• AIP

  • [AIP-47] Alpha Vaults

Introduction

For a new strategy to be added to Alchemix v2 and allowed to scale up, it must go through the following process:

  1. Internal Review, which includes:
    a. A preliminary review to determine if the strategy is feasible to integrate
    b. Research and Development to create the strategy/vault
    c. An internal team audit
  2. A formal audit with Runtime Verification

We have limited scheduled audit slots with Runtime Verification, which can lead to long lead times between finishing a new strategy and passing the audit. The core team has many new strategies in various stages of R&D, and is able to conduct internal audits using knowledge learned from the past 10 months of v2 development engagement with Runtime Verification. While an internal audit is no substitute for a proper 3rd party audit, it is enough to warrant new strategies being released with very limited parameters, called Alpha Vaults.

The purpose of this proposal is to authorize all or some of the current R&D strategies to be released in Alchemix v2 as Alpha Vaults with extremely limited release parameters, rather than require individual governance proposals for each. Alpha Vaults will be marked as higher risk, but can grow by becoming Beta Vaults or Vaults as explained in the definitions below.

Definitions:

Alpha Vault - Passed internal review. The vault is limited to 1m deposit cap.
Beta Vault - Strategies that have not yet passed audit with Runtime Verification, but are permitted on a case-by-case basis to scale past the Alpha Vault caps. Reasons could include passing another 3rd party audit or review, longevity, or being forks of other Beta Vault / Vault strategies. The current stETH and rETh vaults can be considered Beta Vaults.
Vault - Passed audit with Runtime Verification, acceptable to scale these in line with other

Strategies

The following strategies are in the R&D phase to determine if they are feasible to integrate:

Yearn Curve stETH/ETH

Status: Internal Review Complete
APR: 4.35%
TVL: $645 million
Note: This allowance would extend to other single sided yearn curve LP strategies.
Link: https://yearn.finance/#/vault/0xdCD90C7f6324cfa40d7169ef80b12031770B4325

Yearn Curve rETH/stETH

Status: R&D
APR: Not yet reported by Yearn
TVL: $12 million
Note: This allowance would extend to other single sided yearn curve LP strategies.
Link: https://yearn.finance/#/vault/0x5c0A86A32c129538D62C106Eb8115a8b02358d57

Vesper

Status: R&D
APR: 2-8% depending on asset and strategy
TVL: $50k to $20m depending on asset
Notes: This would allow the core team to integrate any available vesper pool at their discretion.
Link: https://app.vesper.finance/

Rari Fuse

Status: R&D
APR: Varies by Pool
TVL: Varies by Pool
Notes: This would allow the core team to integrate any available verified Rari Fuse pool at their discretion.
Link: https://app.rari.capital/fuse

Tokemak Pair Reactors

Status: R&D
APR: 5-15%
TVL: Varies by Pool
Notes: This would allow the core team to integrate any available Tokemak pool at their discretion.
Link: https://www.tokemak.xyz/
Fee: There is not currently an existing vault for Tokemak Pair Reactors, so Alchemix would provide the vault as part of the Tokemak integration. Alchemix would take a 1% management fee on the vault, and then the standard 10% cut of the yield.

Stargate

Status: R&D
APR: 5-15%
TVL: ~$100m-1b
Notes: This would allow the core team to integrate any available stargate pool at their discretion.
Link: https://stargate.finance/farm
Fee: There is not currently an existing vault for Stargate strategies, so Alchemix would provide the vault as part of the Stargate integration. Alchemix would take a 1% management fee on the vault, and then the standard 10% cut of the yield.

icETH

Status: Not started
APR: 10-15%
TVL: ??
Notes: Feasibility will likely depend on the theoretical outcome of a temporary stETH depeg
Link: https://app.indexcoop.com/iceth

ETHMAXY

Status: Not started
APR: 10-15%
TVL: ??
Notes: Feasibility will likely depend on the theoretical outcome of a temporary stETH depeg
Link: https://www.setswap.xyz/ethmaxy

Gearbox

Status: Not started
APR: <1% (should scale up in coming months)
TVL: $10m
Notes: The APR is low while gearbox is in their guarded launch phase, but they are scaling up in the coming months. Gearbox deposits all their revenue in their lending pools - so integrating these pools could be a potential DAO partnership.
Link: https://app.gearbox.fi/pools

stETH Senior Perpetual Yield Tranche

Status: Not started
APR: 8% (paid in 7% LIDO and 1% ETH), plus IDLE gauge rewards (3-8% depending on multiplier).
TVL: $15m
Notes: stETH senior tranche is incentivized by LIDO to indirectly boost yield on the junior tranche.
Link: https://idle.finance/#/dashboard/tranches/senior/lido/stETH
Fee: There is not currently an existing vault for Idle Tranches, so Alchemix would provide the vault as part of the Idle integration. Alchemix would take a 1% management fee on the vault, and then the standard 10% cut of the yield.

Requirements to Release

Each strategy approved by this proposal must have passed all three steps of the internal review phase detailed above.

Release Parameters and Risks

When ready, each strategy will be released with an LTV of 50% and a deposit cap of $1m or 300 ETH. The maximum loss of each strategy will be set to 5 bps (0.05%). Separate proposals will be necessary to increase the deposit caps, on a case-by-case basis. The UI will display Alpha vaults in a separate tab, with language to indicate that they are unaudited.

Note if an integrated strategy suffers a total loss of funds, and assuming every user takes a maximum loan, the user will suffer 50% of the loss and Alchemix will suffer the remaining 50% loss due to the user having an undercollateralized loan. The strategy would be paused and the debt could be settled and then collateral returned to the user if the owners of the strategy make the vault whole. If they do not, the DAO would have to decide how to proceed.

Strategies Not Included

Note that Aave and Compound strategies (aTokens and cTokens) are in the process of being formally audited. stETh and rETh have already been launched with informal 3rd party reviews. Because these vaults are all past the alpha vaults stage, they are not included in this proposal.

Voting

Voting is multiple choice. Select all strategies you would like to potentially be integrated into Alchemix v2. All strategies with >50% of the vote will be approved for future integration as an Alpha Vault should they meet the requirements to be integrated.

I'm for this idea, with the caveat that I suggest that all alpha vaults and beta vaults be housed in a different part of the website, UX-wise, from the audited vaults. And I would further suggest that these alpha and beta vault pages be very clearly and loudly described as unaudited vaults with higher risks, given the lack of 3rd party audits

    asira here from Index. We appreciate the consideration as a yield strategy here for icETH. We think it will be a positive addition to Alchemix v2. Note, TVL for icETH is currently $19,100,000, having achieved this within one month of inception date. We look forward to the support from the Alchemix community.

    IMIMIM

    Yes in agreement. Having a separate vault area would be ideal.

    Thinking more for those that maybe brand new to Defi, I would also consider linking to some form of written post on what being "Unaudited" actually means too, and the extra risks this may pose.

      datol0 Thanks - this was an error. Given the current proposal results and the long lead time on Gearbox specifically (not really worth it until their APR is higher and their protocol is more scaled up), I believe the devs can still look into it when appropriate and we can authorize it separately if needed.

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