Alchemix

Alchemix is a decentralized finance (DeFi) protocol operating on the Ethereum network that introduces a novel financial primitive: self-repaying loans. Founded in 2020 and launched in February 2021 by a team of pseudonymous developers led by Scoopy Trooples, the platform allows users to take out loans that automatically pay themselves off over time. The initial concept was sparked during the "DeFi Summer," with the founders aiming to create a mechanism for accessing future yield in advance.

The core of Alchemix's business model revolves around its "Vaults." Users deposit collateral, such as stablecoins (DAI, USDC, USDT) or Ether (ETH), into these vaults. The platform then puts this collateral to work in established yield-generating protocols like Yearn Finance to earn interest. Instead of the user receiving this yield directly, Alchemix uses it to gradually pay down the user's loan balance. This structure enables users to borrow synthetic assets, like alUSD (pegged to USD stablecoins) or alETH (pegged to ETH), up to 50% of their collateral's value, without facing liquidation risk from price volatility. Revenue for the protocol is generated by taking a 10% fee from the yield harvested, which is directed to the Alchemix DAO treasury to fund development and operations.

Clients are primarily DeFi users who want to unlock liquidity from their assets without selling them or risking liquidation. The protocol serves those looking for capital efficiency, allowing them to spend against their assets while the full principal continues to earn yield. The key products are its synthetic assets, alUSD and alETH, and the underlying smart contract infrastructure, which includes the Vaults and the "Transmuter." The Transmuter is a mechanism that helps maintain the peg of the synthetic assets by allowing users to stake their al-assets and convert them back to the underlying collateral (e.g., alUSD to DAI) as yield flows into the system. In March 2021, the protocol raised $3.1 million in a seed round from investors including Spartan Partners and Delphi Ventures, and another round in March 2021 brought in $4.9 million from firms like Alameda Research and CMS.

Keywords: decentralized finance, DeFi, self-repaying loans, crypto loans, yield farming, synthetic assets, Ethereum, Yearn Finance, non-liquidating loans, ALCX, alUSD, alETH, Scoopy Trooples, collateralized debt position, DAO, liquidity providing, smart contracts, stablecoins, asset management, capital efficiency