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Alpha Homora V2 Adds Leveraged ETH/LINK + Lending of LINK Token

Alpha Homora V2 Adds Leveraged ETH/LINK + Lending of LINK Token

We’d like to welcome the Chainlink community to Alpha Homora V2, as we now support leveraged yield farming of ETH-LINK pool on Sushiswap and Uniswap.

In addition to these leveraged pools, we now enable the lending and borrowing of LINK token!

For simplicity, this blog will be broken down into the 4 parts below

  1. For users who are in these 2 pools on Alpha Homora V1
  2. For users who are new to Alpha Homora V2
  3. What do leveraged users gain from these 2 leveraged pools? What are the risks?
  4. For lenders who want to earn on LINK

For users in these pools on Alpha Homora V1

The addition of these 2 pools on Alpha Homora V2 means that users in these pools on Alpha Homora V1 can now start migrating to V2 to earn ~2x the ALPHA rewards.

To learn how to migrate, see the step-by-step guide here.

For users who are new to Alpha Homora V2

Alpha Homora V2 is a leveraged yield farming product that integrates with 4 AMM protocols - Uniswap, Sushiswap, Curve, and Balancer.

This means that the product adds leveraged functionality to the supported liquidity pools on the underlying AMM protocol.

As a result, the app’s user interface states the AMM name to make sure users know which pool and which AMM they are leveraged yield farming on.

For instance, if “Uniswap’s ETH-LINK pool” is selected, the transaction will be executed on the ETH-LINK pool on Uniswap.

To open a leveraged position on Alpha Homora V2, there are 3 main steps.

  1. Supply liquidity
  2. Borrow assets
  3. Read final summary before confirming the strategy

To see examples of an unfavorable leveraged position and a favorable leveraged position on Alpha Homora V2, see our previous blog post here.

To see a step-by-step guide on how to open a leveraged position on Alpha Homora V2, see the product document here.

What do users gain from these 2 leveraged pools? What are the risks?

What do users gain?

For Sushiswap’s ETH-LINK pool, users on Alpha Homora V2 will:

  • Earn SUSHI APY (higher APY than usual when opening a position of more than 1x leverage)
  • Earn trading fees APY for providing liquidity to pools (higher APY than usual when opening a position of more than 1x leverage)
  • Earn ALPHA liquidity mining rewards when opening a position of more than 1x leverage
  • Optimized and automated leveraged yield farming/liquidity providing process for users

--> Users can supply only one token (no need to have both ETH and LINK)

--> Users can borrow multiple assets (can borrow both ETH and LINK)

--> If users have this pool’s LP token, users can supply the LP tokens as collateral

For Uniswap’s ETH-LINK pool, users on Alpha Homora V2 will:

  • Earn trading fees APY for providing liquidity to pools (higher APY than usual when opening a position of more than 1x leverage)
  • Earn ALPHA liquidity mining rewards when opening a position of more than 1x leverage
  • Optimized and automated leveraged yield farming/liquidity providing process for users

--> Users can supply only one token (no need to have both ETH and LINK or ETH and sUSD)

--> Users can borrow multiple assets (can borrow both ETH and LINK)

--> If users have the selected pool’s LP token, users can supply the LP tokens as collateral

To see examples of an unfavorable leveraged position and a favorable leveraged position on Alpha Homora V2, see our previous blog post here.

To see a step-by-step guide on how to open a leveraged position on Alpha Homora V2, see the product document here.

What are the risks?

As with any borrowing with leverage, Alpha Homora V2 has its own risk. The below outlines the risks yield farmers may face on Alpha Homora V2.

For yield farmers/liquidity providers with no leverage (opening a position at 1x)

Users in this category are exposed to impermanent loss risk. Note that impermanent loss risk is minimal in a pool with all stablecoins (e.g. Curve 3pool that consists of USDT, USDC, and DAI)‌

For yield farmers/liquidity providers with leverage (opening a position with more than 1x)

Users in this category are exposed to impermanent loss risk. The impermanent loss risk is amplified by the leverage level that users enter at. Note that impermanent loss risk is minimal in a pool with all stablecoins (e.g. Curve 3pool that consists of USDT, USDC, and DAI)‌

Additionally, because of the impermanent loss risk + the fact that users are taking on leverage, users' positions also have liquidation risk.

Lenders can lend many assets on Alpha Homora V2 to earn from lending interest rate. Lending interest rate comes from the borrowing interest rate that leveraged yield farmers pay for borrowing the assets from the lending pool to yield farm.

With the addition of LINK today, lenders can start earning interest on these tokens on Alpha Homora V2!

To see a step-by-step guide on how to lend, see here.

About Alpha Finance Lab

Alpha Finance Lab is a DeFi Lab and on a mission to build an ecosystem of DeFi products (the Alpha ecosystem), consisting of innovative building blocks that capture unaddressed demand in key pillars of the financial system. These building blocks will interoperate, creating the Alpha ecosystem that will be an innovative and more capital efficient way to banking in DeFi.

Alpha Homora is Alpha Finance Lab’s first product and DeFi’s first leveraged yield farming product that captures the market gap in lending, one of the key pillars of the financial system.

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