Yeti

CDP

Yeti is a decentralized borrowing protocol that lets users borrow a stablecoin (YUSD) in exchange for depositing yield-bearing assets. Yeti is a fork of Liquity protocol built on the Avalanche network.

Risk Rating
Average
Protocol Code Quality
Protocol Maturity
Protocol Design
Summary
What we like
Yeti offers users a broad range of liquidity provider (LP) tokens to borrow and lever against.
What we like less
Yeti features cross-collateralized borrowing which means multiple assets can be used within one debt position. This can result in the accumulation of bad debt if a riskier asset is used as collateral.
What it means for you
Provides you a great way to leverage on you LP token positions with low interest fees.
Information
Exploit/Hacks
None
Info
Key Metrics
  • TVL: $11.4M (Rank #126)
  • TVL Ranking by CDP: #14
  • Blockchain: Avalanche
  • Chain TVL
    • Avalanche: $11.43M
Risk Assessment
Average
Protocol Code Quality
  • Code reviewed by several experienced auditors including Haechi and code4rena
  • Anonymous team reduces transparency
  • No documented protocol hacks since launch
Protocol Maturity
  • Core protocol launched in 2022; maturity over one year minimizes technical risk as smart contracts are well battle-tested
  • Top 10% by total value locked reduces risk
  • Multisig wallet controls protocol upgrades
  • Multisig consists of less than 4 signers, which makes the protocol more susceptible to centralization risks
  • No timelock exists or no information documented, which mean a malicious actor could approve upgrades without any delay
  • Low voting power concentration reduces risk
Protocol Design
  • No death spiral concerns
  • Robust controls to mitigate oracle price manipulation
  • Cross-collateral markets are exposed to systemic risks as each asset creates incremental risks for the platform as a whole
  • Robust controls in place to prevent risky borrowing
  • Robust mechanisms in place to ensure healthy liquidations
  • Robust methods to accrue protocol reserves
Things to know about Yeti

How Yeti works

Yeti is a cross-collateral lending platform that combines protocol mechanics from Abracadabra and Liquity. It allows users to borrow up to 21x their portfolio of LP tokens within a single debt position. Borrowers receive the YUSD overcollateralized stablecoin, which can be used to lever up on the LP position by swapping for additional assets and redepositing into Yeti. YUSD can be redeemed for 1 USD of underlying collateral minus redemption fees. Users open a position (called a Trove) by depositing tokens on the platform and subsequently borrowing YUSD. Depositors continue to earn the LP token rewards and can use the YUSD to stake, provide liquidity, or leverage their LP position. Yeti uses a Safety Ratio to determine how risky a collateral is. Stablecoins have a ratio between 1 and 1.1, while non-stablecoins have a ratio between 0 and 1. Therefore, higher risk collateral have a lower safety ratio and given a lower weight when calculating the risk-adjusted return of the trove. The Stability Pool is the protocol's first line of defense in maintaing solvency. Users who borrow YUSD can then stake them in the Stability Pool to help repay the debts of any liquidated Troves. The minimum collateralization ratio for Troves is 110%. Over time, the Stability Pool is designed to lose a pro-rated share of their YUSD deposits while making up this loss through liquidation gains, as well as YETI token incentives.

How Yeti makes money

Yeti charges a one-time variable deposit fee that is dependent on the backing percentage of the underlying collateral. The backing percent represents how much of the protocol is backed by a particular asset; as this percentage increases and the collateral becomes higher risk, the deposit fee also increases. There is also a one-time redemption fee that is charged when a borrower's collateral is redeemed (only for the riskiest Troves). This fee is a minimum of 0.5%, with 0.1% going to the Trove being redeemed. Lastly, Yeti now charges a traditional interest rate on its loans. These rates start off around 0.5% annually and is expected to rise to 1-2% over time.

How you make money on Yeti

You can generate revenue via two different ways on Yeti. First, you can deposit YUSD to the stability pool to earn liquidation gains and YETI emission rewards. Second, you can stake the YETI token for boosted yields and reduced autocompounding fees in the future.