Part 1 – Launch alBTC Before Alchemix V2
alBTC is currently the missing piece of the “big 3” triangle of Alchemix Vaults (alETH, alUSD, alBTC). alETH has proven the ability of the Alchemix team to launch additional alAssets based on yearn vaults. Additionally, WBTC yields on yearn are often higher than those of WETH, meaning alBTC is set up for success. Given V2 is set to be shipped to auditors Nov 1st, and will be released late December at the earliest, there is a window of time where we could soft-launch alBTC to start building liquidity and backing prior to V2 without cutting into V2 development resources. This would likely create some additional work to migrate alBTC from V1 to V2, plus some users may need to migrate their collateral, which are both reasons to keep the launch somewhat conservative (similar to alETH).
Part 2 – alBTC Launch Parameters
I propose the following initial parameters for the launch of alBTC:
Collateralization ratio: 400%
Debt Cap: 140 alBTC
The intent is to establish a soft peg for alBTC. The high collateralization ratio is to ensure ample alBTC flows to the transmuter, which helps strengthen the peg and increase yields in the system. The 140 alBTC debt ceiling approximately matches the initial 2000 alETH debt ceiling, which ensures the supply doesn’t balloon faster than we can establish an alBTC market. It is also easier to raise the debt cap and lower the collateralization ratio in the future, rather than go the other way.
I propose the Alchemix protocol enables a 1:1 one-way WBTC to alBTC swap for users who wish to swap directly into LPing for alBTC, similar to what is available for alETH.
I propose that the emissions schedule be modified thus (italics represents a change):
ETH/ALCX: 53% + 5% for tALCX -> 48% + 5% for tALCX
ALCX Only: 18% -> 18%
3CRV/alUSD: 18% -> 17%
alETH/ETH (Saddle): 3% -> 3%
alETH/ETH (Curve): 3% -> 3%
alBTC/BTC (TBD): 0% -> 6%
For various reasons, alBTC could be expected to be more or less attractive to liquidity providers than alETH. Defi natives tend to hold more ETH than other cryptocurrency investors, so attracting BTC capital may be more difficult. However, BTC is still the largest and most commonly owned coin in the cryptocurrency ecosystem. Either way, the goal is to for the alBTC LP to be one of the best yield opportunities on BTC in all of defi, similar to alETH. Diverting an equal amount of ALCX rewards to alBTC as we do to alETH should make this plenty feasible.
The largest reward chunk is taken from the ETH/ALCX SLP as that pool is the least critical to vault functionality, currently has deep liquidity with minimal slippage, and it’s possible that more efficient liquidity from the tokemak reactor could replace any liquidity we lose from the reduction. alUSD is also sufficiently deep and has been around longer than alETH, so the remaining 1% is taken from there. ALCX single stake already has trouble keeping up with emissions in other pools being dumped, and single stake ALCX is the least likely to be dumped - so it’s better to try to make other emissions more efficient where possible first.
Options:
Option 1: Agree that alBTC should launch before V2 and after Nov 1st, and agree with the proposed launch parameters.
Option 2: Agree that alBTC should launch before V2 and after Nov 1st, but disagree with launch parameters and would like to propose an alternative.
Option 3: Disagree that alBTC should launch before V2 and would instead like to wait for V2 (and figure out launch parameters then).