Glossary
Alchemix glossary
Short, precise definitions for the vocabulary you will meet across every Alchemix guide and article on this site.
Alchemix has its own small vocabulary, and several of its terms borrow words from conventional finance while meaning something distinctly different in practice — a loan that never charges interest, a liquidation that behaves nothing like a margin call, and a peg that is defended by economic incentive rather than by a reserve held one-for-one. This glossary exists so that a reader who lands on any single page of the site can look up an unfamiliar term without leaving the article they are reading, and come back with a definition that is accurate rather than merely convenient.
Each entry is written to be understandable on its own, but the terms also connect to one another: an alAsset only makes sense once you understand the alchemist vault that mints it, and the Transmuter only makes sense once you understand what an alAsset is meant to be redeemable for. Reading the glossary in order once, front to back, is a reasonable shortcut to a working understanding of the whole protocol, even before opening a single one of the longer guides.
Where a term reflects a design choice rather than a fixed fact — for example the loan-to-value ratio a vault enforces, or the size of a debt ceiling — the definition explains the concept and notes that the specific figure is a governed parameter that can change, and that alchemix.fi is the source of truth for whatever the current value happens to be at the time you are reading this.
Alchemix
- Alchemix is a decentralised finance protocol, found at alchemix.fi, that lets users deposit yield-bearing collateral and mint a synthetic loan against it that repays itself automatically over time using the yield the collateral generates. It charges no interest and does not expose depositors to ordinary price-driven liquidation, because the debt is denominated in a synthetic version of the same asset that was deposited.
alUSD
- alUSD is the dollar-denominated synthetic token minted by Alchemix against stablecoin collateral such as DAI or USDC. It is a freely transferable ERC-20 token whose soft peg to one US dollar is maintained by Transmuter redemptions and by borrower demand to burn discounted tokens against outstanding debt.
alETH
- alETH is the ether-denominated synthetic token minted by Alchemix against ETH and liquid staking derivative deposits. It functions the same way as alUSD but tracks the value of ether rather than the US dollar, and it is repaid over time by the staking and strategy yield earned by the underlying collateral.
alAsset
- alAsset is the general term for any synthetic token minted by Alchemix, currently alUSD and alETH. Each alAsset represents a claim on the collateral system as a whole rather than a specific individual deposit, and each is redeemable toward its underlying asset through the Transmuter.
Alchemist vault
- An alchemist vault is the smart contract that accepts a specific type of collateral, tracks each depositor's balance and debt, and enforces the maximum amount of alAsset that can be minted against that balance. Different alchemist vaults exist for different collateral types, and each routes deposits into an approved yield strategy.
Transmuter
- The Transmuter is the Alchemix contract that converts repaid collateral flowing back into the system into one-to-one redemptions for holders who have deposited alAssets into it. It gives alAssets a credible redemption floor without requiring the protocol to hold a full reserve of the underlying asset at all times.
Self-repaying loan
- A self-repaying loan is a borrowing position whose balance decreases automatically over time because the collateral behind it generates yield that the protocol applies directly to the outstanding debt. No interest accrues and no manual repayment action is required, though early or manual repayment is always allowed.
Yield-bearing collateral
- Yield-bearing collateral is a deposit that is actively routed into an external yield source rather than sitting idle in the vault. In Alchemix this is the mechanism that funds self-repayment, since the return the collateral earns is what reduces the borrower's debt over time.
Debt ceiling
- A debt ceiling is the maximum total amount of an alAsset that a given alchemist vault is permitted to mint against its collateral, set and adjustable through Alchemix governance. Debt ceilings limit how much synthetic supply can exist against any one collateral type and are a key lever for managing systemic risk.
Loan-to-value ratio
- The loan-to-value ratio, often abbreviated LTV, is the maximum fraction of a deposit's value that can be minted as debt, commonly around fifty per cent on Alchemix vaults. Borrowing below the maximum LTV leaves a larger buffer between the collateral value and the outstanding debt.
ALCX
- ALCX is the governance token of Alchemix, used to vote on protocol parameters such as debt ceilings, supported vaults, approved yield strategies and incentive distribution. Holding ALCX does not directly affect an individual's borrowing position, but governance decisions can change the conditions that position operates under.
Liquidation
- Liquidation is the forced closure of a leveraged position, typically triggered when collateral value falls relative to a separately denominated debt. Alchemix does not expose users to this ordinary form of liquidation because debt is denominated in a synthetic of the same collateral, though loss can still occur through smart contract failure or a yield strategy shortfall.
Credit
- In Alchemix accounting, credit refers to the amount by which yield generated by a user's collateral has reduced their outstanding debt at any given point. Credit accumulates continuously as the underlying yield strategy produces returns and is applied automatically without any transaction from the user.
Yield strategy
- A yield strategy, sometimes called a yield adaptor, is the external protocol or mechanism that an Alchemix vault routes deposited collateral into in order to generate the return used for self-repayment. Examples include lending markets, liquid staking and stablecoin strategies, each carrying its own distinct risk profile.
Harvest
- A harvest is the process by which yield accrued in an external strategy is collected and applied against outstanding debt within an Alchemix alchemist vault. Harvests can occur automatically on a schedule or be triggered manually, and each harvest is what visibly moves a user's debt balance downward.
Peg
- A peg is the target price relationship between an alAsset and its underlying asset, intended to hold at one-to-one. Alchemix maintains this as a soft peg defended by Transmuter redemptions and borrower demand to retire debt cheaply, rather than by a fixed reserve, so the price can drift temporarily during periods of market stress.