Alchemix Finance

Out of the approximately 19,000 ETH deposited in Alchemix, around 15,000 is allocated in Yearn yvWETH. While we acknowledge Yearn’s security and value, their yields are outperformed by LSD tokens, which generate over twice the returns of yvWETH. The current yvWETH cap is 17,000 and stETH is 3,000; however, given the existing borrowing levels, the alETH price remains below target. Increasing caps would only aggravate this issue.

Taking community feedback into account, many yvWETH holders express interest in depositing into the stETH vault. To facilitate a win-win scenario enabling current depositors to migrate without impacting the alETH price, we propose the following strategy. With the upcoming Shanghai hardfork, we anticipate that LSD pegs should maintain a 1:1 ratio going forward due to the free arbitrage opportunities for any price fluctuations below the price of ETH. Consequently, transitioning the majority of our vault capacity to ETH2 tokens is now a prudent and secure decision.

Each week, the team will issue a 24-hour notice before raising the caps. Initially, this information will be exclusively shared on Discord to give priority to community members’ migration opportunities. At the specified time, we will increase the caps by 1,200 ETH in total for the three LSDs available in Alchemix (wstETH, rETH, and frxETH). Based on user preferences, we will adjust the vault cap increases accordingly, resulting in a total increase of 1,200 ETH for each session. The operational team will maintain frequent communication with the community via Discord to coordinate this effort. Vault increases for cap raises will occur sporadically, aligning with the best times for interested participants. This proposal authorizes the migration up to a maximum ETH vault increase of an additional 10,000 ETH2 tokens, while simultaneously reducing the yvWETH deposit cap in accordance with the migrations.

To keep the team informed, we kindly ask users to complete an anonymous and private form, indicating the amount of yvWETH they wish to migrate, their preferred ETH2 token, and a convenient time for coordination. Greater participation in this form submission will enable more effective collective decision-making.

FORM: https://forms.gle/nF4epQPsopS4j4Pg7

A vote “for” authorizes this plan for up to an eventual 10,000 ETH2 vault cap increase. A vote “against” rejects this plan.