Summary:
Grant the Alkahest team 4k ALCX to aid in their development of a Convex-like system to sit "atop" the veALCX governance system that is currently being built.

Motivation:
Alchemix is re-modelling its veALCX governance to be a Curve-gauge-like system with token locking and gauge voting. In an Alchemix community call in early 2022, Scoopy inspired the formation of the Alkahest team, who have been working on and exploring various apps to build atop of Alchemix.

As Alchemix native community members, Alkahest wants to see continued growth and development on top of the Alchemix ecosystem. It is safe to assume that a Convex-like platform will eventually be built on top of Alchemix. We want to do it first and do it in the best way possible. Doing this brings in a variety of benefits for everyone:

  • Aligning ourselves with Alchemix and having a mutualistic relationship will bolster the strength of Alchemix, benefiting each project in the process.
  • Furthermore, by building a Convex-like protocol on top of the ecosystem, it increases the returns of the stakers.
  • This system also allows for liquid staking, meaning that users who stake with us won't have to wait for the 1 year unlock or buy and burn mana.
  • It also automates more of the gauge related activities, meaning that someone can be less active but still generate the same or greater returns.

Specification:
Tokens are locked in our gauge and subsequently deposited into Alchemix's gauge. The tokens that are emitted/farmed are ALK and ogALK. Here is how they are used in our ecosystem:

  • Anything that Alchemix’s gauge supports we will support unless the DAO votes otherwise. Some pools that Alchemix supports earn ALCX rewards directly (eg alETH saddle, ALCX/ETH sushi), while other pools earn various other tokens, such as CRV and CVX for alUSD3CRV and alETHCRV LP, which are fueled by gauge bribes of the Curve ecosystem.
  • Depositing into Alkahest will grant you a token on Optimism redeemable 1:1 for the underlying token, which can then be staked to farm ALK. ALK will be purely governance-oriented. This will enable on chain governance and cheaper innovation on the L2.
  • Holding ALK will automatically farm ogALK, which will capture the profits that the protocol generates. This will be done in a single token e.g. ETH, gALCX, etc.
  • Freezing your ogALK (not allowing it to be transferred but still farmed) will boost your ogALK farming rate. This will allow Alkahest to use the tokens strategically.
    • E.g. if 10% of the ogALK is frozen, then 10% of any profits made over that period can be used at the direction of the DAO or the discretion of the DEV’s (if the DAO hasn’t decided on anything) for the benefit of the protocol.
    • There will also be a one month “thawing” process to allow the devs time to plan ahead as to the amount of tokens needed to be sent to the L2.
  • 10% of the total supply of ALK tokens will be airdropped to ALCX holders (details of the airdrop are not decided yet).
  • ALK will use what we are calling “momentum governance” whereby your total “power” is how many tokens you own multiplied by the average time you’ve held them.
    • This means that for a whale to come in and start controlling the governance process he will have to buy up loads of ALK and then hold them for a very long time to build up enough weighting.
    • This system is also used to determine the weight for the ogALK emissions, which will occur at periodic snapshots.

We believe that this system will be fair and profitable to all, allowing for the maximal amount of innovation to be built atop it, and functionality extended.

Security Concerns:
VE tokenomic systems invite themselves to be built on by other protocols. Most prominently, Convex was built on Curve, and likewise, Aura was built on Balancer. It is possible that such a protocol can be parasitic or even hostile in their usage of governance power. Therefore, investing in a "homegrown" Convex-like platform that is aligned to Alchemix instead of a parasitic, profit-maximized one is a necessary defensive move to help retain the purity of Alchemix governance and not let it become hijacked. This is a strategic investment into the defense of Alchemix’s governance system.

As always, with any smart contract, unexpected bugs or operational mistakes can cause a loss of users’ funds. We have attempted to minimize this with an L1->L2 deployment, effectively “air gapping” the two pieces of code regarding users' funds. The same cannot be said for ALK and ogALK, but that is a risk that exists with all systems.

Funding:
The funding will be used to financially support the devs in building out the system, as an Alchemix-aligned project has been in the works since January but has changed direction multiple times to adapt to the changing market conditions throughout 2022. Closer to launch, there will be a VC funding round to give us the runway we need to push through hard times and also secure funding for an audit.

Voting options:

  • 2k ALCX grant paid now and 2K ALCX paid on the deployment of the protocol
  • 4k ALCX grant paid now
  • No grant at all

Looking ahead:
Our focus is to stay true to the Alchemix protocol and ecosystem. We plan on deploying cross chain solutions that allow for unified liquidity across Mainnet & Optimism. We plan to maintain a close relationship with the Alchemix team and build a symbiotic protocol.

Do Alchemix want to fund this and if so how

I really don't see VC funding as something anyone should aspire to anymore; they have become massive parasites that damage the very projects they invest in.

That said, I'm personally not against a grant for something like this, but given your personal track record of not delivering I'm kinda tempted to go with "nah".

I think it might be helpful to outline who is working on Alkahest and what their credentials are (assuming anon, so crypto / anon persona credentials). Everything else looks fair to me.

    Afroman726 What would you be looking to determine from these? Ie I'm sure an early vision could be shared but could easily change between now and protocol development.

      Looking at this from a risk perspective, I'm concerned that this proposal might be coming out a little bit too soon - or at least the answer might be.
      My main concern is that we are talking about developing on top of something that has not yet been released, so there's a real risk that things will change over time and that work will have to be redone.
      Sure, it's possible to coordinate the development in parallel, but this would still require a lot of overhead to achieve and which almost guarantees substantial burned/duplicated effort, which may just end up in the construction of an awesome white elephant.
      My preference would be to continue to discuss this, and over a period of time nail down the specifics - and then vote on it when more people have a clearer picture of how it will all work.

      Yes, this is a delaying tactic, but is also an opportunity to increase the odds of a yes vote due to people being able to learn more and actually knowing how it'll all work together.

      ov3rkoalafied
      I’m Red House, the Art Goblin of Alkahest, the smoothest brain in the group, and the warm-but-firm glue that helps hold things together. I also have the best grammar of the group (nbd).

      I do drawings with pretty colors, and I focus on the branding, hypnotizing the masses, and the logo design/redesign. All of the grunt work in terms of art, the web design, the dapp design, and the UI are already totally fleshed out and completed.

      Besides doing additional art, editing text, and re-re-re-tweaking the visual designs, I'm going to be here to assist in the people management and communication side of things to help things to run as smoothly as possible.

        From a broad perspective, I do like the idea and proposal. But given the current known unknowns and the unknown unknowns, to paraphrase Mr Rumsfeld, I think I agree with Gorby that this proposal might be a bit premature. But maybe Biddls or someone from the team could lay out what they anticipate the roadmap to be. Maybe there are some things that could be worked on now that wouldn't need to be retooled later, I don't know.

        Also, I like Koala's suggestion regarding who is proposed to work on the team, and what their credentials/bona fides are. And I think that some technical things like how their multisig would be set up, would be helpful as well.

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