Stella
Credit · Leveraged Yield · ALPHA
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.
Pay-as-you-earn leveraged strategies (ex-Alpha Homora).
Protocol TVL
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Risks identified
- 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.