MCS | Find out how Yeti Finance got $700m in TVL in just 4 days

MCS | Find out how Yeti Finance got $700m in TVL in just 4 days


Greetings from MCS, the derivatives trading platform where traders always come first.

source: Yeti Finance

Today, we're going to talk about the recently launched Yeti Finance!

What is Yeti Finance?

Yeti Finance is a cutting edge decentralized borrowing protocol built on Avalanche that allows users to borrow up to 11x against base assets like WETH, staked assets like Liquid AVAX, LP-tokens and 21x on yield-bearing stablecoins, all at a 0% interest rate.

In addition, Yeti Finance provides cross-margin that most borrowing protocols do not have. This allows Yeti Finance users to have a borrowing position of their entire portfolio and multiple assets can act as collateral for loans, making borrowing on volatile assets much safer.

This significantly reduces the risk of liquidation due to asset volatility and sharp drops, thereby enriching liquidity.

YETI’s Stable Coin : YUSD

1. What is YUSD?

YUSD is a USD fixed stable coin used by the Yeti Finance Protocol to repay loans.

Furthermore, users can always redeem the underlying collateral at face value.

2. How does YUSD closely follow the price of USD?

The ability to redeem YUSD for collateral at face value (i.e. 1 YUSD for $1 of collateral) and to mint YUSD at 103% against USDC create a price floor and price ceiling (respectively) through arbitrage opportunities.

Yeti Finance call these "hard peg mechanisms" since they create profit opportunities anytime YUSD moves off the peg and those opportunities remain profitable until YUSD returns to peg.

Additionally, the debt issuance fee increases during times of significant redemptions volume (implying YUSD is below $1). This makes borrowing less attractive and keeps new YUSD from entering the market, which reduces downward price pressure.

3. What are redemptions?

A redemption is the process of exchanging YUSD for collateral at face value. That is, for 1 YUSD you get 1 Dollars worth of collateral in return. Also, users can redeem their YUSD for collateral at any time without limitations. However, redemption fees are charged.

4. Advantages of YUSD

Decentralized : YUSD is a decentralized stablecoin. It is not governed, backed, and/or controlled by a central entity like USDT or USDC. This protects holders of YUSD from centralization risks such as the freezing of funds, lack of transparency in its backing, and risk of regulation.

Directly Redeemable : Unlike most stablecoins, YUSD is directly redeemable by anyone holding YUSD. At any time, YUSD can redeemed for $1 in underlying collateral minus redemption fees giving it inherent value.

Hard-Pegged : Due to YUSD’s hard peg mechanisms, YUSD should always trade above $1.00 and below $1.02. Anything more or less presents a simple opportunity for arbitragers. Unlike MIM, this process is market-driven and does not rely on central actors to adjust interest rates to incentivize users to payback loans.

5.Economic and Smart Contract Security

A stablecoin must be secure and scalable. Yeti Finance has undergone four independent smart contract audits, two economic analyses, and multiple independent peer reviews to ensure YUSD is a safe and secure currency.

In particular the team has worked with 3σ Labs, a world renowned formal verification and economic modeling firm to build a robust economic model of the system and simulate the protocol’s behaviors under a series of extreme market conditions to ensure that it remains solvent at all times.

YETI’s Tokenomics

What is $YETI?

$YETI is the Yeti Finance protocol token. In the future, $YETI will transition into a governance token.

Users can stake YETI to earn more YETI while also accruing veYETI over time.

veYETI can be be used in three ways:

  1. Boosting $YETI rewards for stability pool staking
  2. Boosting $YETI rewards for providing liquidity on YUSD.
  3. Reducing the protocol’s cut of yield on deposited assets (YUSD rebates)

The veYETI model is designed to incentivize users to accumulate and stake $YETI through providing real utility to farmers and protocol users.

Users can begin accumulating veYETI at launch. Shortly afterwards, YETI rewards will be rolled out to YETI stakers, and then veYETI utility in early May.

$YETI Distribution

source: Yeti Finance

50% Community Incentives: Liquidity mining incentives, long-term liquidity providers, genesis liquidity providers, and grant programs.

25% Current and Future Team: This allocation linearly vest over a three year schedule with a 3-month lock. This allocation will be split amongst a core team of eight, non-core contributors, and future team members.

15% Foundation: Development cost, economic security, smart contract auditing, service providers (legal), operational expenses, and partnerships.

1.17% Strategic Investors: Avalanche Foundation, Genesis Block Ventures, Trader Joe, and the founders of BENQI (Hansen, JD, Dan) are the partners who have supported Yeti Finance since day one. Strategic investors will have the same vesting schedule as the team and will continue to advise on future growth of the protocol.

8.83% Future investors: This allocation is set aside in the case it would be definitively beneficial to everyone to bring in additional strategic investors. All future investors will be on a vesting schedule. If not used, this 9% will be divided amongst the Foundation and Community Incentives pool.

YETi’s Emission/Vesting Schedule?

The schedule is front-loaded to bootstrap the protocol, with a higher emissions rate for the first 5 months, and then a constant emissions rate for the next four years after that of 5,000,000 YETI emitted per month. Token emissions will begin in April 2022.

Source: Yeti Finance

Community Token Distribution

Yeti will be allocating roughly 70% of all Yeti emissions to Curve liquidity for the first 6 months, 20% to the stability pool, and 10% to Trader Joe pools — and then re-evaluate from there.

Emissions Table

source: Yeti Finance

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