I just executed another long-term DeFi protocol investment: >10,000 $ALCX (1.1% of all circulating @AlchemixFi supply). This is already one of the most brilliant-ever DeFi protocols and it is now poised to release Alchemix v2, which I believe will be huge. A 🧵 with my thesis: 1/
Alchemix' core product is a self-repaying, no-liquidation loan. Users deposit their asset (currently $DAI or $ETH) into an Alchemix vault. In turn, those funds are deposited into the respective @iearnfinance yield-bearing vaults. 2/
Then, the user can borrow synthetic assets against their _future_ yields, up to 50% $alUSD against their DAI deposit and 25% $alETH against their ETH deposit. 3/
The borrowed alUSD or alETH can be repaid at anytime (as the original position earns yield, less & less needs to be repaid, over time; or more can be borrowed!) or the user can simply let the loan pay itself off, to the withdraw the original capital. 4/
This creates some _great_ opportunities. 1. Farm the borrowed alUSD or alETH directly for good yield. 2. Swap alUSD to another stablecoin or alETH to ETH for different (perhaps greater) yield opportunities. 3. Take a high-risk (and yet risk-free!) position. Let me explain: 5/
Say you want to take a managed gamble on something that could 100x or go to 0. Then: Deposit ETH, borrow alETH, swap back to ETH, and invest away. If your position moons, awesome - payback and/or rinse & repeat. If not, at worst you just have to wait to withdraw your capital. 6/
Users can also hold their long-term conviction positions but borrow against them for real-life purchases. i.e. Deposit ETH, withdraw alETH, trade to USDC/USDT, exit to fiat to buy a house/car. 7/
I and many others have previously invested in $ALCX on the basis of this brilliance, only to later exit, due to several issues. I'm calling the bottom & coming home, as those issues are either being addressed or are on the cusp of being addressed. I'll explain. 8/
One issue has been the over-aggressive $ALCX emissions schedule. Yet various solutions have come online to help protocols efficiently manage their emissions & liquidity (@OlympusDAO, @TokenReactor, @VotiumProtocol); @AlchemixFi has taken advantage & is now better positioned. 9/
Two, the two initial deposit types (DAI and ETH) have unfortunately become among two of the lowest-yielding yearn vault options, making some uses cases less attractive for degen users. However, this will soon be explosively addressed by Alchemix v2: https://t.co/ka0VBltUYk 10/
alchemixfi.medium.com/?p=f569ae958623
In addition to $BTC & $alBTC, users will be able to deposit a wide diversity of stablecoin assets for withdrawing $alUSD, many with considerably higher yield than DAI (and, thus, shorter self-payoff timelines). 11/
Use among current DeFi users is certainly (IMO) set to see major growth (and greater Alchemix protocol income). In addition, I see external consumer-facing protocols building on top of Alchemix (see the Medium article above!), making this attractive product widely available. 12/
My buy today is front-running v2, which I think is likely to be released in January. Then, not too long after (the team is targeting a February audit window for code delivery) a structure for protocol income going directly to $ALCX stakers will be released. 13/
These are two _huge_ catalysts for an already-brilliant (but price depressed, creating opportunity -- the MarketCap is only $200 million!) protocol. I'm back in, hopefully now for good. 14/
p.s. You can deposit your $ALCX to @TokenReactor for $tALCX and stake the $tALCX to @AlchemixFi for currently 80% APR (so your $ALCX is productive in the meantime!, and this helps the protocol accumulate $TOKE for liquidity management benefits). 15/15
