Status: Proposed
Discussion Link: Yield bearing Stable Coin Index - V2 on Avalanche - #4 by Cryptoshi
Created: 04/07/2022
Executive Summary
Concisely put, a stablecoin is a cryptocurrency that has its price pegged, typically 1:1, to a fiat currency, or exchange-traded commodity. Primarily, stablecoins allow users to execute local and cross-border trade more efficiently, without having to go through the costly and slow banking system.
Typically, every blockchain protocol usually has at least stablecoin hosted on the network. The stablecoin is then primarily used to facilitate trading, lending, or borrowing of other digital assets built on top of the blockchain ecosystem. In the Avalanche ecosystem, USDC is the primary stablecoin utilized by most DeFi protocols on the Avalanche networks. However, there are a few other stablecoins such as MIM, USDT, UST, DAI etc. that users on the Avalanche can interact with through different bridges, ramps and wrapping protocols.
While a stablecoin may not grow in value over time, they definitely add immense value to any ecosystem. Notably the emergence of yield bearing protocols on the Avalanche network have created unique opportunities for holders of these stablecoins to earn passive income through high-yield staking, lending and farming on various liquidity pools.
It is on the premise of volatility prevention and yield aggregation that the Cook Team has created the Yield Bearing Stablecoin Index on Avalanche. It is composed of some of the world’s prominent stablecoins. It enables Cook users and index selectors to enjoy the benefits of compounded yield aggregation while shielding their crypto assets from the ravenous volatility that has become synonymous with the cryptocurrency market.
Problem Statement
Since the launch of the Yield bearing Stable Coin Index on Avalanche, a lot of changes have occurred in the Avalanche ecosystem. There is a native token currently included in the Index composition that is no longer supported by the Yield Yak protocol.
This makes it imperative for urgent V2 updates to be made to the YBSC-Avalanche.
Proposed Solutions
- The Cook Team should de-list MIM from the Index composition as Yield Yak does not support it anymore.
- The Cook Team should deploy the latest Yak strategy for USDT.e, USDC.e and DAI.e
Rationale
- By delisting MIM and creating the YBSI-V2, we can ensure that all tokens in the composition are supported by Yield Yak.
- The strategy update will ensure that the yield aggregation remains efficient and relevant.
Specifications
- YB-SCIV2 on Avalanche should be created as an update to the existing YB-SCI
- The YB-SCIV2 contains USDC.e, USDT.e and DAI.e and each stablecoin should be deposited on Yield Yak protocol for interest generation.
| Component | Allocation | Yield Source |
|---|---|---|
| USDC | 40% | Yak Aave strategy |
| USDT | 40% | Yak Benqi strategy |
| DAI.e | 20% | YAK Aave strategy |
We hereby propose that the Cook tech team should implement an update to the existing Yield Yield Bearing Stablecoin Index on Avalanche by creating the YBSI-V2 according to the specifications outlined in the table above.