DeFi darling Yearn.Finance is praised and gained a cult-like following thanks to its innovative and decentralized approach.
Every other day, yEarn creator Andre Cronje announces something new that gets the community excited and YFI surging.
On another such day, amidst the renewed uptrend in DeFi tokens after last week’s overdue correction, YFI jumped 20% to $31,252 but still 18% down from its all-time high of $38,869, as per CoinGecko.
“YFI is a cash generation machine, while many coins from prior cycles are digital petrocks,” said trader and economist Alex Kruger, who recently called Yearn Finance “a beast.” He added,
“Andre is a lightning fast builder delivering useful products. Something spectacular to observe, and unique within crypto. And he has a team now.”
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Today, Yearn.Finance, which has over $800 million in TVL and is next in line to be the Unicorn, is one of the hottest protocols in the DeFi space, which optimizes the yield on pools. In recent times, they have tokenized debt and insurance and launched vaults that allow users to put crypto-assets in and earn yields.
On Thursday, Cronje announced StableCredit, “a new protocol for decentralized lending, stablecoins, and AMMs.”
To be made available in the coming weeks, the idea here is to completely decentralize the lending system with this protocol where users can provide any asset and create tokenized credit called StableCredit USD.
“It is not the strongest of the species that survives, nor the most intelligent that survives. It is the one that is most adaptable to change” https://t.co/7OAmEOAwJn
— Noah Jessop (@njess) September 10, 2020
For instance, you provide x amount of USDC, and the protocol mints “x * USD value StableCredit USD” where the USD value of 1 USDC will be determined by USDC price oracle.
The USDC and StableCredit USD are provided into the 50:50 AMM; the automated market makers define the premium at which the user borrows or repay assets.
The StableCredit protocol then calculates the system utilization ratio, up to a maximum of 75%. The utilization ratio, which defines the amount of credit line the user can extend to borrow against, is created by AMMs.
In tokenized debt, anything over the credit line and you get liquidated.
Now, the utilization value of the supplied USDC is minted as StableCredit USD, which is “lending credit” that can be used to borrow other assets as well.
The community is, as expected, excited about the latest development. And although for now, as Cronje himself said, the DeFi space is experiencing a greed cycle with the governance “Ponzi” in the middle of it, developments like these will see that the protocols like Yearn.Finance, Aave, and Compound sustain in the long term when the greed ends.