Alpha Finance Lab Explained — AAX Academy
Following a public token sale on the Binance Launchpad, Alpha Finance Lab was launched in 2020 by Tascha Punyaneramitdee, former head of strategy at Brand Protocol, and Nipun Pitimanaaree, a graduate in Mathematics and Computer Science from MIT.
The goal of Alpha Finance Lab is to accelerate adoption and expand the userbase for DeFi services. The way they want to achieve this is by creating a series of Alpha products that work across blockchains to capture unaddressed demand from existing crypto users and make it easier for new users to get into DeFi.
The problem in DeFi that Alpha Finance Labs seeks to resolve, is that of restricted demand. Composability inherently part of Ethereum-based DeFi has led to a rapid rise in multiple products including derivatives, lending, governance, prediction markets, synthetic assets and more.
However, with increased interest from around the world the already stretched out Ethereum protocol has reached near-maximum capacity. Severe scalability issues long-known in the crypto community now lead to delayed (and sometimes failed) transactions that come at a very high, you might say prohibitive, cost in the form of gas fees.
Alternative chains seek to resolve this issues with the likes of Binance Smart Chain, Solana, Polkadot, and Cardano all vying to become the next primary DeFi chain. But what Alpha Finance Lab foresees, is an increased fragmented DeFi ecosystem where competition between chains further limits to wider adoption of decentralized finance across the world.
How Alpha will unlock the stage in DeFi growth
To drive DeFi into the next stage of innovation and growth, Alpha is building the tools for a cross-chain DeFi world with increased liquidity compared to what we see today. They are laying the foundation for the next generation of cross-chain DeFi with a range of products that provide multiple financial primitives across a variety of blockchains.
The team recently launched Alpha Homora, a leveraged yield-farming platform compatible with both BSC and Ethereum blockchains. Lenders can earn high interest and yield farmers can get even higher farming APY from taking on leveraged positions on yield farming. Alpha Homora V2 also includes a basic farming mode designed to simplify the process and the recently unveiled Alpha Launchpad claims to be the first and only DeFi incubator program created by builders for builders — a feature analysts at Delphi Digital called “a dark horse catalyst for Alpha that has likely not yet been priced into the market.”
The third product set to launch in 2021 is Alpha X, a non-orderbook perpetual swap product that will not only allow Alpha Homora users to hedge their leverage yield farming positions, but will also allow any DeFi user to easily take a directional view on any asset by opening leveraged long or short positions.
One of the more notable features of the ALPHA protocol is its fee structure, which takes 20% of all borrow interest in V2 and 10% of the borrow interest in V1 to pay out stakers. A recent report from Delphi Digital highlighted the protocol’s fees generated per dollar of total value locked which is significantly higher when compared to competing platforms. The amount of fees it generates per $ of TVL stood at $0.27, with runner up for this metric Compound at $0.05.
Alpha Finance Lab looks to further differentiate itself from other DeFi ecosystems by actively seeking, identifying and addressing unmet needs in the DeFi space with a breakneck development cycle. Alpha Finance Lab also tries to make sure its solutions don’t just offer in-demand utility but are also user-friendly, helping to make DeFi more accessible. Each product developed by Alpha Finance Lab also acts to strengthen the entire Alpha ecosystem, by providing additional utility for ALPHA token holders.
ALPHA is the native utility token of the platform. ALPHA token holders will benefit from the growth of all Alpha products and are an integral part of the growing multi-chain, Alpha ecosystem. By staking your ALPHA, funds staked will be used to backstop the Alpha ecosystem to help secure the ecosystem, earning network fees for covering any default loans in the process. The ALPHA tokens can also be used for liquidity mining and governance voting.
Once ALPHA tokens are staked, you will be able to ‘unlock’ unique features on the Alpha products when using those products as an ALPHA staker. This is one of the very first times that tokenomics is directly integrated with the usage of the core underlying protocols.
On governance, Alpha Finance Lab will implement governance on two levels via a Decentralized Autonomous Organization (DAO): product-level governance and Alpha Finance-level governance. Product-level governance will allow ALPHA token holders to vote on key parameters of specific Alpha products, while Alpha Finance-level governance will allow ALPHA token holders to vote on how the portfolio of Alpha products interoperate.
Originally published at https://academy.aaxspace.com on August 10, 2021.