The borrowing process on Alchemix V3 is simpler than most lending protocols: deposit ETH or USDC as collateral, then directly mint alETH or alUSD. You can borrow up to 90% of your collateral value, with no interest. Your debt only decreases automatically through protocol yield and redemption mechanisms, never growing over time.
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If you have used V2 before, the key change in V3 is the repayment source and redemption mechanism: repayment no longer comes from automatic liquidation of "harvested" yield, but from periodic redemption events in the Transmuter. This changes how you manage your position.
How to Borrow
The Alchemix V3 user interface is organized around the Vaults page. You need to make a deposit before borrowing.
Step 1: Check your available credit. On the Vaults page, check the Available Credit amount. This depends on the type and amount of collateral you deposited. ETH deposits correspond to borrowing alETH, and USDC deposits correspond to borrowing alUSD. Cross-borrowing is not possible.
Step 2: Initiate the borrow. Click the Borrow button, enter the amount in the pop-up window, or click Max to borrow the maximum. The borrow cap is determined by a 90% LTV, but the actual available amount will be shown in Available Credit.
Step 3: Confirm the transaction. Your wallet will prompt you to approve the transaction. Once confirmed, the alAssets (alETH or alUSD) will appear in your wallet. If you checked "Transfer loan to a different wallet," the assets will be sent directly to the specified address instead of your connected wallet.
After borrowing, the Debt amount at the top of the Vaults page will increase accordingly.
Repayment: Three Mechanisms Working Together
Alchemix V3's "self-repayment" is completed by three sources together. Understanding when each one acts is key to managing your position.
Manual repayment (available anytime). You can send alAssets back to the protocol at any time to repay part or all of your debt. This is the fastest way to exit your position.
MYT yield (ongoing). Your collateral is wrapped into Mix-Yield Tokens (MYT) that earn yield across multiple strategies. These yields accumulate into your collateral value, indirectly improving your LTV health.
Transmuter redemption (triggered on a fixed schedule). This is the most important change in V3. When other users deposit alAssets into the Transmuter and wait for redemption, redemption events deduct a portion of your collateral to repay a corresponding share of your debt, while also reducing your collateral by the same value.
Key understanding: Transmuter redemption is not "repaying with yield." It directly consumes your collateral to reduce debt. This means users with high LTV are more affected by redemptions — the more you borrow, the higher the proportion of collateral consumed by redemptions.
Exiting Your Position
Exiting falls into two cases, depending on whether you still have outstanding debt.
If your debt is cleared (or you never borrowed): Simply click Withdraw on the Vaults page. Enter an amount or choose Max to withdraw everything. The system will unwrap the MYT and return ETH or USDC to your wallet. When withdrawing, you can choose to receive standard assets (like ETH) or yield-bearing assets (like yvETH).
If you still have outstanding debt: You cannot withdraw all your collateral directly. Your LTV must remain below the 90% cap. Withdrawing collateral pushes your LTV higher — because collateral decreases while debt stays the same. If the withdrawal would push LTV past the 90% red line, the system will reject the transaction. The way to do it is to first manually repay some alAssets to lower your LTV, then withdraw.
Steps for withdrawal: open the corresponding Vault → switch to the Withdraw tab → enter an amount or choose Max → confirm the transaction. The page will show an LTV health bar to help you judge your position relative to the 90% cap.
Fees and Actual Costs
"0 interest" does not mean zero cost. V3's fee structure determines your actual expenses:
| Fee Type | Current Rate | Trigger Condition |
|---|---|---|
| Borrower redemption fee | 0.50% | Deducted when Transmuter redemption repays debt |
| Transmuter redemption fee | 0.00% | Withdrawing assets from Transmuter |
| Early exit fee | 1.00% | Exiting early before the redemption queue completes |
| MYT yield fee | 15.00% | Deducted from MYT yield |
The borrower's 0.50% redemption fee is only charged when a redemption event occurs, not on a time basis. Its effective annualized cost depends on your starting LTV and the redemption cycle. The higher the LTV and the faster the redemptions, the more noticeable this cost becomes.
Risks to Assess in Advance
LTV management is the core. Although Alchemix officially says liquidation is "extremely unlikely," Transmuter redemptions will continuously consume collateral from high-LTV users. If you borrow close to 90% and do not actively manage your position, redemption events may make your position very passive. A low-LTV strategy is closer to the "set and forget" experience of V2.
Depeg risk of alAssets. alETH and alUSD rely on Transmuter's 1:1 redemption to maintain price. If you need to sell alAssets on a DEX for liquidity, the price may be below face value. Transmuter's fixed-schedule redemption mechanism is designed to narrow this deviation, but it cannot completely eliminate short-term volatility.
Strategy risk, not price liquidation. V3's design logic is: collateral losses only come from failure of the underlying yield strategies, not from ETH/USDC price fluctuations. Because you are borrowing "like for like" (depositing ETH to borrow alETH), price movements do not directly trigger liquidation. But if one of the strategies inside MYT suffers a loss, your collateral will shrink.
A leading global cryptocurrency platform,suitable for both beginners and experienced traders.
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References
- Alchemix Docs·Welcome, page published or updated: 2026-03-29; verified: 2026-10-12.
- Alchemix Docs·Self-Repaying Loans, page published or updated: 2026-04-02; verified: 2026-10-12.
- Xangle·Introducing Alchemix v3, page published or updated: 2025-08-04; verified: 2026-10-12.
- Alchemix User Docs·Take a Self-Repaying Loan, page published or updated: 2024-07-30; verified: 2026-10-12.
- Alchemix User Docs·Withdraw funds, page published or updated: 2024-07-30; verified: 2026-10-12.
- Alchemix Docs·Withdraw, page date not specified; verified: 2026-10-12.
- Alchemix Docs·Fees, page published or updated: 2026-04-02; verified: 2026-10-12.
- Alchemix Docs·Introduction, page date not specified; verified: 2026-10-12.
