Alchemix Review 2021

Alchemix is a new DeFi protocol that enables users to create synthetic tokens representing a deposit’s future yield. It enables users to recover or retrieve the tokenized value of the deposited stablecoins instantly. It works as a magic potion in the world of digital currency. The protocol offers a powerful and DeFi lending primitive that has bundles of features and applications for users and also new exciting tools for developers.

What Is Alchemix?

Alchemix finance is a synthetic asset lending platform that offers an advance on yield farming through a synthetic token. This token represents fungible claims on an underlying mortgage within the Alchemix protocol.

Alchemix is one of the growing DeFi lending protocols that provides an opportunity for borrowers and lending a new and exciting way of paying and repaying crypto debts automatically. It then utilizes the yields earned from the deposits to pay back their user’s debt.

The golden rule to earn future yield is that the longer the traders keep their deposits, the greater yields they will earn and subsequently, the greater amounts of loans will be paid back. In this Alchemix review, we have discussed Alchemix’s features, products and services, and many more.

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How Does Alchemix Work?

The current version of Alchemix allows traders to deposit crypto DAI stablecoins which then mints or creates the stablecoin alUSD. If traders deposit 2 DAI as collateral, they can borrow at most 1 alUSD. Every DAI deposited in the Alchemix smart contract is routed to the Yearn vault from where the users start earning yield immediately. This yield is the most interesting part of Alchemix as they can automatically repay the debt.

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To mint Alchemix’s synthetic derivative, alUSD, users need to deposit stablecoins in the Alchemix smart contracts through the hosted user-interface. This will mint alUSD upto 50 percent of the deposited DAI amount in the ratio 1:1.

The DAI deposited then, used to yearn vault and earn yields. Note that once they deposit their funds, they are fully committed to earning yields that eventually and automatically pay your debt.

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What Does Alchemix Do?

Alchemix DeFi lending protocol enables users to make deposits that act as collateral for their loans. For every $2 deposit, they can take out upto $1. What Alchemix does is take the deposits and put them in the Yearn vault that automatically earns future yield (around 12 percent APY).

Meanwhile, traders can also convert the loan amount into fiat money and use it for their purchases or they can stake the loan into the Alchemix ecosystem and put it to work and earn additional returns.

To make it simpler for your understanding, we have broken down the steps below:–

  • Make a deposit (collateral) into the Alchemix ecosystem.
  • Upto 50 percent of the deposit or collateral’s value will be available as loan.
  • The deposit earns interest over time that automatically repays the loan.

Features of Alchemix

Alchemix offers a myriad of lending features to the users including the Farm, Vaults, ALCX Token, Transmuter, DAO and many more.

Vaults

Alchemix offers Vault that acts as a hub for generating yield advances. This feature is also similar to the other lending platforms such as AAVE and MakerDAO. The Vault accepts DAI as the collateral type.

Transmuter

The Transmuter available on the Alchemix platform which follows a primary pegging mechanism for their synthetic tokens. The Transmuter ensures that all participants get a 1:1 redemption of the alUSD for DAI tokens.

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Token Distribution

The governance token (ALCX) on Alchemix splits the DAO and the community among its developers as they believe in the value of fair launch. The ALCX is a stoken granting governance rights in DAO. The platform did not use any tokens from the crypto investors but developed an independent token for themselves.

Alchemix DAO Feature

The Alchemix DAO will act as a developer multisig, signalling through the Snapshot application. ALCX synthetic tokens will provide the holders with governance rights over the protocol’s direction and use of the treasury. 

Alchemix Review : Pros and Cons

Pros Cons
Earn future yield. Supports very few cryptocurrencies.
Automatically pays back the loan amount. Can not buy ALCX with cash.
Easy connect with external wallets like Metamask and WalletConnect.

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Getting Started With Alchemix

To start using the Alchemix tokens (ALCX), follow the steps mentioned below:–

Step 1

The first step requires the user to go to the official website of Alchemix and select CONNECT on the right corner of the page.

Step 2

In this step, users need to connect with a wallet provider – either WalletConnect or Metamask.

Step 3

To get started with the wallets, users need to buy DAI on any of the fiat-to-crypto exchanges and then transfer it to either Metamask or WalletConnect. Note that users will also require ETH in the wallets to cover the transaction fees.

Step 4

ALCX is an altcoin that can be traded only if ETH is transferred to an exchange. So, start depositing Ethereum on the exchange. Once ETH is deposited, you can trade with ALCX altcoins. 

Alchemix Deposit and Withdrawal Process

Alchemix deposit and withdrawal processes can be done in the following steps:–

  • Send DAI to one of the wallet providers on Alchemix – WalletConnect or Alchemix.
  • Authenticate the wallet on the Alchemix platform.
  • Go to the Deposit button in the Vault section.
  • Deposit the DAI from the wallets into Alchemix.
  • Select Borrow on the Vault page and borrow alUSD. Traders can borrow a maximum of 50% of the total deposit.
  • Stake the alUSD in the pool through Farm and earn yields on the ALCX.

Now, coming to the withdrawal part, once the collateral has been deposits, traders can withdraw alUSD by following the steps mentioned below:–

  • Liquidate the collateral for repaying the borrowed quantity of USD.
  • Either withdraw alUSD beyond the protocol’s ecosystem or claim a part of the DAI yield that the collateral earned over time. 

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Alchemix Token

The Alchemix development team developed the protocol independently, i.e., it did not take financial help or tokens from other investors till they launched. They developed their independent ALCX tokens that grant governance rights to the users in the Alchemix DAO. ALCX token does not have hard-cap but they do offer a carefully designed emissions schedule.

The following is the purpose of ALCX distribution based on the expected supply of tokens after 3 years:–

  • The Alchemix DAO is supposed to receive a pre-mine of 15% of the total projected supply after 3 years. Token usage and proceeds lie completely in the discretion of the community.
  • The Alchemix DAO is supposed to have an extra reserve of 5% of the total projected 3 year supply for the bug bounties.
  • Remaining 80% of the ALCX tokens can be acquired by staking specific tokens and liquidity pool tokens within the Staking Pools contract.

Alchemix on-board developers, founders and community developers have access to a special staking pool that offers 20% of ALCX token block rewards. This equals to about 16% of the total emissions. Liquidity providers and stakers are entitled to acquire 80% of ALCX token block reward and that equals about 64% of the total emissions.

Alchemix DAO

The Alchemix DAO receives its income from the protocol and a part of the yield earned goes to the treasury. The treasury, in turn, pays the permanent staff and developers for the maintenance and growth of the protocol.

Moreover, the treasury funds pay for the protocol’s audits. Alchemix DAO funds projects that are developed on the platform and they use the Alchemix synthetic tokens for funding. In the long run, Alchemix plans to opt for a complete on-chain governance, offering complete control over a number of parameters to the community.

Alchemix Wallet

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Alchemix protocol is a decentralised lending platform that does not have an independent wallet for security reasons. The protocol does not store its traders’ funds. However, users can connect their wallets to the protocol for depositing and withdrawing ALCX tokens on the protocol. The supported wallets are Metamask and WalletConnect. 

Alchemix App

Alchemix protocol offers an application that works on any browser. However, the protocol has not developed an app for mobile devices. The browser version can be used on any device.

Alchemix Customer Support

Alchemix is one of the growing crypto loans protocols. Its support team has developed a customer support page on its platform so that users can raise and discuss their issues relating to the protocol. All answers are reverted within 24 to 48 hours.

Customers can also reach out to Alchemix social media profiles and their details are given below:- 

Twitter – https://twitter.com/alchemixfi

GitHub – https://github.com/alchemix-finance

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Alchemix Review: Conclusion

To sum up this Alchemix review, we believe that Alchemix is one of the fastest growing lending protocols that continues to expand their unique value position with the independent atcoin, ALCX. Alchemix token is a governance token for the protocol that has found a new way of repaying old debt. It uses future yield earned from deposits to finally repay the users’ debt. 

FAQs

Can I Buy Alchemix With Cash?

No, ALCX tokens cannot be directly bought with cash. However, investors can use fiat-to-crypto marketplaces to first purchase Bitcoin, Ethereum and other digital currencies with fiat money and then they can transfer the digital currency to respective altcoin exchanges like Alchemix. 

What Is ALCX?

Alchemix developed their independent altcoin, $ALCX. ALCX tokens are ERC-20 tokens that are used to incentivize and govern liquidity for the Alchemix protocol. The primary use is to govern the Alchemix DAO (decentralized autonomous organization) and to reward the participants on the network for providing liquidity. 

Can ALCX Be Bought in Europe?

Yes, investors can easily buy ALCX in Europe. One of the easiest ways of buying ALCX in Europe is through online banking transfers. All you have to do is open a bank account and transfer fiat money to any crypto exchange like Uphold or Coinbase. 

Note: Alchemix Reviews are not to be considered an endorsement or investment advice of any kind. Investors are requested to seek independent advice from experts and carry out their own research before trading on cryptocurrency exchanges.

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