Alchemix Q1 2024 Report summary
This is a summary of the Alchemix Q1 2024 report, which can be found in full in the Alchemix GitBook. This report provides relevant data for Q1 2024, 1st January 2024 to 31st March 2024.
The first quarter of 2024 brought many developments into the crypto space and into the Alchemix world, including the following:
This quarter saw continued progress with Alchemix total deposits increasing, the value of the Alchemix treasury appreciating considerably, and Alchemix generating $2.07 million in revenue. The breakdown of this is shown in the Protocol Revenue section below.
A key development for Alchemix was the launch of its deployment on Arbitrum towards the end of Q1. This strategic move allows Alchemix to tap into the burgeoning Arbitrum ecosystem, known for its faster transaction processing and lower fees compared to the Ethereum Mainnet.
Alchemix maintained a strong commitment to community governance by presenting 6 proposals for the community to vote on. Notably, in February, AIP-108 was passed to authorize the use of $100,000 of treasury ALCX to launch the Alchemix Grants Program through Questbook.
The Alchemistresses grant project was launched. Alchemistresses is an Alchemix grant project that combines NFTs, DeFi, and on-chain governance to create a community-owned treasury. The treasury will farm yield within the Alchemix ecosystem on Optimism.
Alchemix’s commitment to community engagement was on display with its participation in ETHDenver, a leading crypto conference held in February. The event provided a valuable platform for Alchemix to connect with developers, users, and other industry players.
Given the scale and scope of the Curve exploit and the measures taken to protect user and protocol funds, many of the metrics in this quarter are lower than they could have been had the exploit not happened. For more details, the full post-mortem of the exploit of the alETH-ETH Curve pool is here.
This document is not investment advice, nor should anything herein be construed as solicitation to buy or invest. This is solely for informational purposes only. The discussions in this document represent a good-faith effort to effectively summarize the information that is contained in the corresponding Quarterly Report, the disclaimer of which, including, but not limited to, discussion about forward-looking statements, also applies to this document. The numbers that are being provided below, as of 1 April 2024, as well as other information disclosed in this document, are unaudited. In an effort to effectively summarize the data, this document may contain conjectures or guesses that are the authors’ alone, and do not represent any official positions, feelings or statements of the Alchemix protocol itself.
Introduction
Established in February 2021, Alchemix is a DeFi lending protocol that offers Self-Repaying loans without the risk of forced liquidations. Alchemix’s value proposition is that it enables its users to access tokenized value against their deposits, while those deposits harness the power of DeFi to automatically pay down a borrower’s loan balance over time. Conceived as a new tool for people to take advantage of the time value of money, Alchemix is tested and audited and then deployed on-chain using smart contracts to provide security, transparency, immutability, and uncensorable access to all.
Q4 2023 Lookback
Before we dive into the latest updates, the fourth quarter of 2023 brought interesting developments into the Alchemix world, including the following:
- Curve Exploit Recovery: Reimbursement contracts are live to claim for affected users in the Curve exploit.
- Deposit and User Trust: Deposits are recovering and incentives are restarted to encourage liquidity provision on Mainnet pools, and the alETH transmuter is restarted.
- Cross-chain Functionality: Connext bridge is operational, allowing movement of alAssets across networks.
- L2 Expansion: New pools on RAMSES and Velodrome promote L2 liquidity.
- alETH Re-backed: Full collateralization strengthens stability and user confidence.
- Financial Performance: Treasury value grew, and revenue reached $1.57 million despite the Q4 2023 challenges.
- Active Governance: 6 proposals are presented to the community, including those for alETH re-backing and user refunds.
- The full post-mortem of the exploit of the alETH-ETH Curve pool is here.
Q1 2024 TL;DR Metrics
At the end of Q1 2024 alUSD (0.9841) and alETH (0.9098) prices had both decreased compared to the previous quarter. The slight decrease for alETH was due to the ongoing selling pressure following the rebacking of alETH. The value of the Elixir Contents had decreased 34.9% to $48.24M and the value of the Treasury had increased 91% to $18.32M. Global Deposits increased 9.1% to $49.01M.
- The Treasury figures exclude the value of ALCX, the governance token of Alchemix.
- This row only shows v2 metrics, as v1 had been sunset as of October 1st 2022. This row shows the state of the aggregate global deposits.
Q1 2024 Data
alAsset Prices
The main challenge for the protocol is to maintain a strong price for the alAssets.
The Alchemix SubGraph is not fully functional at the time of writing this report, so CoinGecko is being used for the above chart. The purple line (left axis) shows the value of alETH relative to ETH.
The price of alETH normalized after the Curve exploit, but it is still below target levels.
alAsset Utility
The image below shows the tools and protocols used within the Alchemix ecosystem, many of which provide direct use-cases for alAssets.
Specific integrations and partners are discussed in the full report.
ALCX Governance Token
The governance token of the Alchemix protocol is ALCX. It allows users to influence protocol direction by voting on submitted proposals.
As shown on the chart, the initial high token issuance rate decreased in a linear fashion, dropping to the baseline 2200 tokens emitted per week at the 3-year mark, which was in March 2024.
As of April 2024, annual inflation is ~4.7%, very slowly decreasing in perpetuity.
ALCX emissions are used to support the strategic goals of the protocol.
The protocol is still incentivizing single-sided staking, ALCX liquidity, and alAsset liquidity by using ALCX emissions. However, it has begun the transition to using emissions for the purpose of accumulating strategic assets. As at April 1st 2024 the annualized inflation rate of ALCX was 4.71% and the table below shows future emissions.
Alchemix System Components
Three main components work in tandem to provide the functionality for the Alchemix system. These are the Alchemists, Transmuters and the Elixirs (AMOs).
User deposits are held by the Alchemist contracts. The Elixir and Transmuter contracts also hold a significant amount of funds which are responsible for providing a backstop for alAsset redemption. The Transmuters redeem alAssets for their underlying collateral pairs 1:1, but do this slowly, over a longer period of time.
The Elixirs, on the other hand, own a portion of the main alAsset liquidity pools and can take action to ensure that trades in their respective liquidity pools can be fulfilled at a reasonable level which is determined by governance. The Elixirs also provide a large portion of protocol revenue by farming the liquidity pool tokens.
Excess funds are being deployed in the Transmuters or in the Elixirs to provide price stability and to earn additional protocol revenue.
Elixir Contents
In Q4 2023, the Elixirs contained $74.09M in USD equivalents. At the close of Q1 2024 USD equivalents had decreased to $48.24M.
This quarter the Elixirs shrank by $25.85M (-34.9%) as a result of the alETH Elixir being contracted to encourage an improved alETH price after the Curve exploit.
Treasury
A Treasury dashboard that highlights revenues and expenses, as well as assets and liabilities, can be found at https://alchemix-stats.com.
As a result of the improving market conditions there was an increase in the value of treasury assets.
At the end of Q4 2023 the treasury assets were valued at $9.59M and composed of stablecoin assets valued at $0.85M and $8.74M of other assets. By the end of Q1 2024 the treasury assets were valued at $18.32M and composed of stablecoin assets valued at $1.46M and $16.86M of other assets, which represents a 91% increase for the quarter. The above numbers reflect non-ALCX holdings.
Protocol Revenue
The following shows protocol revenue for Q1 2024. The revenue is denominated in the USD value of the tokens earned at the time that the tokens were claimed. Included is revenue earned by the protocol’s four Elixirs (alUSD-FRAXBP, alETH-frxETH, Optimism Elixir, Arbitrum Elixir), the Mainnet Developer Multisig, the Optimism Multisig, and revenue earned from harvest fees on Mainnet and Optimism, a Velodrome veNFT on Optimism, a RAMSES veNFT on Arbitrum and an Aerodrome veNFT on Base. This report does not yet include revenue that may be earned from other sources of income owned by the treasury’s time-lock address. Those revenues are planned to be included in future reports. This report also does not include tokens whose total revenue was less than $1,000 for the quarter.
Deposits and User Metrics v2
This section provides numbers for user activity in the protocol’s v2 contracts. All data is for Q1 of 2024.
Net Deposits at Quarter End
At the end of Q4 2023 net deposits consisted of Mainnet stablecoins $6.2M, Mainnet ETH $38.45M, and Optimism deposits of $0.28M.
Q1 2024 net deposits consisted of Mainnet stablecoins $5.41M, Mainnet ETH $42.38M, and Optimism deposits of $1.22M.
At the end of Q1 2024, net deposits on Alchemix were $49.01M, an increase of 9.1% on the previous quarter.
Governance
The following are Governance proposals that were voted on in Q1 2024:
- AIP-104 was passed to authorize Alchemix to update Optimism vault boost allocations.
- AIP-105 was passed to authorize a deposit of $150,000 of treasury ALCX into the Spark protocol.
- AIP-106 was passed to make a seed investment of $50,000 in Blueprint.
- AIP-107 was passed to make a treasury investment of $50,000 in Blueberry.
- AIP-108 was passed to authorize Alchemix to spend a maximum of $100,000 of treasury ALCX for the Alchemix grants program.
- AIP-109 was passed to allow Alchemix to enter market-making agreements for the ALCX token.
