Summary:

This proposal seeks to increase the vault limit for apxETH collateral from 500 to 1000 within the Alchemix protocol. The increase is driven by the rapid adoption of apxETH, its status as the highest-yielding liquid staking token (LST), and the benefits of a strategic partnership with Dinero protocol, which jointly incentivizes a pxETH/alETH liquidity pool. Expanding the limit will enhance user participation, liquidity, and protocol growth.

Background:

Alchemix recently introduced apxETH as a supported collateral type, allowing users to obtain self-repaying alETH loans. The integration has been a significant success, with strong demand from users eager to leverage the superior yield of apxETH. Additionally, Alchemix has partnered with DINERO to jointly incentivize a pxETH/alETH liquidity pool. This collaboration has bolstered liquidity and accessibility for users, ensuring seamless interaction between these assets and reinforcing the protocol's ecosystem.

Rationale:

Superior Yield with apxETH:

apxETH is currently the highest-yielding liquid staking token in the market, making it an attractive collateral option for users. The yield advantages contribute to faster loan repayment times and better utility within the Alchemix protocol.

Strategic Partnership with DINERO:

The DINERO partnership adds significant value by jointly incentivizing the pxETH/alETH pool. This initiative has enhanced liquidity and provided users with more efficient trading and staking opportunities. Expanding the vault limit aligns with this partnership's goals by increasing the supply of apxETH available for participation.

Meeting Growing User Demand:

The current vault limit of 500 is insufficient to accommodate the surging demand for apxETH. Increasing the cap to 1000 will prevent bottlenecks, improve user experience, and allow more participants to benefit from Alchemix’s unique offerings.

Protocol Growth and Adaptability:

Supporting higher apxETH collateral limits reflects Alchemix’s commitment to adapting to user needs and growing its ecosystem in a strategic and sustainable manner.

Small impact on alETH LP:

Influx of 250 new alETH as a result of this proposal would have an affect on the alETH price of < 0.002 alETH/ETH (<0.2%), based on the current curve pool size.

Proposed Implementation:

Vault Limit Adjustment: Increase the apxETH vault limit from 500 to 1000.

Conclusion:

The proposal to raise the apxETH vault limit from 500 to 1000 is a natural progression in response to growing user demand, the strategic partnership with DINERO, and the superior yield potential of apxETH. This adjustment will enhance user experience, improve liquidity, and strengthen Alchemix’s position as a leading DeFi protocol. We invite the community to discuss and vote in favor of this proposal.