The covenant’s name was motivated by Alohomora, a snippet from the Harry Potter book series. With regards to the protocol, the snippet symbolizes the unlocking of “Alpha through yield farming with leverage”.
The protocol was created by Alpha Finance Labs, well-known for hosting its “Alpha Lending” tool on Binance’s Smart Chain last month. Alpha Homora intends to lure investors on Ethereum’s DeFi.
Notably, Alpha Finance Lab has the financial backing of three top venture capital companies: Multicoin Capital, Spartan Group and DeFiance Capital.
Alpha Homora runs under the principle comparable to covenant yearn.finance. Its intention is to “industrialize yield farming”, i.e. to pave way for the utilization of investment methods to maximize investors’ earnings.
Therefore, its users can correspond with an uncomplicated interface to take part in Alpha Homora as yield farmers, as ETH lenders to receive interest on funds, as liquidators to be awarded 5% in liquidation bonuses and as fortune seekers who qualify to receive 3% in the form of reinvestment bonuses.
The platform provides an asset with a maximum of 3x leverage, facilitating entry into yield farming. By borrowing ETH funds, investors will be able to connect with the Uniswap covenant and triple the returns they normally receive.
Other than that, the covenant backs liquidity pools such as WETH/WBTC, WETH/USDT, WETH/USDC and WETH/DAI on Uniswap.
Furthermore, the covenant facilitates tokens received via yield farming to be reinvested once in a day without any intervention.
1) $ALPHA Homora! ?♀️ We are excited to announce that our first Alpha product on #Ethereum network, Alpha Homora, will be launched on Thursday Oct. 8 @ 1pm UTC. Let the magic begin ? ?https://t.co/FVG05aKB0S
— Alpha Finance Lab (@AlphaFinanceLab) October 5, 2020
Users of the covenant will also be rewarded with a governance token named ALPHA. The token permits its holders to offer liquidity or obtain a percentage in covenant fess by staking.
Furthermore, ALPHA will remain as the “main token” for using in conjunction with other applications introduced by Alpha Finance Lab.
The key characteristic is that it will be used as a second stage governance token for several products. Therefore, holders will be able to select top covenant metrics and how the covenant connects with other apps.
ALPHA is already trading on Binance platform and also available on launch pool for staking with BUSD, BNB and BAND. Users also qualify to receive rewards in ALPHA with respect to their level of participation:
“A total of 2.5M ALPHA will be distributed to protocol users across 30 days, based on how much they us the protocol (75% to lenders, 25% to borrowers). Usage stats will be collected from Thursday Oct. 9th @ 12:00pm UTC to Sunday November 8th 12:00PM UTC.”
Of late, the Alpha Finance Lab group issued an appraisal on Alpha Homora. Through a Tweet, the team informed that they would halt disbursing debt for the WETH-DPI pool due to a likely security threat to the covenant. Nevertheless, the product was not totally halted and the Alpha Finance Lab team informed that the step was taken only as a safety precaution:
“There has not been an attack. No funds are at risk, and we take security very seriously. The attack would have required the attacker to put up a lot of capital and cannot be done using flash loans. While it is low-likelihood, we’ve decided to be on the safer side and disable issuing new debts on the WETH-DPI pool until further notice. Security is our number one priority.”
New update on #AlphaHomora: we have paused issuing new debts to the WETH-DPI farming pool in response to a potential security issue brought to us by @samczsun. You will still be able to farm with 1x leverage on WETH-DPI as well as on leverage on other Uniswap pools.
— Alpha Finance Lab (@AlphaFinanceLab) October 10, 2020