Alpaca

Yield Aggregator

Alpaca Finance is the largest lending protocol that offers users leveraged yield farming on the BNB Chain and Fantom network.

Risk Rating
Average
Protocol Code Quality
Protocol Maturity
Protocol Design
Summary
What we like
Alpaca offers users the ability yield farm with leverage to multiply their returns. Farmers also can customize their exposure and risk, or use automated vaults to easily access market-neutral strategies without the need to constantly rebalance and monitor positions.
What we like less
Alpaca's lending platform provides leveraged yield farmers with undercollateralized loans that can only be used within the platform, but increases the risk that its AlpacaUSD (AUSD) stablecoin depegs.
What it means for you
Alpaca unlocks higher capital efficiency and provides you attractive yields that are umatched by under-leveraged competitors.
Information
Exploit/Hacks
None
Info
  • Website
  • Token: ALPACA
  • Tags: Yield Aggregator
Key Metrics
  • TVL: $26.1M (Rank #115)
  • TVL Ranking by Yield Aggregator: #0
  • Blockchain: Binance, Fantom
  • Chain TVL
    • Binance: $26M
    • Fantom: $95.34K
Risk Assessment
Average
Protocol Code Quality
  • Code reviewed by several experienced auditors including [CertiK]https://github.com/alpaca-finance/bsc-alpaca-contract/blob/main/audits/protocol/CertiK%20Security%20Assessment%20for%20Alpaca%20Finance%201.pdf) and PeckShield
  • Anonymous team reduces transparency
  • No documented protocol hacks since launch
Protocol Maturity
  • Core protocol launched in 2021; maturity over one year minimizes technical risk as smart contracts are well battle-tested
  • Top 5% by total value locked reduces risk
  • Multisig wallet controls protocol upgrades
  • Multisig consists of less than 4 signers, which makes the protocol more susceptible to centralization risks
  • Timelock is less than 48hrs, which provides users with less time to exit if any malicious upgrades are approved
  • Low voting power concentration reduces risk
Protocol Design
  • No death spiral concerns
  • Robust controls to mitigate oracle price manipulation
  • This protocol is susceptible to risks related to yield optimizers which deploy custom strategies to automatically manage user funds
  • Alpaca is the largest leveraged yield farming protocol on BNB Chain and has since expanded to Fantom to become a multichain platform
Things to know about Alpaca

How Alpaca works

Alpaca is a lending protocol that allows for leveraged yield farming by assuming additional risk within the platform. At its core, Alpaca is a two-sided money market platform with lenders and borrowers. Lenders earn interest by depositing assets into specific vaults. These assets are then offered to leveraged yield farmers as undercollateralized loans that can only be used within the Alpaca platform. Lenders receive a proportional balance of pool-specific interest-bearing tokens (ibTokens) to track their deposited funds and accrued interest. These ibTokens can further be used by lenders to generate additional yield by minting AUSD, which is forked from MakerDAO. Yield farmers use the undercollateralized loans provided by Alpaca to multiply their returns.

How Alpaca makes money

Alpaca generates protocol revenue from a variety of sources including yield farming performance fees, liquidation fees, lending interest, non-fungible token (NFT) royalties, AUSD stability fees, and vault management and withdrawal fees. In most cases, Alpaca has elected to use the protocol revenue to buyback and burn the native ALPACA token to enhance its value.

How you make money on Alpaca

You can earn yield by depositing assets to earn borrowing interest, maximize your LP positions through leverage, and earn passive income with AUSD from inflationary protocol emissions. ALPACA holders can also stake in the governance vault in exchange for xALPACA to receive platform revenue sharing. The deflationary nature of ALPACA also means the token price should increase over time simply from holding as more ALPACA is burnt from the market.