Back in May, we shared a general outline for the Alchemix DAO and updated ALCX tokenomics. The positive reception from the community gave us the go-ahead to create a detailed specification around how veALCX will function. We are pleased to report that the specification is done, and that development has progressed into the nitty gritty details.
We have given small updates here and there in discord, but figure that given the progress since the last official update, now is as good a time as any to present the updated (but still work in progress) vision for veALCX and the DAO.
Development is in the final stage, but the audit has not yet begun. At any point during development, audit, or continued systems modelling, new information could emerge that requires something to change.
What’s the same, and what’s changed?
The reasoning for upgrading our tokenomics as described in the general outline still stands — the protocol is maturing, and it is time to focus on delivering utility to the ALCX token beyond pure governance.
Four of the primary features of veALCX have not been changed and are as follows:
- Boosted yield.
- Staking will be in the form of an 80% ALCX / 20% ETH Balancer Liquidity Pool Tokens.
- veALCX stakers will be able to vote on bi-weekly gauges that direct ALCX emissions to various alAsset liquidity pool incentivization methods, as well as approve or deny governance proposals for new gauges.
- Voting on governance proposals will reference veALCX voting power instead of ALCX holdings.
In the original article, it was noted that a Meta-Gauge was planned for bi-weekly votes to direct votes for protocol-owned CRV and CVX. It was determined that these assets should remain in use as-is by the treasury, to create baseline predictable liquidity while the usage of regular gauges scale up. Therefore, Meta-Gauges are currently out of scope for the MVP veALCX launch.
The maximum lock time of ALCX/ETH liquidity tokens for veALCX is still planned to be one year, with a linear voting boost for longer locks. The ability to rage quit still exists, but it has evolved significantly into a separate token system. You can learn more about locking and unlocking, as well as the new token system, in the following section.
Here is another reminder that all information in this article is not final, and is subject to change, as well as being subject to passing required governance votes to launch. Below are details on veALCX locking and unlocking, ALCX yield, boosted yield, veALCX voting, and the MANA token (MANA is a working title, it will need to be renamed by the community!).
veALCX stakers will need to LP on Balancer, in a pool that is 80% ALCX and 20% ETH. 80/20 pools enable liquidity provision where LPers are still primarily exposed to ALCX, and IL is substantially reduced. Note that the 80/20 liquidity pool and veALCX will only be available on Mainnet. The intent would also be to get a Balancer and aura gauge for the ALCX/ETH pool, which would allow the pool to be bribed and allow for the protocol-controlled liquidity to collect BAL and AURA emissions. The DAO will need to determine how to best transition from the current Sushi liquidity pool to the 80/20 Balancer pool, as well as determine if the Sushi pool should be retired.
The maximum lock time is 1 year. Each BPT will represent 1 veALCX in voting power, multiplied by the number of epochs remaining in the lock. Users may lock additional tokens or extend their lock at any time. Locks will decay linearly each epoch from a 26x multiplier to 0 over 1 year. Users may select a perpetual maximum lock, which will indefinitely delay the beginning of the decay and keep the multiplier at 26x until the user indicates they wish to begin the decay.
There will be a one-epoch cooldown period between unlocked tokens and being able to claim them to the user’s wallet. The user will have no voting power and will earn no rewards during this cooldown time. Locked tokens can become eligible for unlocks by burning MANA tokens — see the MANA section below.
veALCX stakers will receive yield in ALCX, similar to gALCX. This ALCX is subject to the same locking terms as their veALCX BPT token — ie, unlocking BPT will also unlock ALCX with no penalty. Alternatively at any time a user may claim their ALCX rewards immediately, but they will need to take a 50% penalty, which will be redistributed to other veALCX lockers. Lastly, they may immediately compound the rewards into their locked veALCX position with no penalty, as long as they bring their own ETH to pair with the ALCX.
For example, after one epoch the user has earned X ALCX. At this time they have 3 options:
- Claim X/2 ALCX immediately. In this case they are forfeiting half of their ALCX-based yield as a penalty for claiming early.
- Compound their veALCX stake. This would require the user contributing 25% of the value of that earned ALCX in ETH, and would internally lock it for ALCX/ETH Balancer Pool Tokens (BPT) and deposit that for additional veALCX, thus compounding their stake.
- They can purchase MANA or use their accrued MANA to fully unlock their veALCX position early, claiming both the underlying BPT and the ALCX that gets unlocked.
Note that veALCX is currently intended to replace gALCX, meaning gALCX APR would be reduced to 0% when veALCX launches.
veALCX stakers will receive a proportional split of a percentage of AMO and Alchemist revenue for each alAsset (for now, alETH and alUSD). This percentage will be determined by governance. Revenue will be applied as credits to user accounts, offsetting debt if the user’s account has any debt, or allowing user to mint alAssets without incurring debt. The credit can be delegated to accounts owned by different addresses than the veALCX position. The DAO will need to determine what share of total revenue is sent to veALCX stakers.
veALCX stakers may vote on governance proposals and bi-weekly emissions gauges with their vote multiplier. Gauges will be a list of governance approved liquidity pools that accept direct ALCX incentives or bribes, where at least one of the assets is an alAsset. Gauges can additionally pay incentives (to the approved liquidity pools) in other tokens, and receive bribes (for veALCX voters that select that gauge) in any token. veALCX voting power only accounts for BPT tokens, not unclaimed ALCX rewards. Cross-chain gauges (for Optimism, for example) will exist in some capacity. An option to bribe veALCX holders to vote on gauge emissions will be built-in.
MANA (Working Name)
The largest change by far is the addition of the MANA token (name is intended to change, suggest something!). MANA brings a new dynamic to gauge voting and unlocking tokens. MANA has the following features:
- Every 1 veALCX of voting power is rewarded a pre-defined amount of MANA per 2 week epoch.
- MANA that has not yet been claimed (ie, minted) by the user may be used to boost their veALCX voting power for gauges only for one epoch. This means a user could boost their voting power to collect more bribes, or to send more rewards to a pool in which the user provides liquidity. There may be a cap on how much they can boost relative to their veALCX power.
- MANA that has been claimed (minted) may be burned to unlock a user’s veALCX BPT tokens early.
- Claimed MANA can ONLY be used for unlocking, NOT gauge voting. Claimed MANA is liquid — this means users who are content with remaining locked may sell their MANA to other users who wish to unlock their veALCX early.
- The emission rate and cost to take various actions with MANA is currently undetermined.
- The DAO may determine if and how it would like to incentivize MANA liquidity.
Ultimately, MANA gives the user the ability to express their priorities within the veALCX system — maybe they want a bigger share of veALCX bribes, or maybe they wish to direct more liquidity to a pool into which they are providing liquidity — they can burn MANA to increase their voting power. Perhaps they wish to have the financial flexibility to unlock their veALCX early — then they can let the staking rewards build up. Alternatively, they may be fiercely loyal and happy to sell their MANA on the market to others that wish to unlock sooner than they otherwise would have been able to; in that sense it becomes additional yield for veALCX lockers. The options are… well not endless, but there are quite a few of them!
These are the specifications for veALCX that have been conceived thus far. Again, all of the specifications are tentative, and as always, we welcome questions, feedback, and suggestions from you, our community!
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