Yearn Finance Launches Tokenized Debt Product StableCredit


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Yearn Finance, one of the most-used yield aggregator pools, launched its stable coin debt product yesterday that allows users to take out tokenized debt loans, as per a release.

StableCredit comes to Yearn

For the uninitiated, Yearn Finance automates yield-maximizing profit switching opportunities for liquidity providers and yield farmers. It pools together liquidity from users, allocates that capital to liquidity pools, and then pays out the corresponding yield in the form of other tokens to poolers.

And its latest product is StableCredit, an optimized protocol that combines tokenized debt stable coins, lending, automated market makers, and single-sided automated market maker exposure to create a completely decentralized lending protocol.

Users will be able to provide any of the supported assets and create tokenized credit, called StableCredit. Supported fiat currencies will include the US dollar, the Euro, and the Japanese Yen.

The process as follows: Users will first provide amount their amount of choice in USDC, the Center stablecoin. The latter’s price oracle will then be used to determine the USD value of 1 USDC. Next, the protocol will automatically mint the corresponding value, in dollars, of StableCredit USD.

After that, the USDC and StableCredit USD will be provided into AMM with a 50:50 ratio. The protocol will automatically calculate the system utilization ratio, up to a maximum of 75%, and the utilization ratio (or 75% max) value of the supplied USDC is minted as StableCredit USD.

Yearn Founder Speaks on StableCredit

At this point, your StableCredit USD is your “lending credit”. You can use it to borrow (buy via the AMM) other assets, so if another user provides LINK as collateral, you can borrow LINK by “selling” your lending credit. 

It added that when users want to repay their debt, they can “sell” the LINK back for StableCredit USD, pay off your debt, and receive your USDC. 

Andre Cronje, the creator of Yearn Finance, commented that the AMM’s create the utilization ratio’s between assets. He added that the total system utilization ratio defines the amount of credit line they are extended to borrow against.

Cronje noted the AMM defines the premiums at which you borrow/repay assets, and that the Yearn team is currently finalizing the UI and will make it available in the coming weeks.

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