Our multi-chain strategy
Alchemix is continuing to diversify across multiple chains as they become feasible. There are many factors that contribute to our expansion plans, including the integrity of our product and security of our alAssets. Managing the protocol across multiple chains should be as consistent as possible. One way to maximize the security of our product is to deploy to other EVM chains. The Alchemix contract is complex; we believe it is more efficient to utilize our developer resources to extend our vaults and alAsset portfolio amongst EVM chains than to rewrite the core product in different languages.
Since Alchemix is reliant on other secure DeFi building blocks, it is imperative that the target side-chain or layer 2 has a sufficiently robust DeFi ecosystem.
It is the opinion of the Alchemix team and voting community members that the breadth of the Optimism ecosystem has demonstrated itself to be of sufficient size, scope, and security to support Alchemix’s multi-chain goals. According to Defillama.com, Optimism DeFi has a combined 900m TVL, placing it among the top 10 in the multi-chain space. That total addressable market is substantial and can become a new source of growth for Alchemix.
What will it look like?
Many of the parameters of the Optimism deployment will mirror the mainnet deployment. The LTV for borrowing alUSD on Optimism will be the same as it is on mainnet, 50%, meaning a $1000 deposit allows for a $500 alUSD loan.
Out of an abundance of caution, we will have very limited deposit caps for our Optimism launch, 100k each for DAI, USDC, and USDT, and 100 ETH. Once the system has been up and running for at least one week, the DAO multisig will increase the caps to $5m per stablecoin collateral and 5k ETH.
DAI = $5m (after ~1 week of 100k, at multisig discretion)
USD = $5m (after ~1 week of 100k, at multisig discretion)
USDT = $5m (after ~1 week of 100k, at multisig discretion)
ETH = 3k ETH (after ~1 week of 100, at multisig direction)
Emissions and incentives
On the popular Optimism AMM, Velodrome, users can provide liquidity in the alETH/WETH pool, as well as the alUSD/USDC pool. Alchemix DAO is a stakeholder in Velodrome, possessing one of their veNFTs. This enables us to vote and provide VELO token rewards for our liquidity providers.
Once you have acquired alETH or alUSD, you can provide liquidity in its respective pool on Velodrome. As you can see in the image above, Velodrome requires users to add liquidity in proportion to the current pool balance, so single-side deposits are not possible. If you only have alUSD or USDC (or alETH or WETH) and want to LP in these pools, you will have to sell enough of one of the assets to supply the pool with liquidity.
How do alAssets work cross-chain?
When, for example, alUSD is bridged to Optimism, the alUSD on mainnet is stored as bridge liquidity. Then, bridge-specific alUSD is minted on Optimism. Approved bridges can burn the bridge specific alUSD to mint the canonical alUSD (i.e., the alUSD that the protocol accepts), so that all users are operating with the same alUSD. This two-step process will be abstracted away from the user in the UI. Note that to bridge alUSD back to Ethereum mainnet, liquidity to bridge back is required. However, users are able to mint/burn between other chains without liquidity required.
For more information about bridging assets, see our guide here — https://alchemix-finance.gitbook.io/user-docs/guides/bridging-assets-to-other-chains
How is governance affected?
Governance will not be affected; it will remain on the Ethereum mainnet. Note that there will not be any extension of governance into side chains or layer 2s as we roll out our multi-chain strategy. Multi-chain governance is a feature we may implement in the future.
Adding the Optimism network to your wallet (in this case MetaMask):
The Alchemix website will automatically add the connection to the Optimism blockchain when you select Optimism from the dropdown in the wallet widget.
Once you’ve selected Optimism, MetaMask will ask you for permission to add the network. Once you approve the new network, you will be able to switch between Optimism and any other networks you have added.
You can also add networks to your wallet using https://chainlist.org/
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