Alchemix — Use Cases
Alchemix opens up a host of financial options for its users. Take a look below to see what it has to offer.
Example uses/applications of alUSD:
- Personal Usage
Things come up in life and unexpected expenses are incurred. Typical options are paying for this on credit (decentralised or centralised), or just paying out of pocket. With Alchemix, it provides another avenue to manage finances. Instead of sacrificing your capital or going into debt and paying interest, it is now possible to get a yield advance to take care of the unexpected. The advance can be used for anything though, so spend it however you like.
- Personal Finance
Using interest and dividends as a source of income enables people to live off of the money their money makes. The problem is that these payments are typically quarterly, or stream in continually. Alchemix provides the ability to get your future yield now, which can help with planning an annual budget.
- Increase an individual’s capital available for investments
Investors often have a difficult decision to make when allocating their capital. They may be interested in 3 tokens, but can only sufficiently invest in two of them. Using Alchemix, it is possible to get an advance on your yield so you can deploy that capital for investing now. This is especially true for investors who are already hedged with stable coins. Alchemix enables the maintenance of a hedged position while being able to speculate on other tokens without fear of being liquidated. When applied to a large investor, this unlocks capital to make major investments for developing opportunities.
- Making money via DeFi
Alchemix will incentivise an alUSD/DAI pair by returning ALCX farming rewards. Even if this were not the case however, it may be a profitable strategy to pool in AMMs to make money via fees. Because of the flexible settlement system in Alchemix, where it treats base tokens and alX tokens equally, it is a relatively safe position and minor deviances in the peg will have little effect on profit. Through the brilliance of Alchemix impermanent loss becomes truly impermanent. In the scenario where the value of alUSD decreases significantly, alUSD can simply be converted back into DAI 1:1 in the transmutation pool over time.
- Hedging positions
When the platform has expanded its offerings beyond stable coins, for example, an alETH token, it will be possible to hedge that position by trading alETH for a stable coin position. The yield advance can lower aggregate portfolio risk, and provide fresh capital to “buy the dip” if an enticing opportunity arises.