Alchemix Q2 2024 Report summary

8 min readOct 8, 2024

This is a summary of the Alchemix Q2 2024 report, which can be found in full in the Alchemix GitBook. This report provides relevant data for Q2 2024, 1st April 2024 to 1st July 2024.

The second quarter of 2024 brought many developments into the crypto space and into the Alchemix world, including the following:

Alchemix’s financial performance for the quarter was positive, with revenue reaching approximately $2.37 million, which represents a notable increase from the previous quarter’s $2.07 million. The breakdown of this is shown in the Protocol Revenue section below. Additionally, the protocol had growth in deposits, indicating growing user confidence and adoption, and the breakdown of this is shown in the Deposit Metrics section below.

Due to market volatility Alchemix treasury asset values decreased this quarter.

As a result of the Sonne exploit, Alchemix’s Yearn vaults on Optimism (yvWETH, yvDai, yvUSDC) experienced a loss and withdrawals were paused, then restarted.

Vaults on Alchemix are benefiting from increased yield due to the bonus incentives offered by the Optimism and Arbitrum networks. These additional rewards enhance the speed of loans repaying themselves.

The Layer3 Optimism quest has successfully attracted thousands of new users to the Alchemix platform. This initiative has been effective in expanding Alchemix’s user base and increasing brand awareness within the DeFi ecosystem.

To ensure the continued growth of Alchemix six new part-time and full-time Alchemix contributors have been hired: 1 in marketing, 1 in business development, and 4 developers.

Layer 2 alAssets have transitioned to the xERC20 standard. This standard gives greater security compared to traditional cross-chain bridges, improves the liquidity of bridged tokens, and allows Alchemix to have greater control over L2 alAssets.

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 July 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.

Q1 2024 Lookback

Before we dive into the latest updates, the first quarter of 2024 brought interesting developments into the Alchemix world, including the following:

Alchemix Growth: Total deposits increased, treasury value appreciated, and $2.07 million in revenue was generated.
Arbitrum Expansion: Alchemix launched on Arbitrum, expanding its reach and potential.
Community Governance: 6 proposals were presented and voted on, including the Alchemix Grants Program.
Alchemistresses Grant: A new grant project focused on NFTs, DeFi, and community-owned treasury
Community Engagement: Alchemix participated in ETHDenver to connect with the crypto community.
The full post-mortem of the exploit of the alETH-ETH Curve pool is here.

Q2 2024 TL;DR Metrics

At the end of Q2 2024 alUSD (0.9660) and alETH (0.8970) 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 22.7% to $37.28M and the value of the Treasury had decreased 33.9% to $12.11M. Global Deposits increased 6.7% to $52.29M.

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.

Q2 2024 Data

alAsset Prices

The main challenge for the protocol is to maintain a strong price for the alAssets.

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.

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.

The annualized inflation rate of ALCX is shown below and is very slowly decreasing in perpetuity:

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 Q1 2024, the Elixirs contained $48.24M in USD equivalents. At the close of Q2 2024 USD equivalents had decreased to $37.28M.

This quarter the Elixirs shrank by $10.96M (-22.7%), largely as a result of the Curve alUSD-3CRV Elixir being discontinued.

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 deteriorating market conditions there was a decrease in the value of treasury assets.

At 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. By the end of Q2 2024 the treasury assets were valued at $12.11M and composed of stablecoin assets valued at $1.54M and $10.57M of other assets, which represents a 33.9% decrease for the quarter. The above numbers reflect non-ALCX holdings.

Protocol Revenue

The following shows protocol revenue for Q2 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 six Elixir pools (alUSD-FRAXBP, alETH-frxETH, Optimism Elixirs, Arbitrum Elixirs), the Mainnet Developer Multisig, the Optimism Multisig, and revenue earned from harvest fees on Mainnet, Optimism, Arbitrum, 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.