The Mind-Bending Magic of Self-Paying Loans - DeFriday #4

Imagine a world where loans don’t have interest.

One where instead of having assets that are appreciating, and debt that’s also growing, the appreciation on your assets is automatically paying down your debt.

So your stock portfolio growth automatically pays off your mortgage. Or your high yield savings account covers your car payments. Or your real estate portfolio pays off your credit card. All without you having to sell your assets.

Crazy? Kinda. But we’re closer to this world than you think. Enter Alchemix: a new kind of DeFi protocol that allows anyone to borrow against the future yield of their assets.

In other words, self-repaying loans. A platform where you can deposit crypto assets, borrow against them, and then have the future yield on those assets automatically pay off your debt. A loan whose value only goes down, and where your collateral can never get liquidated.

Alchemix is one of the more mind-bending DeFi protocols I’ve discussed yet, so strap in. It might change how you think about money forever.

What is Alchemix?

Alchemix is a fundamentally new financial tool. It blends aspects of a savings account with aspects of a lender, allowing you to earn interest on your deposits as well as borrow against them. Your earned interest automatically pays down your loan amount, meaning your loan never increases, and since you’re borrowing the same asset you’re using as collateral, you can never get liquidated.