This proposal would create an alETH/ETH pool and add it to the Curve UI.
Alchemix is a CDP platform that allows users to borrow soft-pegged synthetic assets of their collateral, with their collateral deployed to Yearn to earn yield and use that yield to repay borrowers’ debt and to peg the synthetic. Alchemix alUSD has been very successful thus far, holding its peg well while providing deep liquidity, and being one of the top pools on curve.fi.
How alETH works:
-Users deposit ETH
-Users mint alETH with a 400% LTV ratio (subject to change via governance)
-User can sell alETH for ETH, LP, leverage their position, or deposit in the Transmuter to exchange for ETH.
-Users’ ETH is deposited into the Yearn yvWETH vault
-Alchemix regularly harvests the yvWETH tokens for their earned yield, which repays debt and sends ETH to the transmuter, which helps to stabilize the peg
-ETH in the transmuter is also deposited in Yearn, and the extra yield earned from it boosts users’ yield for debt repayment.
Alchemix was set to get alETH on curve.fi until we had our reverse-rug incident which lead to the erroneous repayment of users’ debt. We have since then redeployed alETH, restored its solvency, and have vigilantly monitored it for anomalies. We are now confident it is operating properly and put in safeguards to prevent a similar event from happening again. Therefore, we think alETH is now ready to have a pool on the premier DEX for soft-pegged assets, Curve.
Getting on Curve would be beneficial for both Alchemix and Curve. The Alchemix team will lobby Alchemix DAO governance for LP rewards with ALCX. This will bring TVL and volume to Curve, benefiting veCRV stakers. When alETH was first launched, it was intended to be with the 0.3.2 yvWETH vault, but Yearn has since upgraded it to 0.4.2. One big difference here is that while the 0.3.2 vault relied more heavily on CRV rewards from Yearn, the 0.4.2 vault only allocates 11% of its TVL to Curve-based strategies. So the concern regarding al-Tokens double-dipping CRV rewards is severely lessened by these structural changes. See the allocations for the vault here: YearnWatch
This proposal to make an alETH/ETH pool on curve.fi is strictly limited to getting our pool created and listed on curve.fi and will not include having a gauge made for alETH. Should the amount of double-dipping of CRV rewards stay in the current state with minimal utilization of Curve by the yvWETH vault, we will consider making a proposal for a gauge at a later time.
-additional TVL and trading fees from the pool
-will be bootstrapped with ALCX rewards (assuming ALCX governance passes it)
-a small portion of the yield we earn comes from Yearn selling CRV