What Is Alchemix (ALCX)?

Alchemix (ALCX) is a DeFi-based platform that lets users create synthetic assets or collateral-backed tokens to pay back debt. The Alchemix platform states that it offers the user the ability to spend and reserve simultaneously with a self-repaying mechanism for debts. Simply put, the protocol aims to give users an option to get an advance on a future yield instantly. 

According to the platform, users of Alchemix offer their tokens as collateral to the platform. Using the collateral, users take out loans or advances for up to 50% of the amount deposited. Meanwhile, Alchemix puts users’ deposits to Yearn vaults (a yield aggregator) and earns returns on it. These returns from the yield aggregator automatically pay off users’ debt. This way, Alchemix aims to enable users to take an advance out of future earnings that also gets repaid automatically from the returns generated on the yield aggregator.

Primarily, yield aggregators are products of the DeFi space that function by depositing users’ tokens in a vault contract. After that, the vault issues users an ERC20 token that reflects their portion of the combined tokens in the vault. The tokens are then allocated to a strategy that attempts to generate a return using the deposited tokens. Similar to various lending platforms, Alchemix aims to offer a component called a “vault,” which acts as a hub to generate yield advances. In Alchemix, this vault essentially manages the yield positions for users.

Accordingly, the Alchemix platform aims for stablecoins for their initial synthetic token, alUSD, wherein “al” signifies the Alchemix platform. Currently, the Alchemix protocol seeks to offer only the DAI stablecoin to let users mint alUSD. Subsequently, users deposit DAI into the vault and borrow up to 50% of alUSD. Further, Alchemix deposits the collateral DAI into a Yearn vault that generates yield. Finally, this yield repays the users’ debt in Alchemix’s system.

Thereby, Alchemix seeks to provide users with a flexible line of credit for their potential earnings through this mechanism. Additionally, the protocol also aims to safeguard users from committing to extensive fund lockup by providing an easy entry and exit option.

The protocol’s official ticker is ALCX, the token that grants governance rights to Alchemix DAO. The decentralized autonomous organization (DAO) of Alchemix aims to earn from the Alchemix protocol, with a percentage of the revenue going to the treasury. Holders of ALCX tokens have governance rights over the protocol’s direction and usage of the treasury to aid it to evolve into a fully functional DAO. Besides, the holders also use governance voting to express their preference for protocol upgrades.

History of Alchemix (ALCX)

The Alchemix team launched the whitepaper of Alchemix on March 6, 2021. The whitepaper introduces the synthetic tokens that are backed by future yield and explains the functioning of the protocol.

How Are New ALCX Tokens Created?

The Alchemix protocols aim to let users earn ALCX tokens by staking through various yield farming pools.Consequently, the platform seeks to offer four incentivized pools for the users. Firstly, the alUSD pool aims to provide the users with ALCX tokens by staking the alUSD. This pool seeks to incentivize the creation of the synthetic token of the protocol alUSD and to give users a simple entry to the protocol. Secondly, the protocol seeks to offer a Curve protocol–based yield farming pool to aid Alchemix in maximizing its utility in DeFi.

The third pool offers Sushiswap tokens that aim to aid ALCX tokens with liquidity. Finally, the fourth pool is solely for ALCX staking and aims to provide ALCX holders the ability to accumulate more by holding. 

As Alchemix introduces more “al-tokens” to encourage liquidity, the protocol intends to add more equivalent pools to the farming system. 

How to Buy ALCX Tokens

When it comes to buying Achemix (ALCX), you have a lot of options, including Coinbase's centralized exchange. You can securely buy, sell, and manage hundreds of cryptocurrencies anywhere Coinbase is available.