In the past, raw TVL has been the primary metric for evaluating and comparing defi protocols. However, because much of the TVL in defi currently is incentivized by token inflation rewards, this metric gives a poor view of fundamental value. Recently we've seen a move towards metrics that portray "real" protocol use cases and protocol revenue, where possible.
For Alchemix, the primary proposed use-case is stable coin 'loans that pay themselves'. I've embedded live charts, courtesy of Flipside Crypto to evaluate the growth of this use case over time.
This shows the number of first time wallet interactions with the contract recorded on the network each day. In my view, this is the best metric we have for organic growth, since most people learn about new products and services from word-of-mouth.
While quite similar to unique wallet interactions for now, expect these metrics to diverge over time with daily deposit events outpacing first time users, as the protocol gradually accrues repeat users.
The Alchemix treasury receives a 10% cut of yield produced by user funds locked in the Yearn v2 DAI Vault each day
A high resolution breakdown of the sizes of loans in alUSD.
Alchemix has major dependencies on four popular defi protocols: MakerDAO, Yearn Finance, Curve, and SushiSwap. Barring attacks on these protocols, I identify the main systemic risk within Alchemix to be the stability of the alUSD:Dai peg, as well as the Dai:USD peg itself.
Of the above protocols, MakerDAO is the oldest and has already survived a catastrophe following the March 12th 2020 liquidation cascade. Due to the rapidly falling price of ETH, demand for Dai to pay back loans in Maker was so high that Dai was temporarily worth $1.12.
Were this to happen again today, so long as the Dai balance in the transmuter is large enough, alUSD could be transmuted to Dai 1:1 and then sold on crv.to at $1.12. In the case that Dai price moves above $1, there need only be enough Dai in the transmuter and liquidity in the alUSD-3CRV pool on Curve to account for the outstanding alUSD supply. The same applies if alUSD falls below $1, but in reverse.
We can evaluate the safety of the peg from these numbers with
(3CRV liquidity + Transmuter DAI) / Total alUSD Supply
If this function falls below 1, the peg is at serious risk. In that scenario, the transmuter backstop has dwindled, liquidity has dried up, or both. At time of writing, the ratio is a healthy 1.54.
For a strong peg, we also want to see these two lines track each other closely, so that large transactions don't suffer from slippage.
For the foreseeable future, alUSD-3CRV LPs will remain heavily incentivized by inflation rewards of both CRV and ALCX. It remains to be seen whether a downturn in prices will depress yields enough for LPs to look for alternatives.
With regards to the Transmuter, The balance of Dai there is built over time by taking a protocol fee from yields. As time goes on, the capacity of the backstop will continue to grow. Query by 0xdef1.
As of v1.1, some of the Transmuter dai balance is flipped back into yearn vaults to produce higher yields, faster loan repayments, and build a larger transmuter balance. It's not clear at this time whether the rate at which alUSD can be converted to Dai in the Transmuter is affected by these changes, but I believe the developers are aware of that risk, as they've added a "Force Transmute" function to quickly pull DAI that was overallocated to other longer term alUSD stakers in the transmuter contract.
Great data driven overview of alcx from @0xdef1 dyor.fi/alcx
On Dai peg stability in MakerDAO during march 12th liquidation cascade On Dai peg stability in MakerDAO during March 12th liquidation cascade
0xc21D353FF4ee73C572425697f4F5aaD2109fe35b loans contract (alchemist)
0xf3cFfaEEa177Db444b68FB6f033d4a82f6D8C82d transmuterv1.1
0x8392F6669292fA56123F71949B52d883aE57e225 multisig/protocol wallet/deployer address
0xAB8e74017a8Cc7c15FFcCd726603790d26d7DeCa staking pools for alcx farming
0x43b4FdFD4Ff969587185cDB6f0BD875c5Fc83f8c alUSD-3crv liquidity pool
0x6b175474e89094c44da98b954eedeac495271d0f dai token contract
0xbc6da0fe9ad5f3b0d58160288917aa56653660e9 alUSD token contract
0x6c3F90f043a72FA612cbac8115EE7e52BDe6E490 3crv token contract
0xBd2274e8640764a57595C7adf2f91E4eaFDa60e6 Wallet for transitioning from transmuter a to b I guess
0xf872703F1C8f93fA186869Bac83BAC5A0c87C3c8 Another mystery wallet that received 3mm aDai from the above before sending to treasury. most generous explanation is that this is the dev wallet using their own protocol.
0xec70538bEac744eec5eDec4b329205a4b29Ba8AE sent $3.5m in alcx from suspected 'dev wallet'
0xb1cFF81b9305166ff1EFc49A129ad2AfCd7BCf19 YEARN VAULT
0x51e029a5Ef288Fb87C5e8Dd46895c353ad9AaAeC Alchemix deployer