Alchemix Q3 2024 Report summary
This is a summary of the Alchemix Q3 2024 Report, which can be found in full in the Alchemix GitBook. This report provides relevant data for Q3 2024, 1st July 2024 to 1st October 2024.
The third 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 saw mixed results. While the protocol experienced improvement in both alUSD and alETH prices, and treasury value, it also witnessed a decline in global deposits, Elixir contents, and protocol revenue. These trends can be attributed to continued market volatility and operations to maintain the performance of the Alchemix protocol.
Despite the overall decline in deposits, Optimism and Arbitrum had deposit growth of 20% and 112% respectively.
The Alchemix website has been upgraded, resulting in dramatic improvements in responsiveness and user experience.
In a significant governance change, AIP-113 was passed, introducing a transfer of responsibilities and assets from the Alchemix DAO to a new Swiss legal entity, the Alchemix Association.
The Layer3 Arbitrum Quest has successfully concluded and played an important part in the 112% growth of Arbitrum deposits this quarter.
The Alchemix User Docs have been refreshed and redesigned using an Alchemix Grant.
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 October 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, audited and then deployed on-chain using smart contracts to provide security, transparency, immutability, and uncensorable access to all.
Q2 2024 Lookback
Before we dive into the latest updates, the second quarter of 2024 brought interesting developments into the Alchemix world, including the following:
- Alchemix Growth: Total deposits increased, and $2.37 million in revenue was generated.
- Sonne Exploit: Resulted in losses for Yearn vaults on Optimism, leading to a temporary pause on withdrawals.
- Vault Performance: Benefited from increased yields due to bonus incentives from Optimism and Arbitrum.
- Layer3 Optimism Quest: Successfully attracted thousands of new users, expanding the user base and brand awareness.
- Team Expansion: Hired six new team members to support growth and development.
- Layer 2 alAssets: Transitioned to the xERC20 standard for enhanced security, liquidity, and control.
Q3 2024 TL;DR Metrics
At the end of Q3 2024 alUSD (0.992) and alETH (0.9263) prices had both increased compared to the previous quarter. The value of the Treasury had increased 3.6% to $12.55M, Global Deposits decreased 12.6% to $45.71M, and the value of the Elixir Contents had decreased 43.5% to $21.05M.
- The Treasury figures exclude the value of ALCX, the governance token of Alchemix.
Q3 2024 Data
alAsset Prices
The main challenge for the protocol is to maintain a strong price for the alAssets.
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 Q2 2024, the Elixirs contained $37.28M in USD equivalents. At the close of Q3 2024 USD equivalents had decreased to $21.05M.
This quarter the Elixirs shrank by $16.23M (-43.5%), largely as a result of the price of ETH decreasing, and the Curve alUSD-FRAXBP Elixir having to contract.
Treasury
A Treasury dashboard that highlights revenues and expenses, as well as assets and liabilities, can be found at https://alchemix-stats.com.
In 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. By the end of Q3 2024 the treasury assets were valued at $12.55M and composed of stablecoin assets valued at $1.63M and $10.92M of other assets, which represents a 3.6% increase for the quarter. The above numbers reflect non-ALCX holdings.
Protocol Revenue
The following shows protocol revenue for Q3 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 eight Elixir pools (alUSD-FRAXBP, alETH-frxETH, Optimism Elixir, Arbitrum Elixir), 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.
Deposit Metrics
This section provides numbers for user activity in the protocol’s contracts. All data is for Q3 of 2024.
Net Deposits at Quarter End
At the end of Q2 2024 net deposits consisted of Mainnet stablecoins $5.25M, Mainnet ETH $43.41M, Optimism deposits of $2.94M and Arbitrum deposits of $0.69M.
Q3 2024 net deposits consisted of Mainnet stablecoins $3.96M, Mainnet ETH $36.77M, Optimism deposits of $3.52M and Arbitrum deposits of $1.46M.
At the end of Q3 2024, net deposits on Alchemix were $45.71M, a decrease of 12.6% on the previous quarter.
Governance
The following are Governance proposals that were voted on in Q3 2024:
- AIP-111 was passed to authorize a comprehensive sustainability framework for Alchemix, including adequate funding for the treasury, managing ALCX emissions effectively, and defining priorities for revenue allocation.
- AIP-112 was passed to authorize the continuation of the Alchemix grants program for a maximum of $200k of ALCX per year unless amended by a future governance proposal.
- AIP-113 was passed to approve a transfer of responsibilities and assets from the Alchemix DAO to a new Swiss legal entity, the Alchemix Association.