[Proposal] Alchemix & Abracadabra

Summary

Create a new USDC vault which relies on Alchemix and Abracadabra lending to facilitate use of the yvUSDC tokens.

abracadabra.money
alchemix.fi

Background

Alchemix is a self-paying DAI-collateralized loan. It achieves this by taking DAI deposits and lending a stable equivalent called alUSD. The DAI deposits are then placed into the DAI Yearn vault and returns are used to pay off the alUSD loan.

Abracadabra uses yvUSDC tokens as collateral for issuing a similar stable token called MIM. Loans can be up to 90% LTV.

Motivation

Ability to utilize the yvUSDC tokens in an efficient way to earn higher stablecoin yields.

Specification

The vault would accept yvUSDC tokens. These tokens would then be used to take a 90% LTV loan on Abracadabra in MIM. The MIM would be swapped in the Curve MIM-3Pool Metapool for DAI. The DAI would be deposited as collateral into Alchemix for a 50% LTV loan of alUSD. The alUSD could then be staked with Alchemix or deposited into the DAI vault. Staking the alUSD pool in Alchemix provides ALCX rewards which could then be staked in the Alchemix ALCX pool.

Example:
10,000 yvUSDC: ~15%
9,000 MIM swapped for DAI and deposited into Alchemix: ~12% (in Yearn DAI vault)
4,500 alUSD staked: ~45% (denominated in ALCX)

Take ALCX returns and restake in ALCX Pool, ~170%.

For:
Create a separate vault for yvUSDC to be used for strategies with Alchemix and Abracadabra.

Against:
No new yvUSDC vault.

Poll:

  • FOR
  • AGAINST

0 voters

1 Like

Could this be strategy that could be implemented in the existing USDC or DAI Vaults?

1 Like

I’d love to hear any way it could just be implemented as a strategy within the USDC vault.

1 Like

Also this kind of ties into this proposal that didn’t get much traction [Proposal]New Vault(s) that take yVault tokens [Proposals/Vaults] from @noncesense

What are the risks and downsides of such a vault?

Yield risk from Yearn.
Lending risk from Abra and Alchemix.

Loans can be liquidated within Abracadabra but in this instance that would only occur if yvUSDC fluctuated >10%. The vault could also reduce the LTV target to 70-80% to increase confidence against liquidation. Alchemix loans are not ever liquidated. Both lending platforms would have smart contract risk.

3 Likes

This topic was automatically closed 7 days after the last reply. New replies are no longer allowed.