Initially, users had to manually harvest and restake their rewards every ALEX cycle, approximately every 3.5 days. This was necessary to benefit from auto-compounding.
Recognizing the need for greater convenience, the community called for an auto-compounding solution. In response, AutoALEX (atALEX) was launched in April 2022.
Introducing AutoALEX for Seamless Staking
According to ALEX’s blog post, atALEX represents ALEX which is permanently staked. When ALEX is staked as atALEX, its intrinsic value consistently increases relative to ALEX with each cycle. This dynamic increase is tied to the ALEX staking yield. Currently, 103,200 ALEX are emitted each cycle as part of staking emissions, distributed proportionally among stakers. So, the APY adjusts inversely with the amount of ALEX staked: more staked ALEX results in a lower APY and vice versa.
The introduction of atALEXv1 and atALEXv2 marked the creation of permanently staked ALEX. While users could mint ALEX into atALEX, converting atALEX back to ALEX required using the AMM DEX for swapping. Typically, the AMM DEX value closely matched atALEX’s intrinsic value, as deviations quickly corrected through arbitrage.
Source: X
More About ALEX’s Staking Mechanism
Further innovation came with the introduction of LISA, a liquid staking token, launching the first rebase token within the Stacks ecosystem. Rebase tokens are unique due to their dynamic supply mechanism. Instead of the intrinsic value increasing, the token supply in the holder’s wallet increases directly. For instance, 1 LiSTX always equals 1 STX. With each rebase event during a Stacks cycle, holders see their LiSTX quantity increase.
Source: X
The same principle applies to LiALEX. Additionally, LiALEX can be wrapped into vLiALEX, similar to atALEX, exhibiting a growing intrinsic value. Wrapping LiALEX into vLiALEX is particularly advantageous for DeFi use cases, such as borrowing stablecoins against liquid Stacks as collateral. The growing intrinsic value of vLiALEX increases collateral value over time, enhancing borrowing potential and stability.
Disclaimer
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