DEFIDEVELOPMENT

Yearn | Andre Cronje launches tokenized yield credit yCredit, allowing 20 assets to be exchanged for credit limits.

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Yearn | Andre Cronje launches tokenized yield credit yCredit, allowing 20 assets to be exchanged for credit limits.

DeFi prodigy and Yearn founder Andre Cronje has recently unveiled a new project based on September's concept "StableCredit," introducing a tokenized yield credit token called "yCredit."

Understanding the Concept of yCredit Quickly

As Andre Cronje often comes up with new ideas, not every project may turn out as initially announced. For instance, yCredit, which is based on StableCredit, has not been publicly released yet. Therefore, we can start by grasping the basic concept of how it operates.

【Note: Andre Cronje emphasizes that this is an experimental concept, it is not a speculative token, and it may be subject to attacks】

yCredit allows users to "deposit ERC-20 tokens" and receive "credit limit: yCREDIT tokens" equivalent to 99.5% of the USD value. For example, if a user deposits $100 worth of AAVE tokens, they will receive 99.5 yCREDIT tokens. Users can then redeem their AAVE tokens with 100 yCREDIT tokens.

Brief Overview of How It Works

yCredit follows the concept of StableCredit and combines three foundational infrastructures in the DeFi ecosystem: minting synthetic assets DAI, Synthetix, decentralized lending platforms Compound, Aave, automated market makers Uniswap, SushiSwap

The operational elements of this mechanism are described in the announcement:

yCREDIT value above the anchor value – Profit can be made by minting yCREDIT. Sell yCREDIT when the price is above the anchor price to profit from various ERC20 trading pairs.

yCREDIT value below the anchor value – Users can sell ERC20 at this point to acquire cheap yCREDIT or choose to redeem their collateral.

Earn revenue by staking yCREDIT – Users will earn a 0.5% fee every time they deposit, trade, borrow, or repay. These fees will be distributed to users staking yCREDIT.

Leverage/lend ERC20 tokens – yCredit can be used for leveraging and lending supported ERC20 tokens. These include: AAVE, BNB, BUSD, CRV, COMP, DAI, ETH, LINK, MKR, REN, renBTC, SNX, SUSD, TUSD, UNI, USDC, USDT, wNXM, wBTC, YFI.

The product has yet to be launched and requires further observation. However, from the previous project Deriswap, it is evident that Andre Cronje is actively addressing the issue of "Capital Efficiency."

One interesting aspect of this product is its ability to define the value of yCredit using various assets, which can be used for lending, swapping, and staking. It is currently unclear what broad DeFi financial impact will arise after its official launch.

Developers Warn of Flash Loan Risks

Developer @bantg stated that yCredit may be vulnerable to attacks from Aave v2 flash loans. Based on his test results, multiple assets were successfully borrowed at once. This could pose a risk of draining funds from the protocol. Another developer, @NourHaridy, directly advised against interacting with this test smart contract and mentioned that once everyone withdraws their funds, he will reveal how to exploit its vulnerabilities.

Based on past experiences where test contracts of Andre Cronje's projects were discovered early and funds were injected, such as in the case of Eminence, where hackers made $15 million through vulnerabilities.

There is also a community discussion on whether it is beneficial to announce a product before completion. Despite Andre Cronje's disclaimer that it is experimental and unaudited, the profit-driven DeFi community seems eager to seize any opportunity for wealth accumulation.