The Weekly Yax #8: DeFi Building Blocks
The Weekly Yax is the easiest way to keep up with the yAxis Project.
Every Sunday, we highlight major news and developments, alongside key takeaways from the week’s episode of Ya Herd?
Major News & Developments
- June 8th yAxis surpassed 15k YAXIS bought back by the revamped MetaVault launch.
- June 11th marked the 8th episode of Ya Herd?
- June 12th kicked off v3 Canonical Vault and Gauges testing.
- June 12th concluded the first Champions Table Design Contest — the “Cointest.” Voting for the design submissions will begin shortly.
Ya Herd? Week #8 Key Takeaways
- Building Block #1 — Curve Finance: Curve Finance (v1) allows users to deposit pegged assets in “like-for-like” pools, most famously in its 3Pool of USDC | USDT | DAI. Curve’s AMM technology concentrates liquidity around the peg for low-slippage swaps between these “like-for-like” assets. The fees generated by these swaps, in addition to CRV rewards (with option to boost CRV rewards by staking CRV through Gauges, which yAxis will be implementing in Era 2), generate yield for liquidity providers. From its top-of-stack position, yAxis has a strategy to plug into Yearn, who then provides liquidity on Curve, allowing yAxis to take advantage of Yearn’s boost. yAxis also uses Curve as an overflow pool, considering its reliability as a battle-tested platform. Looking forward, yAxis has the option to continue to leverage Curve with Canonical Vaults, given that Curve has pools for BTC, ETH, and LINK.
- Building Block #2 — Lend/Borrow Protocols (Aave & Compound): Aave and Compound operate by allowing users to deposit assets or “collateral” and borrow against those deposited assets. Demand for borrowing the assets relative to the supply of the assets deposited determines the “utilization rate” of the assets in the pool, which in turn dictates yield. A higher utilization rate means greater yield. Yield is also generated through liquidity mining programs, in which users are incentivized to use these protocols with stkAAVE or COMP. These lend/borrow protocols often form the base layer for other yield aggregators, which yAxis has the ability to plug into. Furthermore, with delegated strategies in v3, yAxis will actively utilize Aave and Compound to deposit BTC, ETH, and LINK collateral, borrow stablecoins against that collateral, and deposit these stablecoins in higher-yielding farms. With delegated strategies, at every interaction, the vaults will determine their loan health factor to decide if they should borrow more against their collateral or pay back some of the loan. Combined with Chainlink’s Keepers, Canonical Vaults will keep user funds safe from liquidation risk.
- Upcoming Feature — Insurance: yAxis’s planned insurance implementation would enable vault users to lock their vault tokens in a separate contract, which would be used to credit the remaining holders in the case of an insurance event, as determined by governance. As a reward for doing that, they’ll earn additional yield. If an insurance event does happen, these users don’t necessarily lose all their capital — they’re simply locked in until the debt is paid off. This market-driven solution is similar to a tranching implementation, which allows the vault users themselves collateralize the insurance via market incentives. This implementation avoids putting the onus on YAXIS stakers to collateralize the system, whereas many other projects use their native token as collateral, forcing projects to liquidate their own token at the worst time. Avoiding this issue conveys yet another example of how yAxis is leading the way in security and tokenomics.
- TVL Targeting in v3: Building upon the overview done in The Weekly Yax #3, there’s 240 mil TVL of ETH on Alpha earning 6% yield, 160 mil TVL of ETH on Yearn earning 3% yield, 120 million TVL of LINK earning 5.5% APY on Curve, etc. The list could go on and on, but the major theme is single-digit yields. As outlined in YIP-09, Canonical Vaults are built to offer double-digit yields even at scale of hundreds of millions of TVL.
Era 2 is still yAxis’s “emission phase” to attract speculative crypto-native capital, bootstrap the Canonical vaults, and prove that the vaults can continue to operate securely and efficiently at scale. This approach generates Lindy and trust, which is easier to leverage in marketing efforts to large depositors and institutional capital, catapulting yAxis to its next growth phase.
- Risk-Adjusted Yields: Risk-adjusted yield is an important concept as the DeFi market continues to mature. While yields across DeFi are presented to the user in a uniform, nominal fashion, not all yields are built the same. A yield with more uncertainty, more risk, and less regard for security would generate a lower EV (expected value) than a slightly lower yield backed by a reliable, diligent, security-first approach. This dynamic really highlights the value proposition of yAxis. yAxis provides attractive yields with industry-leading security, unaffected by flash loan risk that has plagued other yield aggregators, optimizing the return profile for vault users. The security features being built for future eras only reinforce this value proposition.
The full recording of this week’s episode can be found here.
yAxis Project Stats of the Week
- MetaVault TVL $61.3 million, earning 16% APY.
- YAXIS staking 560% APY (189% APR) and LP 495% APY (192% APR).
- Over 2,380 YAXIS bought back with MetaVault revenue this week for distribution in The Great Harvest.
- 76% of the YAXIS circulating supply is staked.
Community Content Spotlight
This week’s community content spotlight goes to Flind. Flind has been a dedicated supporter of yAxis, frequently contributing to community discussion and asking questions for Ya Herd?. Recently, Flind also showcased their meme game as well:
A huge thank you to goes out to Flind from the yAxis Herd for helping to make the yAxis Project Discord a light-hearted, enjoyable, and engaging place.
Join Us: Bounties & Jobs
Coordinated by the yAxis Champions Programme, the yAxis Bounty Board lists requests for proposals (RFPs), where community members can respond to specific Project needs and receive compensation upon task completion. See the current opportunities below and check the Bounty Board frequently as more opportunities will be added over time.
If none of the current opportunities appeal to you, but you would still like to contribute, reach out to firstname.lastname@example.org. You have the opportunity to shape the next era of yAxis.
That concludes the eighth edition of The Weekly Yax. Thank you for reading and looking forward to many more!
Onward and upward, Yax Herd!