Is Alchemix Safe?
Risk Grade: B- (35/100)
Alchemix is rated as moderate risk — some novel mechanisms, generally well-understood.
Moderate risk — genuinely innovative self-repaying loans with clean recent operation, but yield dependency and high LTV plans introduce real fragility
A lending protocol where your deposited collateral earns yield that automatically pays off your debt over time. It holds $29M in deposits with a unique self-repaying loan model. Its B- grade reflects genuinely innovative design with clean recent operation, offset by dependence on external yield sources and historical integration incidents.
TVL
$79,490
Mechanisms
7
Interactions
5
Value Grade
C-
Key Risks for Alchemix Users
Your loan only repays itself if the underlying yield strategy keeps earning. If DeFi yields go to zero, your collateral stays locked indefinitely while your debt never shrinks.
Previous incidents include a $4M loss from a bad yield strategy (yETH, 2023) and exposure to the Curve reentrancy exploit. These were external protocol issues, but Alchemix inherits risks from every protocol it deploys funds to.
The upcoming V3 allows borrowing up to 90% of your collateral value. This leaves almost no safety margin if yields drop or collateral value declines.
Top Risk Factors
- •Self-repaying loan model depends entirely on sustained yield generation from underlying strategies. If yields go to zero, loans never repay and collateral is locked indefinitely.
- •Historical integration risks: $4M yETH reverse rug (2023) and Curve pool reentrancy exposure demonstrate compounding third-party dependency risk.
- •Upcoming v3 with 90% LTV introduces thin margin for error if yield strategies underperform, compressing the buffer between collateral value and debt.
How Alchemix Compares to Peers
Alchemix ranks #42 of 90 Lending protocols (above-median). At a risk score of 35/100, it's in line with the sector average (37/100).
Adjacent peers: Suilend (B-, 34/100) is ranked just safer, and dForce (B-, 35/100) is ranked just riskier.
See the full Lending sector leaderboard or the Alchemix vs dForce comparison.
Common Questions about Alchemix
Plain-English answers based on Alchemix's scores across Hindenrank's 8 risk dimensions. The highest-scoring (riskiest) dimension is Vitality Risk (6/10).
Has Alchemix ever been hacked or exploited?
Alchemix has a fairly clean operational history. The track record dimension scored 3/15, indicating minor or no significant incidents on record. A clean track record is a positive signal but it does not guarantee future safety, especially as protocol complexity grows.
How much money is at stake in Alchemix?
Alchemix currently holds a small TVL — exit liquidity is a real concern at this size. Smaller TVL means individual depositors carry a larger share of any loss event, and it can be harder to exit a position quickly during stress.
What's the worst-case scenario for Alchemix?
Hindenrank has identified specific collapse scenarios for Alchemix. The most prominent: "Yield Drought Self-Repaying Loan Freeze". The trigger condition is DeFi-wide yield compression drives Yearn/Curve yields below 1% APY for 6+ months while Alchemix V3 has $50M+ in 90% LTV positions. Reading through the full scenario list on the protocol page is the single best way to understand the actual failure modes — generic "smart contract risk" is rarely the thing that takes a protocol down.
Is Alchemix regulated or insured?
Alchemix has low regulatory exposure on Hindenrank's framework (2/10). The protocol is structured in a way that minimizes counterparty and jurisdiction concentration, though regulatory risk in crypto can change rapidly. No DeFi protocol carries FDIC-style insurance — even with low regulatory risk, depositors are not protected in the way bank customers are.
What are the biggest red flags for Alchemix?
Hindenrank's retail-focused risk audit flagged: Your loan only repays itself if the underlying yield strategy keeps earning. If DeFi yields go to zero, your collateral stays locked indefinitely while your debt never shrinks. Previous incidents include a $4M loss from a bad yield strategy (yETH, 2023) and exposure to the Curve reentrancy exploit. These were external protocol issues, but Alchemix inherits risks from every protocol it deploys funds to. The upcoming V3 allows borrowing up to 90% of your collateral value. This leaves almost no safety margin if yields drop or collateral value declines.
Should beginners deposit into Alchemix?
Alchemix is rated B-, which is acceptable for users who understand the protocol's mechanism. Beginners should read the full risk breakdown and only deposit after they can articulate the top three failure modes. If you cannot explain how the protocol works, do not deposit.
How does Alchemix compare to safer Lending alternatives?
Alchemix is one protocol in Hindenrank's Lending coverage. The safest Lending protocols on the leaderboard tend to share three traits: a long incident-free track record, conservative mechanism design, and high-quality public documentation. Compare Alchemix against the full Lending ranking before committing capital.
For the full 8-dimension score breakdown, the radar chart, and dependency graph, see the Alchemix risk report.
Read the Full Alchemix Risk Report
This protocol has 2 collapse scenarios. 2 high-severity interaction risks identified. See the full mechanism classification, interaction matrix, and deep-dive recommendations.
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