YUSD Stablecoin

YUSD

YUSD is an overcollateralized stablecoin issued by the Yeti protocol.

Risk Rating
Best
$0.53
37.71%
Summary
What we like
Offers users a permissionless, decentralized method to gain exposure to a non-volatile store of value that is backed by its underlying collateral.
What we like less
YUSD is a cross-collateral stablecoin, which means users can borrow based on a portfolio of assets. This exposes borrowers to incremental risks as the failure of any collateral can result in YUSD becoming undercollateralized.
What it means for you
YUSD is a great instrument to earn "stacked" yield by levering up with your yield-bearing assets as collateralization ratios generally improve over time while earning additional yield by putting USD to work for you in DeFi.
Information
Blockchain
  • Avalanche
Key Metrics
  • Market Cap: $6.4M
  • Fully Diluted Valluation: $6.4M
  • FDV / MC: 1
  • Ranking inside Exponential (among stables): #33
  • Circulating Supply: 12,063,619
  • Total Supply: 12,063,619
  • Volume (24H): $173.3
  • ATH: $4.17 (04/23/2023)
  • ATL: $0.08 (02/26/2024)
Risk Assessment
Best
Asset Strength

YUSD is a low-cap, fully collateralized asset. This asset is exposed to the underlying risks of Yeti, a protocol rated as Watch out.

YUSD is a stablecoin that trades within 100bps of its peg to USD, making it a somewhat volatile store of value.

Asset Tokenomics

YUSD has an uncapped supply but has inflation control or burn mechanisms in place. A fraction of the entire YUSD supply is always deposited inside the stability pool. Yeti uses the stability pool as a liquidity reserve to help mitigate liquidity crises in case of black swan events. This also serves as a price stability mechanism as YUSD depositors withdraw their stability deposits and sell in the open market.

Asset Volatility

YUSD is a stablecoin that trades within 100bps of its peg to USD, making it a somewhat volatile store of value. A fraction of the entire YUSD supply is always deposited inside the stability pool. Yeti uses the stability pool as a liquidity reserve to help mitigate liquidity crises in case of black swan events. This also serves as a price stability mechanism as YUSD depositors withdraw their stability deposits and sell in the open market.

Dependencies

Yeti

Things to know about YUSD

How is YUSD created?

YUSD is a collateral-backed stablecoin created by Yeti Finance. Its value is pegged to the USD and kept stable through an economic system of aligned financial incentives. YUSD is minted when users borrow against locked collateral (called a trove) and burned when debt is repaid. Another way to obtain YUSD is swapping through decentralized exchanges like Trader Joe and Curve. These pools will be heavily incentivized in the beginning to ensure deep liquidity for the YUSD stablecoin.

What is YUSD used for?

YUSD is a price-stable asset that is mostly used as a hedge against volatility as it maintains a stable value of around 1 USD. Users need an alternative store of value and medium of exchange to navigate the highly volatile crypto markets. YUSD addresses this problem for crypto native users, as well as enables a wide range of financial activities including market making against another stable asset and levering up on crypto assets.

How is the price of YUSD kept stable?

YUSD is an asset-backed currency that maintains a free-floating peg to the USD. This means that its value may differ from exactly 1 USD from time to time given current market conditions. YUSD follows the DAI overcollateralization model to maintain its peg via a combination of external market forces, internal economic incentives, and policy tools controlled by YETI token holders. The different market actors all acting in self-interest, work in concert to maintain YUSD's stability. Borrowing fees are one policy tool that is used to manage the circulating supply of YUSD. Decreasing the borrowing fee helps incentivize the minting of additional YUSD, while increasing the borrowing fee has the opposite effect of reducing the rate of YUSD creation. Vault owners also play an important role in maintaining the peg by minting YUSD when spikes in demand push its price above 1 USD, and conversely purchasing YUSD to pay down their debt at a discount when it trades below 1 USD. Lastly, arbitragers contribute to maintaining the YUSD peg by taking advantage of price differences across various market makers.