Stella

Stella (formerly Alpha Homora) offers leveraged yield strategies with a pay-as-you-earn borrowing model: borrowers pay 0% interest and instead share a portion of realized profit with lenders. Stella is the rebranded continuation of Alpha Finance Lab and Alpha Venture DAO, whose flagship product Alpha Homora was DeFi's first leveraged yield farming protocol, launched in October 2020 (Cointelegraph, May 2021). The rebrand to Stella was announced in May 2023, repositioning the project from a DeFi lab into a single product: leveraged strategies with 0% cost to borrow (Stella rebrand announcement, 23 May 2023). Instead of charging interest, Stella uses a Pay As You Earn model: borrowers, called leveragoors, pay nothing while a position is open, and Stella takes a cut of the net profit only when a profitable position is closed (Stella strategy docs). Of that yield cut, 20% is collected as protocol fees accruing to ALPHA stakers (Stella FAQ). The lineage carries a heavy credit history: a February 2021 exploit of roughly $37.5m drawn from Cream's Iron Bank, and a bad debt dispute that ran into 2023 (Cream Finance post mortem, DL News, 2023).

0% borrow APR: lenders are compensated from strategy profit share rather than interest, aligning incentives between borrowers and lenders.

- Stella Strategy: The leverage side of the protocol. Users ("leveragoors") open leveraged positions on supported DeFi strategies, initially Uniswap V3 concentrated-liquidity pools (e.g. ETH/USDC.e, ETH/USDT, ETH/ARB, WBTC/ETH), borrowing liquidity from Stella Lend at 0% borrowing interest to size up their positions and yields. - Stella Lend: The lending side. Capital providers deposit assets into lending pools and earn 'real yield' generated by leveragoors' strategy activity rather than a fixed interest curve. Because returns derive from strategy profits, there is no traditional APY cap. - Pay-As-You-Earn (PAYE) fee model: Stella's core mechanism replacing borrowing-interest accrual. Leveragoors pay 0% cost to borrow for the whole leverage duration; only when a position closes with positive net yield is a portion of that profit deducted as the fee to lenders ('no gain, no pay'), aligning incentives between borrowers and lenders.

- ALPHA (ALPHA): Token, Governance & Utility Token

- Smart Contract: Stella's leverage relies on 'spell'-style strategy contracts routing capital between Stella Lend and external protocols (e.g. Uniswap V3). The predecessor Alpha Homora suffered a ~$37M exploit in Feb 2021 where a faked spell contract was treated as legitimate, demonstrating the concrete danger of this composable-strategy design. - Systemic: Leverage layered on top of external DeFi protocols creates protocol-to-protocol contagion. The 2021 Alpha Homora incident abused Cream Finance's Iron Bank and left ~$32M of cross-protocol bad debt, showing how a failure in one integrated protocol can cascade into Stella's positions and lenders. - Collateral: Leveraged positions (initially Uniswap V3 LP positions) are volatile and subject to impermanent loss; adverse price moves can push a leveragoor's position below the required collateralization and trigger liquidation, with lenders exposed to shortfall if liquidation is not fast enough. - Oracle: Valuing leveraged LP positions and triggering liquidations depends on accurate on-chain price feeds. Manipulated or lagging oracle prices could misvalue collateral or delay liquidations, a recurring attack surface for leverage/LP protocols. - Governance: The protocol and ALPHA token are steered by the Alpha Venture DAO / Stella core team, which sets supported strategies and risk parameters. Concentrated control over which strategies are whitelisted and how the PAYE fee is set concentrates decision-making risk.

- Underwriting: similar in that Collateral only, no borrower assessment; leverage granted against the deposited position; differs in that Margin lending against eligible collateral - Collateral: similar in that The leveraged strategy position itself is the collateral; differs in that Pledged securities in a margin account - Settlement: similar in that On chain at position close, when the yield cut is calculated; differs in that Performance fee crystallisation at redemption - Rate setting: similar in that 0% contractual borrow cost; the lender's return is a share of net profit, of which 20% of the yield cut is protocol fee; differs in that Zero coupon performance participation, similar to a hedge fund incentive fee replacing a management fee - Recourse on default: similar in that Non recourse; historically, where the protocol itself was exploited, the debt was pushed onto a counterparty lender (Iron Bank) and negotiated over years; differs in that Counterparty credit exposure crystallising into a workout negotiation - Regulation: similar in that n.a. No named entity or regulatory status; Kraken lists ALPHA under a UK crypto asset statement rather than any securities framework; differs in that Regulated prime brokers must hold client assets under client money rules