What Is YUSD Stablecoin (YUSD) ? Complete Guide Review About YUSD Stablecoin

What Is YUSD Stablecoin (YUSD) ?

YUSD Stablecoin is a cutting edge decentralized borrowing protocol built on Avalanche that allows users to borrow up to 11x against LP tokens, staked assets like Liquid AVAX, and base assets like WETH – and over 20x on yield-bearing stablecoins, all at a 0% interest rate. Users continue earning farming and staking rewards when these assets are deposited onto Yeti Finance’s platform, opening up numerous leveraged farming strategies.

YUSD Stablecoin Borrowers receive YUSD (an over-collateralized USD stablecoin) at a minimum ratio of 1 YUSD to 1.1 USD in collateral. Users will then be able to use the YUSD to purchase additional assets, hedge their position, or provide liquidity for additional rewards. Yeti Finance also offers cross-margining, something the majority of borrowing protocols don’t have. In simple terms, users on Yeti Finance can open up a borrowing position on their entire portfolio instead of just a single asset.

YUSD Stablecoin Token Storage Key Points

Vision

Yeti Finance has a much bigger long-term vision. With decentralized borrowing, Yeti Finance will become a “liquidity black hole” as users drop in their entire portfolio of LP tokens, staked assets, and base level ERC-20 tokens. This will enable our long-term goal for Yeti Finance to become decentralized finance’s prime broker. A single protocol with access to a user’s entire portfolio will be able to offer the most optimal lending rates, netting services to minimize collateral requirements across financial instruments, and other products including flash loans and options (i.e. Theta Strategies). Think Compound + Yearn + Ribbon + Opyn + Alpha Finance Lab in one

Stability Pool and Liquidations

The Stability Pool is the first line of defense in maintaining system solvency. It achieves that by acting as the source of liquidity to repay debt from liquidated troves—ensuring that the total YUSD supply always remains backed. When any Trove is liquidated, an amount of YUSD corresponding to the remaining debt of the Trove is burned from the Stability Pool’s balance to repay its debt.

In exchange, the entire collateral from the Trove is transferred to the Stability Pool. The Stability Pool is funded by users transferring YUSD into it (called Stability Providers). Over time Stability Providers lose a pro-rata share of their YUSD deposits, while gaining a pro-rata share of the liquidated collateral. However, because Troves are likely to be liquidated at just below 110% collateral ratios, it is expected that Stability Providers will receive a greater dollar-value of collateral relative to the debt they pay off.

Liquadtion

To ensure that the entire stablecoin supply remains fully backed by collateral, Troves that fall under the minimum collateral ratio of 110% will be closed (liquidated). The debt of the Trove is canceled and absorbed by the Stability Pool and its collateral distributed among Stability Providers. The owner of the Trove still keeps the full amount of YUSD borrowed but loses ~10% value overall hence it is critical to always keep the ratio above 110%, ideally above 150%

Yeti’s Key Benefits

Borrow against entire portfolio

Rather than one individual debt position for each of your assets, users can borrow against all their assets at once allowing for better protection against liquidations.

Maximum Capital Efficiency

Yeti’s low minimum collateral ratios allow users to get up to 11x leverage on base assets, staked assets, and LP tokens – and 21x leverage on interest bearing stablecoins.

0% Interest Rate

As a borrower, there’s no need to worry about constantly accruing debt.