Hey guys :) I’m back with another comprehensive Q&A piece, this time for a new and innovative Defi lending platform with incentivized borrowing – Yield (YLD).
Yield is a non-custodial P2P lending dapp that not only incentivizes lending (as per usual) but borrowing as well with $YLD token rewards. Yield also supports lending and borrowing for any ERC-20 token.
Now, before we dive in, the following piece is similar to my latest articles on Opium Protocol (OPIUM), and Mirror Protocol (MIR), so if you haven’t already seen those, be sure to check them out as well.
Hope you enjoy!
The list of Q&A is kind of long so first comes the list of questions that I have prepared the answers to:
- What is Yield Credit?
- Who and When Created $YLD
- What is $YLD Token Used For?
- How is Yield Credit Different From AAVE or Compound Finance?
- How Much $YLD You Can Earn on Repaying Loans?
- What is the Yield Credit Integration With Chainlink About?
- What Assets Can You Lend & Borrow on Yield?
- Where to store $YLD?
- Where to buy and sell $YLD?
1. What is Yield Credit?
Yield Credit website homepage
Yield Credit is “the future of DeFi lending.”
It’s a non-custodial, individualized, fixed-rate lending and incentivized borrowing platform that has pioneered its own DeFi lending niche; Peer-to-Peer (P2P) lending, something which is very popular in TradFi and never before done in DeFi.
Contrary to how existing DeFi lending platforms operate, the P2P aspect of Yield Credit means that lending and borrowing are individualized rather than pooled. When you lend out cryptoassets with Yield Credit, they don’t enter a pool of funds with other lenders, they go directly to the borrower.
This simple innovation in DeFi lending has some very important implications being:
Yield Credit loans are fixed, guaranteed, and immutable. The platform offers guaranteed fixed interest rates starting at 2% and up to 12.5%. Yield can offer guaranteed fixed interest rates because loans are individualized and the parties involved agree to the lending offer or borrow request terms before its facilitated.
Rates Don’t Trend Towards ~0%
When lending or borrowing on Yield, the specified interest agreed upon is exactly what will be earned/paid regardless of when the loan is repaid and whatever happens on the platform or the wider crypto market.
You don’t have to worry about market dynamics causing the rates on your active loans to trend to ~0% because there isn’t a shared pool where interest is spread among various participants. Therefore, each lender receives the total interest of a repaid loan in its entirety.
Lend or Borrow Any ERC-20 Token
Yield supports the lending and borrowing of any ERC-20 token including stablecoins, cryptoassets, DeFi tokens, utility tokens, elastic supply cryptoassets, wrapped cryptoassets, etc. This is a true game-changer as it opens the floodgates to an immense amount of capital that couldn’t previously be lent out or borrowed with existing platforms.
Apart from the benefits apparent from Yield Credit being a P2P DeFi lending platform, Yield has introduced another key innovation being:
Yield Credit is the first DeFi lending platform to incentivize borrowing; where if you successfully manage your loan to term by repaying on time, you can earn up to $350 in $YLD (subject to change).
Therefore, not only is lending incentivized (as per usual by earning interest), but borrowing is incentivized as well by earning $YLD token rewards for maintaining healthy loans and repaying on time.
All in all, Yield Credit’s incentivized borrowing coupled with the benefits of guaranteed fixed rates and the ability to lend or borrow any ERC-20 token is a recipe for success. Period.
2. Who and When Created $YLD
Yield was created by a pseudonymous developer or entity known as Coiner_, who is rumored to have started working on Yield in 2018 after the rise and fall of Elixer (ELIX).
After Elixer, Coiner_ held onto the belief that a DeFi P2P lending platform that could run itself and vastly improve on the front runners in the space, was badly needed. He was determined to build this thing out and gained enough core supporters to see it through.
Now, here we are more than 2 years later, and Yield finally launched on the Ethereum mainnet on March 10, 2021.
Prior to this launch, Yield launched an incentivized private beta in early February 2020. It went over very well and early adopters received $YLD token airdrops for their contributions to the project. Then, in December 2020, the Yield dapp went public for further testing and $YLD token distribution to early adopters.
During this beta period, Yield gained multiple notable supporters/endorsers, one of which is the team at Ampleforth (AMPL).
Yield (YLD) Token Distribution:
- 200 $YLD - Original testers of the beta platform
- 25K $YLD - Top 100 $YLD token holders
- 25K $YLD - Liquidity providers on Uniswap
- On-Going $YLD Distribution - The Graden (Yield liquidity mining program)
3. What is $YLD Token Used For?
Yield’s $YLD token logo
The native cryptocurrency of Yield is $YLD – a mintable and burnable ERC-20 token serving as a utility token for the Yield lending dapp and any future Yield dapps. $YLD is primarily used to incentivize borrowers with $YLD rewards, provide discounts on fees, and more.
$YLD Token Functionalities
- Minting and Burning $YLD to reward on-time loan repayers
- Staking - Receive fee discounts, reduce collateral, and mitigate liquidation
- Yield Farming - $YLD is being rewarded to liquidity providers at i.e. SushiSwap
You can track $YLD’s supply and play with various scenarios on how it can be affected by using the YLD Supply Calculator:
$YLD Supply Calculator
Users of Yield Credit are charged fees which are then used to buyback and burn $YLD. If a user chooses to stake (lock-up) $YLD, they can receive up to a 25% discount on fees (depending on how much $YLD is staked).
Additionally, if a borrower has $YLD staked and is receiving discounts on fees, the $YLD they earn per loan is increased. Also, they are automatically reducing their collateral liquidation ratios.
Therefore, staking $YLD to save on fees essentially gives borrowers one more option if they ever need to save their loans in the event of a market downturn, aside from topping up their collateral.
Yield features a $YLD liquidity mining program called “The Garden” to help with the distribution of its $YLD token. The Garden started in late January 2021, with 50K $YLD rewards dedicated to rewarding liquidity providers.
$YLD rewards for current and future Gardens (liquidity mining programs) are dependent on the total amount of $YLD minted by borrowers in the Yield dapp that month.
4. How is Yield Credit Different From AAVE or Compound Finance?
DeFi lending platforms comparison
Yield Credit is a uniquely designed DeFi lending platform that completely revamps the DeFi Lending model used by protocols like Aave or Compound by replacing their pooled-lending with an individualized, Peer-to-Peer (P2P) model.
This simple change has major implications and transforms DeFi lending as we know it today.
See below, features of Yield Credit that are different from Aave and Compound:
- Lending and borrowing is individualized
- You can lend and borrow any ERC-20 token* (with a chainlink oracle as of March 2021)
- Wide range of collateral options from day 1 (31 in total)
- Guaranteed, fixed interest rates
- Interest rates do not trend towards ~0%
- Borrowers earn $YLD for maintaining healthy loans and repaying on time
- 100% of fees are used to burn $YLD
As you can see, Yield Credit has multiple differences/improvements over Aave and Compound which puts it in a position to take market share away from them.
Yield simply offers more incentives to put capital to work and therefore unused capital at Aave or Compound might flee, seeking better returns at Yield Credit. After all, Yield incentivizes borrowers to do exactly that and also supports any ERC-20 token.
Therefore, Yield opens the floodgates to an immense amount of erc-20 capital that couldn’t previously be lent out or borrowed with existing platforms.
5. How Much $YLD You Can Earn on Repaying Loans?
The number of $YLD a borrower can earn from repaying their loan ON TIME. As of March 2021, there is a cap of $350 in YLD per loan.
6. What is the Yield Credit Integration With Chainlink About?
Yield Credit has integrated Chainlink’s Price Feeds on mainnet to secure their fixed-rate, individualized lending markets.
By integrating Chainlink’s decentralized oracle network, Yield hardens the security of its protocol by ensuring its smart contracts use high-quality decentralized price data that is provably robust even amidst flash loans and high gas prices.
Yield chose Chainlink over developing their own oracle solution or using a different one for the following reasons:
- Chainlink is the most secure, reliable, and time-tested decentralized oracle network in the industry.
- Chainlink Price Reference Data Feeds have become widely used in the DeFi space and there’s an oracle feed for many crypto assets, with more being added.
- Chainlink pulls data from numerous high-quality data aggregators, providing volume-adjusted prices with market coverage across all relevant CEXs and DEXs.
- If Yield were to develop their own oracles for retrieving price data, it is highly unlikely they would be as robust and secure as Chainlink’s offering.
- Developing a custom oracle system would not only be time-consuming but expensive as well.
All in all, by integrating with Chainlink, Yield users can be confident that the pricing data used in Yield’s smart contracts are of the highest quality, reliable, secure, and tamper-proof.
7. What Assets Can You Lend & Borrow on Yield?
Yield Credit - supported crypto assets
Yield Credit launched with support for over 30 crypto assets including AMPL (a market first), YFI, SUSHI, LINK, ANT, and others.
As Yield matures and its user base grows, more and more crypto assets will be supported.
After all, Yield provides P2P lending on any ERC-20 token with a Chainlink oracle price feed. When Chainlink creates new price feeds for crypto assets, they can be added to yield.
Currently, the minimum amount to lend is $1000.
8. Where to store $YLD?
MetaMask wallet website homepage
Yield (YLD) is an ERC-20 token residing on top of the public Ethereum blockchain. That said, you can store $YLD in any ERC-20 token-supported wallet.
However, the best wallets for storing $YLD are non-custodial Web3 wallets that provide seamless access to the best DeFi applications, like Yield Credit, SushiSwap, Uniswap, Harvest Finance, etc.
That said, DeFi wallets are the best for storing $YLD because the token is widely used and supported in the Ethereum-DeFi ecosystem.
Popular Yield (YLD) Wallets:
- Trust Wallet (mobile)
- Argent (mobile)
- Coinbase Wallet (mobile)
- MyEtherWallet (MEW) (web)
- Metamask (web)
In addition to the above-listed wallets, Yield (YLD) can be stored on a wide variety of other reputable wallets supporting ERC-20 tokens.
9. Where to buy and sell $YLD?
Yield (YLD) can be bought and sold on a peer-to-peer (P2P) basis but the most popular way to buy, sell, or trade $YLD is through decentralized cryptocurrency exchanges.
You can buy and sell $YLD with cryptocurrency at the following top DEXes. In most cases, you will be able to buy $YLD with $ETH or stablecoins.
- SushiSwap - WETH
- Uniswap - ETH
In addition to the exchanges listed above, Yield (YLD) will also get listed on a variety of other exchanges and platforms that enable people to buy, sell, or trade cryptocurrencies in the near future.
Hope you enjoyed that read :) Let me know if I have missed something in the comments.