Loans that pay themselves

Separate the debt outcome from the collateral outcome

A self-repaying loan is often described as borrowing against future yield. That phrase is useful as an introduction, but incomplete for Alchemix v3. Scheduled redemptions use collateral to cancel corresponding debt, and MYT yield replenishes collateral. To assess the outcome, track the loan obligation and the remaining collateral independently. You should not assume every unit of canceled debt was funded by newly earned yield.

This distinction affects exit planning. If your goal is liquidity now and a certain amount of assets later, a debt-only forecast cannot establish whether the goal will be met. The remaining assets depend on earnings, settlement outflows, fees and possible losses. The repayment calculation article shows the accounting with clearly labeled illustrative numbers.

Borrowing capacity is not a personal risk budget

The documented maximum LTV defines a protocol borrowing limit, not a recommendation for every depositor. Starting near the ceiling leaves less room for a decline in MYT backing. Choosing a smaller loan provides more room in that particular risk dimension, although it does not remove contract risk, stablecoin risk or exposure to the vault's strategies.

Decide how much liquidity you actually need before using the maximum available amount as an anchor. Then consider what change in collateral value would make the position uncomfortable and whether you could respond under unfavorable conditions. The MYT-loss stress test is a better starting point than assuming that like-kind borrowing means liquidation is impossible.

How to interpret a yield figure

A yield number needs context: which market it refers to, whether it is historical or estimated, and whether fees are already deducted. Comparing a gross figure with a net figure can make one option appear more attractive than it is. Applying a yield fee twice can create the opposite mistake. Check the app's explanation and the official fee schedule rather than treating an isolated percentage as a complete return estimate.

Even a correctly interpreted yield is not a guaranteed repayment clock. The amount of collateral earning yield can change, rates can change and a strategy can produce losses. A static calculation is valuable for understanding sensitivity, but cannot predict a future position balance. This is why the durations above are explicitly separated from the actual v3 redemption mechanism.

Plan the cost of obtaining and returning liquidity

The face-value loan is not necessarily the amount you can spend. An alAsset swap can produce different proceeds after price impact and fees. An eventual exit may involve buying an asset back, settling debt, withdrawing collateral and paying network costs. Review the full sequence before interpreting zero borrowing interest as zero total cost.

Repayment methods also depend on whether debt is earmarked. The accepted settlement asset and fee treatment should be confirmed for your position rather than inferred from an old tutorial. The manual repayment checklist explains what to check before and after signing.

Questions borrowers commonly ask

Is a self-repaying loan free money?

No. The loan is backed by collateral, and debt cancellation can consume that collateral. Fees, uncertain yield and losses remain relevant. The model changes the way borrowing is funded and settled; it does not create an unconditional profit.

What if I need immediate cash?

Compare an actual net swap quote with your required amount. Transmuter redemption has a term and additional conditions, so it is not equivalent to immediate liquidity. Read the synthetic asset overview before choosing an exit.

How should I compare this with another lending service?

Use the same spending requirement and time horizon, then compare debt denomination, costs, collateral exposure and exit flexibility. Our Alchemix lending comparison explains why unlike headline rates do not establish a winner.