Can Alchemix, which launches services on Arbitrum, seize the market with new gameplay?

Recently, Alchemix officially announced the launch of services on the Arbitrum network as part of its multi-chain expansion strategy.

According to official information, during the initial launch of Arbitrum, Alchemix limited the deposit limit, specifically: the USDC deposit limit is US$100,000, while the stETH deposit limit is set at 200 ETH. This restrictive measure can be seen as a prudent start, aiming to ensure the stable operation of the platform and the safety of user funds.

In addition, Alchemix also showed plans for future development, announcing that it will add jUSDC as part of its services in the near future. The realization of this plan is waiting for JonesDAO to complete the upgrade of the jUSDC contract. This shows that Alchemix not only focuses on the quality and stability of its existing services, but also actively explores new partnerships and asset types to provide more diversified DeFi services.

This article will systematically sort out the operating mechanism of Alchemix and explain how Alchemix, a decentralized over-collateralized lending platform, continues to move forward in the field of decentralized finance.

With multiple mechanism innovations, Alchemix improves the security and efficiency of the platform

Alchemix Finance is a synthetic asset protocol and community DAO backed by future yields. The protocol provides you with progress on various liquidity mining strategies through synthetic tokens. The token represents a fungible claim on the underlying collateral in the Alchemix protocol, which claim must be made by the depositor of that collateral. Alchemix currently offers alUSD borrowing against some stablecoins pegged to the U.S. dollar as collateral, and alETH borrowing against ETH.

Alchemix marks an innovation in the world of decentralized finance (DeFi), providing an over-collateralized lending service through a platform based on Yearn financial technology. What is unique about this platform is that users’ over-collateralized funds are not just static storage, but passively invested in DeFi protocols such as Yearn, and the profits generated are used to automatically repay the borrower’s debt and interest. This means that as long as the mortgaged assets are generating sufficient returns, the user’s position can be protected from liquidation, thereby reducing investment risk to a certain extent.

Alchemix’s lending mechanism requires users’ asset mortgage ratio to reach 200%, that is, if a user pledges DAI worth $100 on the platform, they can lend alUSD worth $50. This 1:1 stablecoin value ratio provides users with a safety cushion, keeping borrowing and lending values stable during market fluctuations. Users can flexibly adjust their borrowing ratio by increasing mortgages or repaying debt, maintaining the liquidity and flexibility of funds.

Alchemix mitigates the risk of extreme market volatility through its unique debt repayment mechanism. By directly pegging its stablecoin alUSD to DAI, Alchemix breaks away from the traditional financial system’s reliance on pegs to the value of the U.S. dollar, enabling a more stable and self-sufficient economic model. This strategy not only provides users with a more stable lending environment, but also contributes new solutions to the stability of the DeFi field.

One of Alchemix’s core features is its automated debt repayment system. After the user deposits DAI, the platform provides the user with an equal amount of alUSD in the form of liquidity mining. This part of alUSD represents the user’s borrowing and is also a mark of future earnings. Subsequently, the DAI deposited by users is invested in platforms such as Yearn, and most of the profits generated are used to repay users’ debts. This model not only provides users with an automated debt management method, but also greatly increases the efficiency of fund utilization.

Through this innovative lending and automatic debt repayment mechanism, Alchemix provides users with a new way to manage funds, allowing them to effectively manage and reduce lending risks while enjoying the high returns brought by DeFi.

Introducing the innovative gameplay of Transmuter, Alchemix can ensure the stability of the stablecoin value.

Alchemix has introduced an innovative concept, Transmuter, which is the core that distinguishes it from other DeFi protocols. This mechanism enables all assets passing through Transmuter to achieve a 1:1 equivalent exchange with zero slippage, maintaining a stable ratio between DAI and alUSD. This not only simplifies the management of assets, but also provides users with an environment where they can deposit safely without worrying about market fluctuations.

Alchemix achieves a series of advantages through its Transmuter mechanism:

1. Elimination of the risk of liquidation: Since DAI and alUSD maintain a stable ratio of 1:1, the value of the user’s mortgage assets in the protocol remains stable, theoretically eliminating the risk of liquidation;

2. Free repayment operation: The 1:1 link between DAI and alUSD allows users to repay directly using mortgage assets, increasing the flexibility of repayment and eliminating the lock-in period;

3. Stability of asset value: Alchemix prevents extreme market conditions by introducing Chainlink oracles to ensure that the 1:1 exchange rate between DAI and alUSD is not affected by market fluctuations.

The operation of Transmuter is based on several key steps:

1. The DAI deposited by users is used as collateral and invested in platforms such as Yearn to generate income. A portion of these proceeds goes through Transmuter to automatically repay users’ debts;

2. If the user does not lend alUSD, the income (DAI) provided by Transmuter will increase the user’s borrowing ability;

3. alUSD holders can also participate in the Transmuter mechanism and destroy alUSD by exchanging DAI, thereby maintaining a stable ratio of DAI to alUSD.

Transmuter also provides a unique mechanism that allows users to quickly redeem DAI by other users when their positions generate additional DAI, thereby accelerating the exchange process between DAI and alUSD and ensuring a stable ratio between the two. This design not only improves the liquidity of funds, but also improves the efficiency of the entire protocol and user experience.

In general, Alchemix provides a flexible and secure lending platform through the Transmuter mechanism. Its automatic debt repayment and protection against market fluctuations solve the challenges faced by traditional lending to a large extent. This original alchemy not only enhances the stability of the DeFi ecosystem, but also provides users with more control and security.

The new V2 version is officially launched, and Alchemix’s further market performance attracts attention

Market demand urges the continuous evolution of Alchemix, and its V2 version introduces a series of new features aimed at improving the diversity and liquidity of projects. One of the significant improvements in the V2 version is the expansion of the types of stablecoins that can be used as collateral, including USDT and USDC, a move that significantly deepens alUSD’s liquidity. In addition, V2 also introduces new synthetic assets such as alETH and alBTC, allowing users to leverage BTC and ETH in the DeFi ecosystem with lower risk, while ensuring that the underlying collateral is not subject to liquidation risk.

Alchemix’s core mechanism—paying off current debt with future earnings—is further developed in V2. This model allows users to instantly release future value-added income by casting al-tokens, thus realizing a new type of lending experience. This approach has been hailed as a “checkbook for the future”. The interest generated by users’ deposits is automatically used to repay debts, making it possible to advance future income.

Alchemix provides the community with the opportunity to participate in project governance and share profits through its governance token $ALCX. ALCX’s distribution mechanism is designed with long-term incentives and project sustainable development in mind, including pre-mined tokens and phased release through DeFi protocols. It is worth noting that the Alchemix team chose not to conduct upfront financing, but distributed tokens by adding an ALCX/ETH SLP pool on SushiSwap, ensuring the initial scarcity of ALCX circulation and increasing demand for it.

Alchemix’s token economic strategy resulted in low circulation and high demand for ALCX in the short term, which contributed to an increase in the token price. High demand not only pushes up the token price, but also enhances the attractiveness of the staking pool, allowing participants to enjoy higher annualized yields (APY), which in turn promotes more participation and investment, forming a A positive feedback loop.

Overall, Alchemix V2 not only enhances the functionality and flexibility of the platform, but also provides users with new financial management tools and investment opportunities through unique lending models and token economic strategies, further promoting the innovation and development of the DeFi ecosystem. develop.