Alchemix Finance

This is a proposal following up the passing of “[RFC] A deeper collaboration with Frax Finance”. Specifics about the size of the alUSDFRAXBP AMO were left out of the poll. This proposal presents five different choices for Alchemix DAO governance to decide.

See the linked forum discussion for the full rationale and discussion.

Choice 1: No alUSDFRAXBP AMO

Choice 2: Continue current AMO setup, but allocate the 11.6M DAI reserve to alUSDFRAXBP

This is certainly the most conservative choice in a sense. The DAI in reserve would be converted to alUSDFRAXBP tokens, which would make the AMO the largest LP in the pool. It would deepen the markets and increase the amount of support from FRAX, but it still would be about 1/5 the size of the alUSD3CRV AMO, and a larger more liquid complement to the main pool. The Votium budget would be split 80% to alUSD3CRV and 20% to alUSDFRAXBP

Choice 3: Split the AMO’s 50/50 in size.

This is the clear middle ground choice. Each liquidity pool has its own advantages and disadvantages, based on the stable coins you prefer between them. The 11.5M DAI reserve will also be split evenly between both AMOs. This would be respectful of the users who prefer interacting or LPing with DAI and USDT vs FRAX while also increasing the earnings ratio of the AMOs. The current Votium budget would be split between the two pools evenly.

Choice 4: Make alUSDFRAXBP the primary AMO.

This is the Fraximalist choice. 80% of both the 46.9M alUSD3CRV and 11.5M DAI will be allocated to the alUSDFRAXBP AMO, along with 80% of the Votium incentive budget. This choice would still leave a sizable 11.6M alUSD3CRV AMO and adequate support from incentives for liquid markets. The resulting alUSDFRAXBP AMO would control 46.72M of the pool’s liquidity, likely resulting in making alUSD liquidity incentivisation a net gain for the DAO.

Choice 5: Fraxchemical alUSD

Same as Choice 3, but 100% in alUSDFRAXBP and allowing the alUSD3CRV pool to be deprecated. This would be the most aggressive option of the three, resulting in the largest AMO gains. However, if users want to swap to DAI or USDT, they will face higher fees as the trade will need to be routed via USDC or FRAX. Another potential drawback is that any and all potential risk with FRAX will be passed along to alUSD without alternative markets to diversify with.