Y2K
Y2K offers a suite of on-chain structured products designed to allow users to hedge, leverage, and speculate on the risk that a particular pegged asset deviates from its fair market value.
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- Documentation
- Auditors
- Please see our FAQ on experienced auditors
- Website
- Token: Y2K
- Tags: Insurance
- TVL: $62.2K (Rank #245)
- TVL Ranking by Insurance: #0
- Blockchain: Arbitrum
- Chain TVL
- Arbitrum: $62.18K
- Code reviewed by several experienced auditors including PeckShield, Halborn, and code4rena
- Anonymous team reduces transparency
- No documented protocol hacks since launch
- Latest protocol version launched in 2022; maturity over one year minimizes technical risk as smart contracts are well battle-tested
- Bottom 80% by total value locked increases risk
- Core contracts can be upgraded with just an EOA wallet
- No timelock exists or no information documented, which mean a malicious actor could approve upgrades without any delay
- At least one critical governance issue documented
- No governance token and/or contracts are fully immutable
- No death spiral concerns
- Robust controls to mitigate oracle price manipulation
- This protocol is susceptible to risks related to insurance platforms where your principal is always at risk in case of a system deficit
How Y2K works
Y2K is a depeg insurance platform with several products. Earthquake is the flagship product that enables the creation of fully collateralized insurance vaults. Users can use these vaults to hedge, speculate and underwrite the volatility risk associated with various pegged assets like stablecoins, liquid wrappers and other derivative assets. Users hedge against depeg risk by depositing ETH as collateral into the Hedge vault and receiving y2kTokens in return. Currently, users can hedge against FRAX, USDC, USDT, MIM and DAI on a weekly and monthly basis. On the other side, risk takers can sell insurance by depositing ETH in the Risk vault and receiving y2kTokens in return. Each pair of vaults has the following properties: asset, epoch, and strike price. The strike price is how far from the peg the specific asset needs to deviate before a liquidation event is triggered and thus a payout to the Hedge vault depositors. Users can deposit at any time before the epoch starts, after which the funds are locked for the duration of the epoch. Y2K users Chainlink oracles to monitor the prices of the pegged assets. In the event a depeg hits the strike price, the funds in the Risk vault are liquidated and awarded proportionally to the depositors in the Hedge vault. Wildfire is the secondary market built on top of Earthquake. Since user collateral is locked during an epoch cycle, Wildfire enables users to exit their positions in real-time via its order book system. These positions are redeemable for a fraction of the collateral in case of a depeg event, which allows traders to speculate on depeg sentiment in a secondary market without needing to lock their positions.
How Y2K makes money
Y2K charges a 5% fee on all Hedge vault deposits. There is also a 5% fee collected on Risk vault deposits upon a depeg event. If there is no depeg, then no fee is charged.
How you make money on Y2K
You can deposit ETH into the Hedge vault to hedge against depeg risk. Alternatively, if you believe a depeg is unlikely, then you can deposit ETH into the Risk vault to earn insurance premiums. Risk vault depositors receive premiums regardless of whether a liquidation event occurred.