How Does AlphaFi Work?
AlphaFi is the leading yield optimizer on the Sui blockchain, automatically managing concentrated liquidity positions on Cetus DEX to maximize returns for depositors. With ~$11M TVL and a 20% performance fee model, it auto-compounds LP rewards while distributing protocol fees to ALPHA token stakers. The C+ grade reflects risks around automated rebalancing strategies, single-chain exposure on Sui, and the sustainability of its halving emission schedule.
TVL
$11M
Sector
Yield
Risk Grade
C+
Value Grade
C
Core Mechanisms
4.1.2
Automated CLMM vault management on Cetus — auto-rebalances concentrated liquidity ranges
Manages Cetus concentrated liquidity positions with automated range adjustment strategies
3.3.3
Auto-compounding of LP rewards back into vault positions
Earned fees and reward tokens are automatically reinvested to compound returns
2.1.2
20% performance fee on auto-compounded rewards
Fee charged on yield generated, with 75% used for ALPHA buyback and liquidity
1.1.2
ALPHA token emission with 100-day halving — 42,500/day initially, halving each 100 days
Aggressive halving schedule reduces emissions quickly over time
2.4.1
75% of performance fees used to buy ALPHA and add to ALPHA-SUI liquidity pool
Revenue-funded buyback combined with protocol-owned liquidity seeding
2.2.1
50% of protocol fees distributed as periodic airdrops to ALPHA stakers
Fee sharing with token stakers at 100-day intervals coinciding with halving epochs
How the Pieces Interact
Auto-compounding into concentrated liquidity positions during high volatility may compound into out-of-range positions, reducing yield to zero until rebalance
As ALPHA emissions halve, liquidity mining incentives decline; if buyback revenue cannot compensate, LP retention drops and vault TVL shrinks
20% performance fee on vault rewards reduces effective yield for LPs, making vaults less competitive vs manual CLMM management during low-fee periods
Buyback pressure from performance fees may not offset emission sell pressure, especially in early high-emission phases, leading to net token dilution
Split between staker airdrops and buyback-liquidity may create suboptimal allocation — too much to one channel reduces effectiveness of the other
What Could Go Wrong
- Concentrated liquidity vault rebalancing strategies depend on accurate price feeds — oracle latency could trigger rebalancing at unfavorable prices
- Auto-compounding 20% performance fee creates protocol revenue dependency on volatile DeFi yields that may not be sustainable long-term
- Single-chain risk on Sui — all protocol TVL and operations are exposed to Sui network liveness and smart contract risks
- ALPHA emission halving schedule creates declining incentives that may fail to retain liquidity providers
Concentrated Liquidity Vault Drain via Rebalancing Exploit
TailTrigger: Vault rebalancing logic is exploited to force positions into unfavorable ranges, allowing attacker to extract value through predictable price movements
- 1.Attacker manipulates Cetus pool prices to trigger vault rebalancing at extreme ranges — Vault moves concentrated liquidity to attacker-controlled price range
- 2.Attacker executes large trades against the mispositioned liquidity — Vault suffers significant impermanent loss as liquidity is consumed at unfavorable prices
- 3.Auto-compounding reinvests diminished returns into the same exploited position — Losses compound as the cycle repeats
- 4.Vault depositors notice declining balances and rush to withdraw — Bank run depletes vault TVL; remaining depositors bear disproportionate losses
Risk Profile at a Glance
Overall: C+ (41/100)
Lower score = safer