LiALEX: Introducing a Rebase ALEX Token

With the LiALEX upgrade to atALEX, slippage in swapping atALEX to ALEX can be eliminated.

The Beginning: atALEX v1

ALEX staking was one of the first DeFi utilities we enabled after our mainnet in January 2022. In exchange for locking your ALEX into a smart contract and supporting the TVL of the ALEX protocol, users received staking rewards.

In order for those rewards to auto-compound however, every ALEX cycle (~3.5 days) users would have to manually harvest their staking rewards, and then stake those rewards. It didn’t take long for our community to ask for greater convenience in auto-compounding their ALEX staking yields, and in April of 2022, we launched AutoALEX (atALEX).

Auto Compounding ALEX

atALEX is ALEX that is permanently staked. Once ALEX is staked in atALEX form through our “Stake” page, the intrinsic value of atALEX will consistently increase, with respect to ALEX, with every ALEX cycle.

Although the amount of atALEX that appears in your wallet remains constant, it is worth more ALEX with every ALEX cycle.

For example, today 1 atALEXv2 = 1.0647 ALEX but in the future 1 atALEXv2 = 1.07 ALEX.

The rate at which atALEX increases is dynamic as it relies on the ALEX staking yield. Currently, every cycle 103,200 ALEX is emitted as a part of staking emissions. Those 103,200 ALEX are distributed to ALEX stakers proportional to their contribution. The greater the amount of ALEX being staked, the lower the APY and vice versa.

Why do I currently see atALEXv2?

In August of 2023, Stacks underwent a major upgrade from Stacks 2.0 to Stacks 2.1. As a part of this upgrade, all liquidity had to be withdrawn and migrated to new pools.

As a part of this migration, all atALEXv1 could be redeemed at its intrinsic value and moved over to atALEXv2.

atALEXv2 is simply the post Stacks upgrade version of atALEXv1, it is functionally identical to atALEXv1.

Why LiALEX?

With atALEXv1 and atALEXv2 we created permanently staked ALEX. Although you could mint your ALEX into atALEX, to exit atALEX back to ALEX required using the AMM DEX to swap.

The vast majority of the time, the AMM DEX value closely reflected the intrinsic value of atALEX, as deviation creates an arbitrage opportunity that is soon traded away.

There were moments of market stress, however, where a combination of high volatility and massive congestion on the Stacks chain, impeded our mechanism to maintain the atALEX intrinsic value peg, which understandably caused community concern.

Fortunately, with LISA we’ve successfully introduced rebase tokens to Stacks, and we’re taking this latest technology and applying it to atALEX to upgrade to LiALEX to fix this issue and create the best user experience possible.

What is a Rebase Token?

With the LISA liquid staking token, we’ve launched the first rebase token into the Stacks ecosystem. A rebase token is a unique form of cryptocurrency token with a dynamic supply.

Instead of the intrinsic value increasing over time, the supply in your wallet increases directly. 1 LiSTX = 1 STX always. So with every rebase event during a Stacks cycle, you’ll hold more LiSTX in your wallet.

The same is true for LiALEX. LiALEX can also be wrapped into vLiALEX, which like atALEX, has a growing intrinsic value. Why wrap LiALEX? Because for DeFi use cases, such as borrowing stablecoins against liquid Stacks as collateral, vLiALEX is a better fit due to its growing intrinsic value, which means the value of the collateral you are borrowing against, grows over time.

Benefits of LiALEX

• Similar to LISA with LiSTX, LiALEX will introduce a rebase liquid stacking ALEX token with a dynamic changing supply that will increase directly in your wallet.
• There will also be a wrapped version, vLiALEX will have an intrinsic value that steadily increases. vLiALEX will have DeFi utilities where it can be used as collateral for borrowing stablecoins.
• LiALEX will have immediate minting and a one-click upgrade to LiALEX from atALEXv2.
• 1 LiALEX = 1 ALEX always. There will be a 3-month (32 cycles) queue for guaranteed 1:1 redemption, and you continue earning rewards during the queue cycles.

Conclusion

LiALEX is a powerful upgrade to atALEX creating a more robust auto-compounding token with improvements our community has been requesting. LiALEX represents the first step in expanding LISA’s capabilities from liquid stacking to general liquid staking.

Along with LISA and XLink, the ALEX ecosystem is expanding its services to a wider array of tokens and blockchains. Stay tuned to our social channels for coming announcements as we continue building the DeFi layer of Bitcoin.