1/ The Ethereum infrastructure market is heating up, but one of the most pivotal projects in the space is still going unnoticed.
@alkimiya_io and the future of the block space commodity market.
@alkimiya_io and the future of the block space commodity market.
2/ The Problem:
Miners/validators face the risk of volatile yield.
There is currently no way for these entities to hedge their risks, and we are seeing the effects of this now with many smaller players in the mining industry being forced to sell their equipment.
Miners/validators face the risk of volatile yield.
There is currently no way for these entities to hedge their risks, and we are seeing the effects of this now with many smaller players in the mining industry being forced to sell their equipment.
3/ On the other hand, there aren't many places for sustainable yield in DeFi. Most projects are forced to use their own tokens as incentives.
Even with more sustainable yield sources such as mining/validating, there is no way to access it in a capital-efficient way.
Even with more sustainable yield sources such as mining/validating, there is no way to access it in a capital-efficient way.
4/ The Solution
Block space is a commodity, and creating a market around this resource is very much needed.
Today, I'll be covering a project aiming to do just that.
Block space is a commodity, and creating a market around this resource is very much needed.
Today, I'll be covering a project aiming to do just that.
5/ What is Alkimyia?
Alkimiya is a permissionless protocol that makes the economics of block space accessible to the broader DeFi universe.
As a DeFi user, you can access hash power swaps as well as structured products that use hash power as an underlying yield source.
Alkimiya is a permissionless protocol that makes the economics of block space accessible to the broader DeFi universe.
As a DeFi user, you can access hash power swaps as well as structured products that use hash power as an underlying yield source.
6/ What Does This Mean?
Block space is the king commodity in crypto, and users are able to now easily access this yield without having to get direct exposure to the underlying asset.
On the other hand, miners/validators can de-risk and lock in fixed rates very easily.
Block space is the king commodity in crypto, and users are able to now easily access this yield without having to get direct exposure to the underlying asset.
On the other hand, miners/validators can de-risk and lock in fixed rates very easily.
7/ What Are Hash Power Swaps?
Hashpower Swaps, which Alkimyia calls Silica, are commodity swaps between a buyer and seller of hash power.
The buyer provides an upfront payment in return for the seller's hash power over a specified period of time.
Hashpower Swaps, which Alkimyia calls Silica, are commodity swaps between a buyer and seller of hash power.
The buyer provides an upfront payment in return for the seller's hash power over a specified period of time.
8/ The hash power seller does not receive the full payment instantly but instead is paid daily whenever they deliver the daily mining rewards.
This allows miners/validators to sell their future hash power at a fixed rate and lock in a stable yield.
This allows miners/validators to sell their future hash power at a fixed rate and lock in a stable yield.
9/ These Silica tokens can be broken down into smaller fractions and transacted on secondary markets.
Anyone with the tokens can claim the mining rewards associated with the contract when the contract expires.
Anyone with the tokens can claim the mining rewards associated with the contract when the contract expires.
10/ What are Hash Vaults?
Hash Vaults are structured products that contain pools of Silica with additional payout logic.
It is an umbrella smart contract that holds all the Silica that the vault creator has purchased on behalf of the buyers of the Hash Vault.
Hash Vaults are structured products that contain pools of Silica with additional payout logic.
It is an umbrella smart contract that holds all the Silica that the vault creator has purchased on behalf of the buyers of the Hash Vault.
11/ Users can pool together various Silica and restructure the payout logic into other forms of yield-generating assets. These vaults are flexible by nature, creating a further level of capital efficiency
These vaults are secured by the underlying hash power of the Silica
These vaults are secured by the underlying hash power of the Silica
12/ For example, a group of Silica can be pooled and restructured into a 5% fixed-income bond + an on-chain DAO that continuously reinvests the rewards into new contracts.
The payouts of these new instruments come from the bundle of mining/validating rewards.
The payouts of these new instruments come from the bundle of mining/validating rewards.
13/ Users have complete freedom when creating these vaults.
Convertible bonds with mining revenue as underlying, hash power perpetual swaps, structured products that separate block subsidy and MEV incomes, on-chain mining funds operated by DAOs, and much more is made possible.
Convertible bonds with mining revenue as underlying, hash power perpetual swaps, structured products that separate block subsidy and MEV incomes, on-chain mining funds operated by DAOs, and much more is made possible.
14/ Best of all, these assets are not siloed off from the rest of DeFi.
Instead of harvesting yields from instruments dependent on volatile collateral value or lending activities, the cash flow comes from the economic activity that sustains the blockchain itself.
Instead of harvesting yields from instruments dependent on volatile collateral value or lending activities, the cash flow comes from the economic activity that sustains the blockchain itself.
15/ When the demand for these hash power-backed assets increases, the demand for base layer hash power contracts is also indirectly spurred.
It forms a closed loop, and introduces a new category of much more βhardenedβ instruments to the DeFi ecosystem.
It forms a closed loop, and introduces a new category of much more βhardenedβ instruments to the DeFi ecosystem.
16/ Benefits of Alkimiya:
-Increased capital efficiency
-Leveraged block space yield
-Structured products around block space
-Allows miners/validators to lock in yield
-Composable and sustainable yield
-Increased capital efficiency
-Leveraged block space yield
-Structured products around block space
-Allows miners/validators to lock in yield
-Composable and sustainable yield
17/ When?
The team has a basic testnet up right now, with plans to launch on Ethereum mainnet this quarter (not confirmed).
The team has a basic testnet up right now, with plans to launch on Ethereum mainnet this quarter (not confirmed).
18/ Alkimiyia also recently rose $7.3M from notable funds such as Dragonfly and Coinbase, among others. With plenty of runway, we'll probably start getting some big announcements soon.
coindesk.com
coindesk.com
Summary:
I'm generally pretty bullish on Ethereum infrastructure, and a block space market is very much needed. Unfortunately, there is no token yet, but this is definitely a project to watch
Very excited about what is to come, and hoping for more progress in the coming months
I'm generally pretty bullish on Ethereum infrastructure, and a block space market is very much needed. Unfortunately, there is no token yet, but this is definitely a project to watch
Very excited about what is to come, and hoping for more progress in the coming months
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