Our network's incentive structure is designed with the institutional DeFi user in mind and is built to overcome the bottlenecks that are currently preventing CeFi adoption of DeFi markets. The current disconnect between CeFi and DeFi hinges on capital, connectivity and control issues. Alkemi provides a solution to overcome those friction points with our flagship product, Alkemi Earn.
Our program’s objective is simple: drive platform utility using network incentives and grow with a balanced composition of lenders and borrowers. As of April 2021, we have successfully exceeded our initial target of $2m worth of deposits from our Genesis Liquidity Providers on Alkemi Earn and are actively onboarding the next wave of Liquidity Providers and Borrowers.
Liquidity Providers (‘LPs’) and Borrowers accumulate network rewards in the form of native Alkemi Network (‘ALK’) multi-utility tokens based on their working capital participation in the Alkemi Earn permissioned pool’s four core markets: wBTC, ETH, USDC, and DAI. Further detail on the program, including benefits and how to participate are outlined below.
Alkemi has allocated ~70 million ALK tokens, 35% of its total token supply, to its Liquidity Mining Program to incentivize Liquidity Providers’ participation in the Alkemi Network. Below are the core benefits for participating in the Alkemi Liquidity Mining Program:
Early Participation Alkemi Earn has launched and will grow with curated groups of Liquidity Providers. This curation naturally limits the amount of competition for the reward tokens and participants have access to greater rewards.
Asset Deposit Amount The reward tokens are distributed formulaically based on liquidity in each market. Within each market, lenders receive reward tokens based on their proportional supply into the market. Larger deposits result in a higher token reward potential.
Deposit Duration (Total Time Value Locked) ALK token allocations are calculated on a per-block basis. The calculation take into account the dollar value of assets deposited at each block. The longer a participant has assets deposited in the network, the greater the potential for ALK rewards.
As shown in the tables below, the Alkemi Network Liquidity Mining Program is in effect with the following calculation and distribution parameters.
REWARDS POOL CALCULATION
Total ALK Token Supply
Total Reward Allocation
Mining Program Duration
ALK Rewards / Year (% of total supply)
ALK Rewards / Year (#)
Number of Blocks / Year (Ethereum avg.)
ALK Rewards Issued Per Block
REWARDS DISTRIBUTION CRITERIA
wBTC, USDC, DAI, ETH
Reward Allocation Ratio for Markets
Market Liquidity / Total Liquidity
Reward Breakdown in Each Market
6 Months after TGE
TGE Target Date
Please note the following in the above tables:
Each year, 8.75% of Alkemi’s total token supply (17,500,000 ALK tokens) will be distributed to network participants as ALK reward tokens
The actual number of reward tokens are calculated at every Ethereum block creation (i.e. 8.323820396 ALK tokens assuming a 15-second block time)
In each market, the reward-based ALK tokens are split equally between lenders/borrowers
Reward-based ALK tokens are recorded to their owners prior to Alkemi’s TGE and will have a vesting duration of 6 months starting from the TGE date
Upon participant’s Loan/Borrow Effective Date, ALK token reward accrual process is initiated for the participant. All calculations prior to the TGE will be done by Alkemi and purely based on the individual wallet's historical transaction history and balance on a by-block basis
The table below illustrates ALK reward allocations to lenders and borrowers in the USDC market, based on assumptions of $4m USD liquidity provision equally split between the four core launch markets. Note: these inputs are subject to participation.
EARN POOL ASSUMPTIONS
Total Market Liquidity
4 Core Launch Markets
wBTC, USDC, DAI, ETH
Liquidity Distribution Across Markets (presumed)
Equal split across 4 markets (25% each)
REWARDS SCENARIO: USDC MARKET
USDC Market Liquidity (25% of total pool)
USDC Market Total Rewards / Block
USDC Market Lenders’ Rewards / Block (50%)
USDC Market Borrowers’ Rewards / Block (50%)
REWARDS SCENARIO: USDC LENDER
Lender USDC Supply
Lender USDC Supply / Total USDC liquidity
Lender's ALK Rewards / Block
REWARDS SCENARIO: USDC BORROWER
Total Outstanding USDC Loaned (presumed)
Outstanding Loan Taken by Borrower
Borrower USDC Loan / Total USDC Loan
Borrower ALK Rewards / Block
To start earning ALK token rewards as a member of the Alkemi Network Liquidity Mining Program, participants must meet the following criteria. Please contact Brian Mahoney, CSO, to learn more.
Deposit Amount: Minimum $50,000 USD, Maximum $500,000 USD equivalent of wBTC, ETH, USDC, and / or DAI to be deposited into the Alkemi Earn Permissioned Liquidity Pool.
Minimum Deposit Period: 90-day lender commitment period.
Loan Type: High-yield, variable rate, fixed-term.
Interest Rate: Liquidity Provider receives interest rate payment(s) from collateralized borrowers on Alkemi Earn.
Protocol Cut: 1% of interest earned from lent assets stays in the protocol to cover operating costs.
Collateral Requirement: Borrowers are required to supply a minimum of 125% of their desired borrow amount as collateral to one of the 4 markets. Supplied collateral assets earn interest as well as ALK token rewards while in the protocol.
Duration and Repayment: Borrows can be repaid anytime. Once a borrow has been repaid, the account’s collateral can be entirely withdrawn or transferred.
Algorithmic Interest Rate: Borrower pays interest rate payment(s) from the programmatic rate set by the protocol, which is re-calculated at each block. ALK tokens are earned by borrowers upon both borrowed and supplied assets.
Liquidation: A borrowing account becomes insolvent when the Borrow Balance exceeds the amount allowed by the collateral factor. When an account becomes insolvent, other users can repay a portion of its outstanding borrow in exchange for a portion of its collateral, with a liquidation incentive — currently set at 10% (subject to change.)
Origination fee: Borrowers pay 0.1% of the borrow amount as origination fee, which is added to the total borrow amount in respective currency.