underlying strategy suffering a majority loss of funds (ie, greater than 50% of the strategy), then the user would actually have bad debt with Alchemix (the value of their debt would exceed the value of their collateral). In this scenario, the user actually suffered less of a loss by using Alchemix.

Note some yield strategies may require selling yielded tokens to harvest yield. In this scenario, a temporary depeg of the value of the harvested token would result in the user experiencing reduced yield for the period of time the token remains depegged. For more an examples of the protocol handles collateral depeg events and vault losses, see [Vault Losses and Collateral De-pegging](https://alchemix-finance.gitbook.io/user-docs/resources/guides/vault-losses-and-collateral-de-pegging).

## Liquidity Providers / Transmuter Users <a href="#liquidity-providers-transmuter-users" id="liquidity-providers-transmuter-users"></a>

alAsset liquidity providers are exposed to price fluctuations of alAssets. They create the liquidity for users to sell their alAssets for other tokens. alAssets can only be redeemed for underlying collateral in three ways:

1. Loan repayment (instant, 1 alAsset = 1 asset)
2. Selling through a liquidity pool (instant, price will fluctuate)
3. Depositing in the Transmuter (timeline is uncertain, 1 alAsset = 1 asset)

A liquidity provider / alUSD holder that does not have an Alchemix position in a yield strategy does not have option 1 at their disposal. A liquidity provider has three primary steps to consider when providing liquidity:

1. Price / balance of liquidity pool when entering the pool
2. Yield earned from providing liquidity over the life of the liquidity provision
3. Price / balance of liquidity pool when leaving the pool

If the balance of the pool moves favorably for the LPer over time, they can earn yield as well as a net positive slippage from the difference between their exit and entry position. If the balance of the pool moves unfavorably, then the net negative slippage would be subtracted from the yield earned during their liquidity provision over time.

A user can hedge this exposure by using the Transmuter, or by being a depositor within Alchemix. If the alAsset pool shifts less favorably for the depositor/LPer, they can withdraw alUSD instead of stablecoins for a bonus positive slippage and repay their debt. They could also use the same approach with the Transmuter, at the opportunity cost of waiting for the collateral to flow into the Transmuter. See [Transmuter](https://alchemix-finance.gitbook.io/user-docs/alchemix-ecosystem/transmuter) and [The Transmuter, Elaborated](https://alchemix-finance.gitbook.io/user-docs/resources/guides/the-transmuter-elaborated) for more information on how the Transmuter distributes collateral to alAsset stakers.

Lastly, alAssets could become undercollateralized if a large enough loss of funds of an underlying yield strategy occurred, as detailed in the [Depositors (Borrowers)](#depositors-borrowers) section.

## Alchemix DAO and ALCX Holders <a href="#alchemix-dao-and-alcx-holders" id="alchemix-dao-and-alcx-holders"></a>

As mentioned above, it is possible for bad debt to exist in Alchemix if a yield strategy suffers a significant loss of funds. Because ALCX liquidity and single staking pools are not locked, Alchemix cannot currently slash stakers to make the protocol whole. In the scenario of a full yield strategy loss above, the treasury could sell ALCX or other assets from the treasury to make the protocol whole if decided by governance, which would dilute ALCX holders.

<figure><img src="/files/BdJUe7Jx8opOv6RG7Udb" alt=""><figcaption></figcaption></figure>


# The Transmuter, Elaborated

A deeper dive into how the Transmuter functions

The Transmuter is actually composed of two separate components: The TransmuterBuffer and the Transmuter.

When funds enter the Transmuter, assuming there is at least a matching amount of the corresponding alAsset they will be immediately be claimable by users with alAssets staked in the Transmuter. The TransmuterBuffer sits between the Alchemist and Transmuter, limiting the available funds that are accessible for transmutation. The goal here is to delay the transmutability of funds so that the massive front-stop (ie, excess funds in the Transmuter buffer) cannot immediately be used to take advantage of extremely small (< 0.1%) arbitrage opportunities, thus burning protocol value for tiny gains. The longer the system can hold onto the front-stop, the longer it can supply liquidity and earn revenue through the Elixir/AMO, and the more Alchemist depositors Alchemix can sustain.

<figure><img src="/files/O20mqx6YtnEK1gX6NO2v" alt=""><figcaption></figcaption></figure>

### Transmuter Flowchart

In the Transmuter, user-exchanged and un-exchanged balances are updated in a stepwise manner, only when the exchange() function is called. The `exchange()` function sends the underlying asset (USDC, DAI, or USDT) to the Transmuter in exchange for the alUSD burned from the transmuter. The TransmuterBuffer receives a call to its `exchange()` function whenever `alchemist.harvest()`, `alchemist.liquidate()`, or `alchemist.repay()` are called - ie, whenever a yield harvest occurs, or when a user liquidates or repays their loan. `TransmuterBuffer.exchange()` will update the available amount of flow that is theoretically accessible by the transmuter, and subsequently call `Transmuter.exchange()` with the marginal amount of funds that need to be exchanged. Each Transmuter handles a single collateral type. Each TransmuterBuffer handles a single synthetic type, and all collateral types underlying that synthetic.

### Flow Rate <a href="#flow-rate" id="flow-rate"></a>

The flow rate is set by governance and is a per-second MAXIMUM rate of flow for funds to be sent from the TransmuterBuffer to the Transmuter. The main features of the flow are:

1. Flow-rate is constant and linear.
2. The flow-rate (measured in underlying collateral token per one second, ie 1 DAI/second) will continuously add to the available-flow (measured in the underlying collateral token, ie 1 DAI).
3. The available-flow is a measure of how much underlying collateral will immediately flow from the TransmuterBuffer to the Transmuter, upon a deposit to the TransmuterBuffer (ie, a call of the `exchange()` function). This means the available-flow can build up over time if the Transmuter flow-rate is being underutilized. A build-up of available flow makes it possible for the effective flow-rate over a period of time to exceed the flow-rate, thus ensuring the set flow-rate is acting as more of an average over time, rather than a hard cap.
4. Each underlying-token has its own flow-rate. The available-flow for a given underlying-token can exceed the total amount of funds denominated in that underlying-token (across all strategies) held by the transmuter-buffer in the Alchemist. However, when this is the case, the Transmuter will only be able to access the actual funds held by the Transmuter-buffer in the Alchemist (see Invariants 1 and 2)
   1. Figure 1 shows a scenario where available flow has exceeded the total buffered amount (total amount of underlying token controlled by the Transmuter buffer across all strategies in the alchemist).
   2. Figure 2 shows a scenario where the total buffered amount has exceeded the available flow.
   3. In both scenarios, the total amount exchanged to the Transmuter cannot surpass the lesser of the two values in question.
   4. In Figure 1, there will be an excess of available-flow. Should the flow of the underlying asset to the Transmuter increase beyond the defined flow-rate, the excess of available-flow would be used to absorb the faster rate (as described in Item 2 above).

<figure><img src="/files/BCqZVt0eO5eiSCMJ7NlW" alt=""><figcaption><p>Visualization of Transmuter Buffer Available Flow Scenarios</p></figcaption></figure>

<figure><img src="/files/BdJUe7Jx8opOv6RG7Udb" alt=""><figcaption></figcaption></figure>


# Vault Losses and Collateral De-pegging

Vault losses and collateral de-pegging events are two scenarios that can create a loss of alAsset backing, thus jeopardizing the health of the protocol. Vault losses are caused by the underlying yield strategy returning less of the underlying token than expected - for example, a strategy that is meant to earn 10% APR on ETH suddenly only being worth 0.9 ETH per 1 ETH deposited. Collateral de-pegging is caused by the underlying collateral being worth less than its expected value. This is only applicable to alUSD as it is the only alchemist that accepts multiple collateral types. For example, if USDT were to be worth $0.9 relative to DAI and USDC each being worth $1. This is not relevant to ETH as 1 ETH will always be worth 1 ETH.

Vault losses are handled automatically through the `maxloss()` parameter. Collateral de-pegging is handled manually through sentinels' ability to pause tokens (see [Multisig Admin Rights](https://alchemix-finance.gitbook.io/user-docs/alchemix-dao/the-alchemix-dao/governance-process/multisig-admin-rights)). See below for an example scenario where a yield-bearing asset experiences a 10% loss in underlying collateral, and another scenario where DAI drops to $0.80 relative to USDC and USDT.

### Vault Loss Scenario <a href="#vault-loss-scenario" id="vault-loss-scenario"></a>

**Scenario:** A yield-bearing asset experiences a loss in the underlying collateral. For this example, we will assume a 10% loss of DAI from the yvDAI vault that is unrecoverable.

After the transaction that causes the loss is committed to the chain, the `maxloss()` is triggered and the following happens:

* The following yvDAI Alchemist functions are automatically disabled:
  * `deposit()`
  * `depositUnderlying()`
  * `withdrawUnderlying()`
  * `withdrawUnderlyingFrom()`
  * `liquidate()`
  * `harvest()`
* The following yvDAI Alchemist functions are still useable:
  * `withdraw()`
  * `withdrawFrom()`
  * `repay()`
  * `mint()`
  * `burn()`

**Resolution:** In order to re-enable the disabled functions, the following needs to happen:

1. A proposal is created to call `snap()` on the Alchemist, targeting the yvDAI vault.
2. A vote takes place (we assume it passes)
3. `snap()` is called on the Alchemist, which accepts the 10% loss and resets the expected value of those yield tokens held in the Alchemist

**Damage:** The maximum damage is the total amount of funds lost from the vault. alUSD will still be overcollateralized and depositors will experience the loss, the same way they would experience the loss if they held the tokens outside of Alchemix or if they used `withdraw()` after `maxloss()` was triggered. The effective rate of yield flow to the transmuter buffer would also be slightly slower, as there would be slightly less collateral in the system earning yield relative to the alAsset supply. Note that if a loss of >50% were realized, this could lead to a loss in backing for alUSD.

While the risk of a vault losing collateral is low, the damage is still significant. However, Alchemix does not control the operations of 3rd party vaults, so the only way to minimize the risk is to carefully consider which yield-bearing strategies are added.

**Necessary Response Time:** The response time for this scenario does not need to be necessarily fast, because the functions that are affected by a vault loss will be automatically disabled. The team and the DAO should assess the loss to make sure that it is unrecoverable before taking the governance steps to remedy the situation by calling `snap()`.

### Collateral De-pegging <a href="#collateral-de-pegging" id="collateral-de-pegging"></a>

**Scenario:** One collateral token used by the Alchemist experiences a severe de-pegging against other collateral. For this example, we will assume DAI drops to 80 cents vs USDC & USDT. alUSD maintains its peg against USDC & USDT.

This de-pegging presents multiple arbitrage opportunities:

1. Users can buy DAI off the market, deposit it into the Alchemist, take a loan, and repeat this loop until the minting cap is reached.
2. Users can buy DAI off the market and use it to repay their loans until the repay cap is reached.
3. Users can liquidate their current yDAI position (paying off their outstanding debt at a discount), buy more DAI with their loan, deposit it into the Alchemist, take a loan, and repeat until the liquidation cap is reached.

These arbitrage opportunities will likely result in one or more of the mint / repay / liquidate caps being met.

**Resolution:** The only resolution that matters is getting DAI to reach peg again. This can take multiple avenues.

* The peg could re-stabilize on its own without any intervention.
* The collateral in question can be disabled by a sentinel or admin, buying the peg more time to re-stabilize. This would disable the following functions:
  * `deposit()`
  * `depositUnderlying()`
  * `repay()`
  * `liquidate()`

**Damage:** The de-pegging of DAI results in the price of the alAsset dropping towards the de-pegged asset. The sentinels exist to disable underlying tokens as soon as they experience a de-pegging event. The repay, liquidate, and mint caps are in place to limit the amount of de-pegging of the synthetic asset that can occur prior to sentinel action.

**Risk:** Given the interconnected nature of underlying collateral tokens and DeFi at large, there will likely be consistent, small arbitrage opportunities between collaterals and their pegged synthetics. In times of high volatility, these arbitrage opportunities can get exasperated as assets experience larger and longer de-pegging events. As a result, there is some risk that the repay/liquidate/mint caps get reached.

Note that if the peg does not restabilize, DAI would remain paused; there will be a loss in the backing of alUSD. The DAO will need to determine how to proceed in this scenario.

**Necessary Response Time:** The faster a sentinel can respond by disabling the de-pegged underlying token, the less the price of alAsset will be arbitraged down.

<figure><img src="/files/BdJUe7Jx8opOv6RG7Udb" alt=""><figcaption></figcaption></figure>


# Marketing Material

## Marketing Material

Our logos are for use in promo and marketing materials.

Please consult the brand book for more information.

For any questions, please contact @metalface in the official Discord.

## Brand book <a href="#brand-book" id="brand-book"></a>

An overview of how to use our brand in your material

{% file src="/files/3L1DzQyy7CyQkyfJa6fU" %}

## The Alchemix logo <a href="#the-alchemix-logo" id="the-alchemix-logo"></a>

**Bronze**

<figure><img src="/files/TnJBqNry5Vw4G6nRmDRo" alt="" width="375"><figcaption></figcaption></figure>

**White**

<figure><img src="/files/AsyThdH80nvqzKFmbz5A" alt="" width="375"><figcaption></figcaption></figure>

**Black**

<figure><img src="/files/6p1XbGTRZOWRZj4o4Q1u" alt="" width="375"><figcaption></figcaption></figure>

<figure><img src="/files/02ov8CxpqbZsjdtkiA3N" alt=""><figcaption></figcaption></figure>


# Alcx logo - Bronze

Our master logo for use in all situations unless contrast is an issue.

## SVG <a href="#svg" id="svg"></a>

{% file src="/files/H9v3MLzUgqJy1wiurGdb" %}

{% file src="/files/33UvZLg6CI8Bwsl3uxuP" %}

{% file src="/files/RI4DSuchQ8eb72EFy2X4" %}

{% file src="/files/vrF0uJsnIl3MqRoY1rgj" %}

{% file src="/files/GQRZm7nGHvrxekO5MKvK" %}

{% file src="/files/ROoMmFUKCpk919GquqUJ" %}

## PNG

{% file src="/files/IuTjies8Wa6bR48ya4RR" %}

{% file src="/files/TfBjdIJGy778mNmiQlXW" %}

{% file src="/files/SXza4MNeGQ3gEa1bnN6q" %}

{% file src="/files/TnJBqNry5Vw4G6nRmDRo" %}

## JPG

{% file src="/files/M2EqEtSVA8AzN7N1y2Kk" %}

<figure><img src="/files/02ov8CxpqbZsjdtkiA3N" alt=""><figcaption></figcaption></figure>


# Alcx logo - White

Our white logo for use where contrast is an issue.

## SVG <a href="#svg" id="svg"></a>

{% file src="/files/1dhNOj1iBgfrg9KQGBI1" %}

{% file src="/files/Rl0MfylaUblMc2XYTUcn" %}

{% file src="/files/dmjrOeE5i0BgUq0aMeSQ" %}

{% file src="/files/XbLjcpBsDuSLUIhpPueb" %}

## PNG

{% file src="/files/AsyThdH80nvqzKFmbz5A" %}

{% file src="/files/Ajvh4YsPmm9vYAfHqmAF" %}

{% file src="/files/xtqIG0bt15viFwyG45G7" %}

{% file src="/files/skjl8PTWx0G61EFB9WU2" %}

<figure><img src="/files/02ov8CxpqbZsjdtkiA3N" alt=""><figcaption></figcaption></figure>


# Alcx logo - Black

Our black logo for use where contrast is an issue.

## SVG

{% file src="/files/s7kYHcZCr3nKGDt0qen4" %}

{% file src="/files/naLsYUQnJyutIeEcR4Es" %}

{% file src="/files/jCq0PX05XMVMWqekY6di" %}

{% file src="/files/I7yV8ODRRnYgnGTJYX1g" %}

## PNG

{% file src="/files/kEhbO09nrk3GWhG2LiJj" %}

{% file src="/files/4Zqp2fKDJK3osUtuCCWe" %}

{% file src="/files/PNJvvlN0XY7M1jVLfOGv" %}

{% file src="/files/6p1XbGTRZOWRZj4o4Q1u" %}

<figure><img src="/files/02ov8CxpqbZsjdtkiA3N" alt=""><figcaption></figcaption></figure>


# alAssets

## alETH

{% file src="/files/BB7tS08pIi52nLU27c35" %}

{% file src="/files/3WI7cEI0Ej7GOsGrRe7w" %}

{% file src="/files/SviPnxbyMSCNs6wgZgxl" %}

{% file src="/files/rcURxKnWiApLblWzqf6o" %}

## alUSD

{% file src="/files/OX22NCofkWGQ8uYEyzBP" %}

{% file src="/files/t76GPjbbPVQxnGPvWGTC" %}

{% file src="/files/Vi0UwYPjsxwnd0jrZDFM" %}

{% file src="/files/71B2R0WcGdapeCqsWXXI" %}

<figure><img src="/files/02ov8CxpqbZsjdtkiA3N" alt=""><figcaption></figcaption></figure>


# Audits & Reports

## Audits

* Alchemix v2 was audited by Runtime Verification. Alchemix continues to engage Runtime Verification for additional audits on protocol changes. The v2 audit report can be found here: <https://github.com/runtimeverification/publications/blob/main/reports/smart-contracts/Alchemix_v2.pdf>​
* Alchemix offers a bug bounty program through ImmuneFI. The program can be found here: <https://immunefi.com/bounty/alchemix/>​
* Alchemix ran a one-off code4rena contest. The contest can be found here: <https://code4rena.com/contests/2022-05-alchemix-contest>

<figure><img src="/files/BdJUe7Jx8opOv6RG7Udb" alt=""><figcaption></figcaption></figure>


# Financial Reports

Quarterly financial reports.

### 2025 <a href="#id-2023" id="id-2023"></a>

{% file src="/files/yqcf08SrHu15CL9ltbHV" %}

{% file src="/files/7Izk8eSaEBFd25tdOgQi" %}

{% file src="/files/aIP1OnXk87PgP71m0kOF" %}

{% file src="/files/yL0wfxK6DFa7iGz5J0lP" %}

### 2024 <a href="#id-2023" id="id-2023"></a>

{% file src="/files/narpEYFyOu8xeWkae5ZQ" %}

{% file src="/files/Xzq6CdOKzn1JSruZJnnq" %}

{% file src="/files/GFaRqbmXy2mteRcHgarE" %}

{% file src="/files/QIOs98jWoFkdIfYJHVQQ" %}

### 2023 <a href="#id-2023" id="id-2023"></a>

{% file src="/files/WxlUh1HTEULqSCf9qycl" %}

{% file src="/files/onT7O8EnF70HF6iihZck" %}

{% file src="/files/C4pLIWNfyiyVa1JKw6J8" %}

{% file src="/files/lZPuFw4yk52CHk640uzF" %}

### 2022 <a href="#id-2022" id="id-2022"></a>

{% file src="/files/qZ3xtMCPVetetuGA1lz1" %}

{% file src="/files/9vlfF0xjz4eXl3zbtwWx" %}

{% file src="/files/xucqP8pyOoH3ASt2kxF1" %}

{% file src="/files/3eexgo0n2r1KHCamhNN5" %}

<figure><img src="/files/BdJUe7Jx8opOv6RG7Udb" alt=""><figcaption></figcaption></figure>