iearn USDC

yUSDC

yUSDC is an interest-accruing token that represents a USDC deposit in the Yearn protocol.

Risk Rating
Good
Summary
What we like
yUSDC is an interest-accruing version of USDC. USDC provides easy on-ramp and off-ramp to convert your USD into digital dollars that is backed 1:1 by underlying reserves.
What we like less
yUSDC is exposed to compounding risks as Yearn deploys the USDC across several DeFi protocols. USDC is also more centralized as Circle custodies the deposited USD and controls the minting and redemption of USDC.
What it means for you
yUSDC offers you a great way to earn yield on your USD, while maintaining exposure to a highly liquid instrument to hedge your portfolio in volatile market conditions.
Information
Blockchain
  • Ethereum
Info
  • Asset Type: ERC-20
Key Metrics
Risk Assessment
Good
Asset Strength

yUSDC is a large-cap, fully collateralized asset. This asset depends on a centralized entity for custody services. This asset is exposed to the underlying risks of Yearn, a protocol rated as Solid. yUSDC is a receipt of a USDC deposit in the Yearn protocol and accrues interest. USDC is backed 1:1 by USD reserves held with a licensed custodian (Circle). The asset has an uncapped supply but has inflation control or burn mechanisms in place.

yUSDC is a stablecoin that usually trades within 20bps of its peg to USD, which makes it a solid store of value.

Asset Volatility

yUSDC is a stablecoin that usually trades within 20bps of its peg to USD, which makes it a solid store of value.

Dependencies

iearn USDC has no dependencies.

Things to know about yUSDC

Who invented USDC?

USDC launched on the Ethereum mainnet in September 2018 as a partnership between Circle and Coinbase through the co-founding of the CENTRE Consortium. Customers on Coinbase with USD accounts can exchange 1 USDC for 1 USD and vice versa. USDC is issued by financial institutions and established fintech firms that have met its membership criteria.

How does yUSDC work?

yUSDC is a receipt of a USDC deposit in the Yearn protocol on Ethereum and accrues interest. USDC is backed 1:1 by USD reserves held with a licensed custodian (Circle). The process of minting USDC tokens involves interacting with CENTRE contracts which manage the minting and burning of USDC. First, a user sends USD to a licensed token issuer's bank account. Second, the issuer uses the USDC smart contract to mint an equivalent amount of USDC. Third, the newly created USDC is sent to the user's on-chain address, while the deposited USD is held in reserve. The process for redeeming USDC for USD is just the reverse process.

How secure is yUSDC?

yUSDC is exposed to compounding risks as Yearn deploys the USDC across several DeFi protocols (a failure in any protocol can lead to the entire pool failing). USDC is a centralized stablecoin that is perceived as safer and more transparent than USDT as its reserve composition only consists of cash and short-term U.S. government bonds. USDC regularly undergoes audits and publishes monthly reserve reports and attestations that prove the number of USD reserves is greater than the amount of USDC in circulation. Nonetheless, USDC can ""blacklist"" any of its associated addresses at will. When a USDC address is blacklisted, it can no longer receive USDC and all of the USDC controlled by the address can no longer be transferred on-chain.