Proposal:
- Deploy an alUSD Alchemist on Optimism with AAVE V3 strategies enabled for DAI, USDC, USDT.
- Deploy an alETH Alchemist on Optimism with the AAVE V3 wETH strategy enabled.
- Additionally, Alchemix will seek to incentivize additional TVL on Optimism through AIP-59 (Increase Velodrome Stake), as well as applying for an OP (see below) grant (see below) through the Optimism Foundation.
- The Alchemists on Optimism will utilize the following parameters:
- Accepted Collateral
- DAI, USDC, USDT, ETH
- aDAI, aUSDC, aUSDT, aETH
- Max LTV = 50%
- Deposit Caps
- DAI = $5m (after min 1 week of 100k, at multisig discretion)
- USD = $5m (after 1 week of 100k, at multisig discretion)
- USDT = $5m (after 1 week of 100k, at multisig discretion)
- ETH = 5k ETH (after 1 week of 100, at multisig direction)
- Repayment and Liquidation Caps
- DAI = $2 million per 60 minutes
- USDC = $2 million per 60 minutes
- USDT = $2 million per 60 minutes
- ETH = infinite
- Maximum Loss
- DAI = 5 bps (0.05%)
- USDC = 5 bps (0.05%)
- USDT = 5 bps (0.05%)
- ETH = 5 bps (0.05%)
- Cap Raises
- All vaults are pre-authorized to have their caps increased to $5m
Context:
Since deploying on Fantom, Alchemix has been looking towards the next deployment. Optimism and Arbitrum have emerged as the leading candidates due to potential partnerships, reputation, TVL, and expected protocol launches. However, until now, deploying Alchemix on these chains had not been feasible, as the necessary yield strategies did not exist at an acceptable scale.
Recently, AAVE has grown significantly on Optimism, partially due to Optimism’s OP grant incentives being passed on to lenders. With the integration of AAVE on mainnet Alchemix, Alchemix now has an existing mainnet yield strategy that exists at scale on another chain. Additionally, the presence of the OP grants program gives Alchemix a chance to incentivize additional TVL on Optimism, which benefits both Alchemix and Optimism in attracting more users.
There are three main components of the Alchemix Optimism launch - the Alchemists, alAsset liquidity, and the OP grants program.
Alchemists
The Alchemist parameters follow the precedents set by previous launch parameters for the initial v2 alUSD and alETH launch, the Fantom deployment, and the AAVE Mainnet launch. Deposit caps are significant but smaller than mainnet, with an initial “soft launch” period. Liquidation caps are also kept smaller, as the amount of arbitrage possible in the event of an underlying token depeg is a function of all liquidation caps combined.
alAsset Liquidity
alAssets already have liquidity on Optimism due to the generous veVELO NFT gift from Velodrome. AIP-59 aims to increase this liquidity in preparation for launch, as well as make the preservation and growth of this liquidity more sustainable. Furthermore, Alchemix previously successfully launched a bridge to Optimism, for those users that wish to move some of their existing alAssets to or from Optimism.
OP Grants
Optimism is offering OP grants to protocols that deploy on Optimism, with applications re-opening in September. These grants are typically being used by the partner protocols to fund liquidity mining for their users. Alchemix plans to apply for a grant when the program re-opens in September. The OP from the grant is intended to be used for the direct incentivization of alAsset liquidity on Velodrome (through liquidity mining or bribes), the incentivization of Alchemist deposits (potentially via boosted yield, pending technical limitations), and the acquisition of assets (such as veVELO) to further strengthen Alchemix’s product offering on Optimism. A portion will also be held by the Alchemix treasury with no short-term plan to utilize it, in order to align Alchemix over the long term with the success of Optimism. The intended ratios are 25% for each purpose. Note that this description summarizes the intended grant application strategy - but the usage and quantity of OP (if the application is accepted) may change depending on feedback that Alchemix receives from Optimism regarding the application.
A note on AAVE OP yield
Note that AAVE yields on Optimism are currently boosted by OP rewards from Optimism’s grants program. When an Alchemist holds a user’s AAVE deposits, that entitles Alchemix to the OP emissions earned by the respective aToken. Alchemist deposits are not fungible positions and therefore cannot be staked for OP rewards. Therefore, to pass the rewards on to depositors, the OP tokens from AAVE will be melted down in order to boost yield to Alchemist depositors. Additionally, if Alchemix receives a grant, a portion of the OP may be used to further boost yield. This yield will help overcome the friction of existing users migrating to a new chain, and new users learning a new protocol.
Voting
A vote “FOR” authorizes Alchemix to launch alUSD and alETH Alchemists on Optimism with AAVE V3 strategies integrated, utilizing the listed parameters AND authorizes Alchemix to pursue an OP grant from Optimism.
A vote “AGAINST” does not authorize Alchemix to launch on Optimism with the above parameters.