Alchemix has held off from launching on L2s and other EVM chains so we can move forward with our new v2 architecture. Now that it is deployed, we are ready to expand onto other chains. The Alchemix Core team is proposing an expansion into Fantom as our first multichain expansion.
Rationale:
There are a few reasons for choosing Fantom over other networks. Primarily, Fantom has a robust DeFi ecosystem. It has every primitive Alchemix needs: Uni v2 type AMMs, Balancer v2 type AMMs, Curve, various forks of Curve, Lending protocols, and most importantly, Yearn Finance. Yearn has been the backbone of Alchemix since its inception. They can be thought of as a Yield as a Service (YaaS) provider for Alchemix. They are the single most trusted project in the token yield vault space, and typically offer better rates than other lending and liquidity markets. Yearn is fully deployed on Fantom, giving us all of the necessary ingredients for a robust implementation on Fantom.
The size of the Fantom Ecosystem is also sufficiently large to support an Alchemix operation on Fantom. According to Defillama.com, Fantom DeFi has a combined 6.66b TVL, placing it among the leaders in the multichain space. That total addressable market is substantial and can become a new source of growth for Alchemix. Combined with the diversity and depth of DeFi on Fantom, it creates a fertile ground for integrations with various protocols across its DeFi ecosystem.
Since the launch of Alchemix, we have heard one complaint, and heard it loudly – that the fees on Ethereum are too damn high. Thankfully, Fantom is among the cheapest of sidechains to transact on. A typical transaction on Fantom costs between $0.02-0.05, or to borrow a catchphrase from Elon Musk, “orders of magnitude” cheaper in comparison to Ethereum main net. For many, v1 was too cost prohibitive for smaller and medium sized users on Ethereum. The gas cost to deposit and borrow might mean a month or two of yield from the protocol, defeating the purpose of the protocol for those users. On Fantom, the onboarding transaction fees will be recouped virtually instantly by the user. This also impacts operations in a profound way. Because transactions are measured in cents instead of tens or hundreds of dollars, it means that operational expenses on Fantom will essentially be negligible. This means more frequent harvests for our yield providers and hence ourselves too, resulting in better UX.
Multichain Components:
After much research in the multichain space, Alchemix has decided upon using the ERC20 mint/burn stableswap functionality for our multichain alAssets. There is a lot to unpack, but here is a high-level overview. Each deployment of Alchemix across various chains is its own complete fully functional dApp. They are essentially carbon copies of the mainnet versions (albeit hooked into different protocols/assets potentially). Each one has its own canonical alAsset, meaning that when you borrow an alAsset, it originates from the chain you borrowed it on.
When swapping an alAsset, for example, alUSD, from Ethereum to Fantom, we would go through a token bridging protocol, with Anyswap being the initial bridge we use. So a user would send aUSD to Anyswap to then get anyalUSD on Fantom. Then when on Fantom, the anyalUSD holder can swap anyalUSD 1:1 for the canonical version of alUSD on Fantom. This is all abstracted away from the end user, so it seems that you are just sending alUSD to your Fantom wallet from Ethereum. A user’s L1 alUSD can pay off alUSD debt on their sidechain/L2 v2 position, for example.
However, since alUSD and alETH are already deployed on Ethereum mainnet and are non-upgradeable contracts, this stableswap mint/burn function does not work coming back to Ethereum mainnet. This means that while there is infinite bandwidth to move alAssets around from mainnet to multichain, and multichain to multichain, there is a bottleneck getting back to Ethereum mainnet. This is constricted by the total amount of alAssets in the bridge originating from mainnet. So if $10m alUSD left mainnet to go multichain, only 10m alUSD can be bridged back into mainnet. This is ultimately a good thing in our estimation because any execution or consensus risk in L2s and sidechains will not cross-contaminate our mainnet deployment, which we will always consider to be the main home of Alchemix.
Initial Launch Parameters:
Approve the following Alchemix v2 alUSD initial Fantom Launch Parameters:
- Accepted collateral types:
- DAI, USDC, USDT
- yvDAI, yvUSDC, yvUSDT
- alUSD maximum Loan-to-Value (LTV) ratio: 50%
- Deposit Caps:
- DAI = $3.3 million
- USDC =$3.3 million
- USDT = $3.3 million
- Repayment and Liquidation Caps:
- DAI = $5 million per 60 minutes
- USDC = $5 million per 60 minutes
- USDT = $5 million per 60 minutes
- Maximum Loss:
- DAI = 5 bps (0.05%)
- USDC = 5 bps (0.05%)
- USDT = 5 bps (0.05%)
AND,
Request the Alchemix MutliSig signatories to act as follows:
- If 3 days have passed, the system is functioning properly, and alUSD is considered on peg (> 0.997 USDC), raise the deposit caps for DAI, USDC, and USDT to be $6.6m each.
- If 7 days have passed since the previous deposit cap increase, the system is functioning properly, and alUSD is on peg, raise the debt caps for DAI, USDC, and USDT to be $16.6m each.
The DAI, USDC, and USDT vaults are on Yearn operating at production levels and are the most trusted stablecoins in the space. There are other possibilities with Yearn on Fantom, including FRAX, MIM, and DOLA. Post launch, we can take a closer look at their potential integration(s).
Many of the parameters will mirror the mainnet deployment. The LTV for borrowing alUSD on Fantom will be the same as it is on mainnet, 50%, meaning a $1000 deposit allows for a 500 alUSD loan. The convertible cap will be set to $5m over a 1 hour period, which provides a good balance of UX and protection. In addition, MaximumLoss parameter will mirror mainnet at 0.05%.
To ensure security and stability, we will do a semi-guarded launch, with progressive adjustments once systems are confirmed to be fully operational without issue. Initially, we will launch with a $10m debt cap, split equally among the initial collaterals. There will be a minimum 3 day period where we will stay at this level in order to monitor systems. The health of the alUSD peg will also be monitored at this time, and must be above 0.997 alUSD/USDC before the cap can be raised. Then, if the deposit cap has been hit and alUSD is on peg, we will raise it to 20m total. There will be a minimum one week period at $20m, and similarly to the previous step, we will raise the cap to $50m in total if system health allows for it. From there, any additional deposit cap raises will go through governance.
Launch Plan and Emissions Adjustment:
As mentioned earlier in our multichain architecture, alAssets will essentially have unlimited liquidity between sidechains/L2s. Therefore, we really only need to have one or two robust market places for our tokens outside of mainnet because of cross-chain arbitrage. Considering Fantom’s low fees and super fast transactions, and the fact it is the first sidechain we will deploy on, it makes sense to build one of our primary multichain markets there.
The Alchemix governance token recently got a nice upgrade in the form of the gALCX contract. gALCX is a token wrapper for ALCX, where it takes the deposited ALCX and stakes it into the single-sided ALCX pool for ALCX and auto-compounds it. Initially, we will look towards liquidity mining incentives to bootstrap the markets on Fantom, and we will use gALCX instead of ALCX as the multichain representative for ALCX. The main reason is that it offers the users a much better experience holding ALCX on other chains. Because it auto-compounds the staking rewards, it is always accruing more ALCX, making it a much more attractive token to hold. When the gALCX is paired in a LP position, it is getting ALCX rewards and trading fees – in addition to any other farming incentives on top.
Our current token emissions are approximately 12k ALCX a week, and are distributed as follows:
ALCX/ETH SLP - 20%
alETH saddle - 2%
Bribes for alETH and alUSD - 16%
-alUSD 8%
-alETH 6%
-d3 2%
ALCX - 10%
tALCX - 12%
Olympus Pro - 40%
-ALCX/ETH SLP 10%
-DAI 5%
-ETH 5%
-CVX 17.5%
-TOKE 2.5%
Over half of the emissions are geared towards acquiring protocol controlled value in tALCX staking and Olympus Pro. While we have had great success in securing value for the protocol, with the launch of the AMO, it no longer makes sense to continue acquiring ETH and DAI for alUSD and alETH liquidity. By cutting these bonds, we can direct those emissions to the Fantom deployment and increase alUSD and alETH bribes for the AMO. Adding more to the alUSD and alETH bribes on Convex will be important going forward. Since we will be adding sizable liquidity, our deposits will dilute existing farmers. We must therefore increase our Convex incentives to not affect our current LPs and enhance the benefits of the AMO. Therefore, with the savings from the DAI and ETH bonds, Convex bribes for alUSD will be raised from 8% to 11%, and alETH will be raised from 6% to 9% of total emissions.
We have spoken with Beethoven X, an authorized Balancer V2 fork on Fantom. Much like Balancer, they offer both volatile and stable swap AMM pools. We propose to make an alUSD/USDC pool on Beethoven X. Through the use of the Boosted Pool technology, the USDC in this pool can be deployed to Yearn, which gives LP’s additional yield. This pool would receive 2.5% of total emissions (approximately 300 gALCX/week), and Beethoven X is offering generous BEETS incentives to Alchemix LPs for two months. Between gALCX rewards and its auto-compounding, BEETS rewards, and the additional USDC yield, we expect this pool to reach the mid 8 figures, which would enable a large user base on Fantom and serve as a major liquidity hub in the multichain ecosystem. We are also looking at other exchanges for alUSD liquidity pairing, but have chosen to focus on Beethoven X for alUSD because of their willingness to cooperate with us and their powerful feature set.
Approximately 0.85% of the emissions (800 gALCX total, or 100 gALCX/week) will be directed to the FTM/gALCX pair on Spookyswap. Spookyswap is the leading UniV2 style AMM on Fantom, leading the chain in TVL and volume. They have an incentive system in which a protocol can pay Spookyswap DAO their governance token in return for a higher total value of their BOO token, so for every $1 of gALCX we send to Spookyswap, we will get more than $1 of BOO in token rewards for FTM/gALCX LPs. We propose to spend $80k of ALCX (approximately 800 ALCX currently) for 1 point of allocation for 60 days. This would amount to approximately $150k worth of BOO tokens in rewards for gALCX/FTM. Additionally, since it is paired with gALCX, it has inherent token rewards built in for LPing. We expect this to make a market approximately $2-3m in liquidity for gALCX on Fantom, which should provide sufficient market depth and act as a strong hub in the multichain ecosystem.
We have also engaged with Spirit Swap, another popular DEX and DeFi platform on Fantom. Their DAO governance has approved a gauge for a gALCX/FTM pair to make it eligible for SPIRIT token rewards. Much like Curve, they have a gauge and bribe system where you can incentivise the SPIRIT token stakers to direct rewards to specific liquidity pools. We propose spending 0.66% of emissions, approximately 80 ALCX/week on their bribing system for the gALCX/FTM pair. We expect this market to attract, similar to Spookyswap, 2m in liquidity for gALCX/FTM.
All of these liquidity pool incentives have a minimum 60 day commitment, and will be continued until governance approves an alternative.
With the following changes, the new emissions are proposed to be:
ALCX/ETH SLP - 20%
alETH Saddle LP - 2%
Convex Bribes for alETH and alUSD - 16% -> 22%
-alUSD3Crv LP 8% -> 11%
-alETH LP 6% -> 9%
-d3 LP 2%
ALCX - 10%
tALCX - 12%
Olympus Pro - 40% -> 30%
-ALCX/ETH SLP 10%
-DAI 5% -> 0%
-ETH 5% -> 0%
-CVX 17.5%
-TOKE 2.5%
Fantom - 4%
-Beethoven X alUSD/USDC Boosted Pool 2.5%
-Spooky Swap gALCX/FTM LP 0.83%
-Spirit Swap gALCX/FTM LP Gauge Bribe 0.66%
Summary:
-Launch on Fantom largely mirroring the Ethereum mainnet deployment, with the yvDAI, yvUSDC, and yvUSDT yield tokens, an initial deposit limit of 10m total, and progressive steps to 20m and 50m in the period after launch.
-The multichain architecture deems all alTokens are canonical regardless which chain they are minted on, and can be swapped 1:1 with alAssets on other chains, with the only bottleneck being alAssets being bridged back to Ethereum mainnet.
-The multichain version of ALCX is gALCX, an auto-compounding ALCX
-The following emissions have changed:
Convex Bribes for alETH and alUSD
-alUSD3Crv LP 8% -> 11%
-alETH LP 6% -> 9%
Olympus Pro
-DAI 5% -> 0%
-ETH 5% -> 0%
Fantom - 4%
-Beethoven X alUSD/USDC Boosted Pool 2.5%
-Spooky Swap gALCX/FTM LP 0.83%
-Spirit Swap gALCX/FTM LP Gauge Bribe 0.66%
A vote “For” authorizes the deployment and its initial launch parameters, authorization to ramp up the deposit cap in two steps, use of gALCX as the multi chain governance token, listing of assets on Anyswap, and the adjustments to the emissions weights.
A vote “Against” rejects the proposal in its entirety signaling a desire for an alternative plan
