$YLD About to Eat $AAVE's Lunch

$YLD About to Eat $AAVE's Lunch

By kevW!ls0n | coinMANIA | 25 Feb 2021


Few realize the amount of idle ERC-20 capital just sitting on the sidelines, watching all the Stablecoins, Ether, Wrapped Bitcoin, and “Blue Chip” alts get utilized in DeFi lending platforms like Aave and Compound. 

Sure, these assets have a lot of liquidity, but you can’t discount the ocean of other ERC-20 tokens and all the capital that comes with them. We’re talking billions of dollars here...this ain’t chump change, not anymore. 

Therefore, the next DeFi Lending platform to support the lending and borrowing of any ERC-20 token will be a true game-changer. It will open the floodgates to an immense amount of capital that couldn’t previously be lent out or borrowed with existing platforms and gain a massive edge over the competition. 

Can I get a drum roll, please?

The platform doing just that and more is Yield Credit (YLD) – a DeFi lending platform with incentivized borrowing & lending for any ERC-20 token. Yield Credit will be launching on Ethereum mainnet soon. 

When it does, watch out!

The Issue of Pumped TVLs

Besides the fact that Aave is exclusive in what tokens they allow their users to lend and borrow, they have an even bigger issue at hand; nearly 70% of Aave deposits are NOT utilized. That’s like $1.2B worth of capital and it's not getting any smaller… 

But it's not just Aave who has this issue. Other DeFi Lending platforms do as well, take a look:

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Lending Protocols Utilization of Supply Deposited, Data Source: Messari

As seen in the image above, Aave utilizes just 30% of deposits, Compound utilizes 48%, Maker 33%, Cream 52%, and Alpha utilizes the most with 90%. 

Therefore, the three largest DeFi protocols in terms of TVL (Maker, Aave, and Compound respectively) don’t even use half of their supplied deposits… that’s more than $8.5B in deposited capital that’s NOT being utilized.

This is a huge issue for two reasons:

  • It lowers the APY % for lenders - People think a big TVL is good, that it means they should deposit capital there too! However, this couldn’t be further from the truth. If the TVL is NOT being utilized it just lowers the APY % for lenders because there is ample capital available to borrow. 
  • If TVL is NOT being used, it will leave! - Protocols with pumped TVLs that are not being utilized are at risk of suffering massive outflows of capital to protocols that offer better incentives and utilize the deposited capital. In fact, we already beginning to see this happen; where DeFi Lending protocol Alpha Finance is siphoning ~10% market share from the big dog DeFi Lending platforms:

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Alpha Gaining Market Share, Data Source: Messari

How $YLD Eats Aave's Lunch

Yield Credit completely revamped the DeFi Lending model used by protocols like Aave or Compound by replacing their pooled money-market model with an individualized, Peer-to-Peer (P2P) model where lending and borrowing is individualized (ie. Peer-to-Peer, not pooled).

With that at its basis, Yield Credit changes the Defi Lending game and is poised to eat Aave’s lunch when it finally launches on Ethereum mainnet. 

Here’s How Yield Does It:

  • Yield provides P2P lending on any ERC-20 with a Chainlink oracle price feed.
  • People holding ERC-20’s like $AMPL (with an MCap of $500M), or $LRC (with an MCap of $665M), or any other ERC-20 can finally put their assets to work through lending or use them as collateral for borrowing.
  • Wide range of collateral options from day 1 (31 in total).
  • Unused capital at Aave will flee, seeking better returns at Yield Credit as Yield incentivizes borrowers en masse to do exactly that.
  • Not only is lending incentivized (as per usual with interest), but borrowing is incentivized as well. Earn up to 350 $YLD for maintaining healthy loans and repaying on time.
  • Yield’s interest rates never trend towards 0% like on Aave. Lenders earn guaranteed fixed interest rates starting at 2% and up to 12.5%.
  • 100% of fees used to buyback $YLD on the open market and burn it, thus reducing the total supply of $YLD.
  • New $YLD liquidity mining programs offering high APYs.
  • Stake $YLD to receive fee discounts, reduce collateral, and mitigate liquidation.

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