Zaps to Farms on Alchemix

roman-wido

Dear Alchemix community,
I come from Wido, an infrastructure for Zaps.

What are Zaps

Zaps are transactions that let users deposit any token into any Farm. With Zaps, users won't need to leave the Alchemix website to get LP tokens before depositing.

Why Zaps

Zaps make deposits into Farms easier by reducing friction and improving UX. Zaps can grow deposits and TVL by as much as 2x. Full report here.

Proposal

At Wido, we would like to build Zaps into farms on Alchemix. There are currently three farms on Alchemix:

ALCX
Saddle alETH
ALCX/ETH v2

Users can deposit tokens they already have (like USDC, DAI, ETH) for each farm instead of getting LP tokens on Saddle or Sushiswap.

We suggest following a similar pattern regarding the deposit token selector for the UX, which Alchemix already implemented in the "Vaults" section. This should make things consistent.

Screenshot to visualise deposit token selector.

Steps forward

First, we would like to ask the Alchemix community for feedback and comments on this proposal.

If there is an interest in implementing Zaps for farms on Alchemix, then we (the Wido team) would create a PR on the Alchemix web repository for the Alchemix developers to review and approve (if everything meets their requirements).

n4n0

Two things:

1) The report you linked is not available under that URL
2) What's the cost of using your zaps?

roman-wido

n4n0

1) I updated the link. Here again for your convenience. Thank you for raising.

2) We propose to charge 0.2% from the user for each Zap transaction.

Hource

Looks pretty cool to me, +1. I wonder if a fee model could be built that's sublinear, might be more attractive to larger deposits.

n4n0

Hource well the Li.Fi SDK we're using for bridging assets has a minimum and maximum fee, although the maximum fee afaik is always 0.1% of the bridged amount. But ye I agree, the overall economics must be sound enough for users to opt-in to use this feature over manually swapping their assets and then depositing. A small extra on top for being a convenience-layer should be okay tho.

roman-wido

Thank you, n4n0 and Hource

We will closely monitor usage after launching. Users will have the ability to avoid paying fees by depositing directly. Monitoring the conversion rate on Zaps will give us good insight into whether users are willing to pay for convenience. We will see whether larger deposits require different fee mechanisms from the data.

0.2% is our initial proposal, as it makes things simple to start. We will use usage data to reevaluate after launch.

ov3rkoalafied

roman-wido This would immediately have to be integrated into the Alchemix front end right? I fully support something like this existing, would defer to N4n0 if it's secure. Ie, I would vote "yes pending security review from core team". If we simply have to add some code we control to tie into an immutable smart contract, then it seems pretty straightforward.

n4n0

ov3rkoalafied bit of context maybe, so Roman and I were talking a while ago in Discord DMs about this and he said his team were eager to build this. Basically they'll write the code, open a pull request against our staging branch, get a proper vetting through code review and if all is well we'll merge it.

roman-wido

Thank you to everyone for your comments and feedback.
We will start work on the PR this week. I will follow up here as soon as it is ready for review.

n4n0

Sounds cool!

roman-wido

While building Zaps for the following three farms on Alchemix — ALCX, Saddle alETH and ALCX/ETH v2, we noticed none of the farms currently produces output tokens that would be sent back to the user.

It looks like those three farms also do not support deposits on behalf of a user. It is necessary that either the farm returns a receipt token or takes deposit on behalf of the user so that Zaps can attribute the deposit to the user.

We also noticed a wrapper contract called gALCX that wraps the ALCX farm. This wrapper contract does return receipt tokens to the user.

Building Zaps into gALCX is straightforward because it produces a receipt token that can be sent back to the user.

Building Zap for the other two farms — Saddle alETH and ALCX/ETH v2 — needs adjustments in how those farms operate.

It would be good to understand the reason behind the wrapper contract of gALCX and if a similar one would be appreciated for the remaining two farms — Saddle alETH and ALCX/ETH v2, to ensure the output tokens are in place. In such a case, we would build Zaps into the wrapper contracts.

Alternatively, would Alchemix consider adding an option to deposit on behalf of a user into the existing farms?

cc @n4n0

ov3rkoalafied

roman-wido In certain jurisdictions receipt tokens could be viewed as taxable events. It's debatable, but we'd definitely need to understand which of our users could be affected by a change like this. I was unaware that there were many reasons for receipt tokens other than composability (ie, rechypothication out the butt)

n4n0

Yeah right now the farms are pretty basic; there's no receipt token and no delegated deposit. I'm not sure what the consensus on updating the contracts for the farms is, seeing how they are v1 spawned.

The gALCX wrapper for ALCX was made to enable auto compounding for users that want to stake their tokens in the ALCX farm. Not sure if this can be done for the other farms.

I'll ask around tho.