Stablecoin Borrowing Strategies
In-depth on borrowing with yield-bearing stables
With Yeti Finance we wanted to create an incredible experience for all stablecoin farmers by offering the best leverage strategies. With low-collateral ratio options on many yield-bearing stables, we deliver opportunities to lever up and multiply stablecoin yields for profit in a bull or bear.
Pure yield-bearing stablecoin strategies come with low liquidation risk because the dollar value of this collateral shouldn't drop. Low collateral ratio stablecoin strategies have lesser liquidation risk both in Normal Mode and Recovery Mode.
In both Normal and Recovery Mode, you will be eligible for liquidation if your trove's collateral ratio is below 110%. But in Recovery Mode you are also eligible for liquidation if your AICR (Adjusted Individual Collateral Ratio) is less than the TCR.
Trove Status | Normal Mode | Recovery Mode |
|---|---|---|
ICR < 110% | Liquidation | Liquidation |
110% < ICR
and
AICR < TCR | Can't be liquidated | Liquidation |
110% < ICR
and
150% < AICR | Can't be liquidated | Can't be liquidated |
If you keep your ICR above 110% and AICR above 150%, your trove can never be liquidated under normal mode or recovery mode.
Stablecoin collaterals have ratios of above 1.5 for the AICR calculation, which means a lower ICR trove is not going to be eligible for liquidation in recovery mode. For example if you have $10k of YUSD debt along with $11k in stablecoin collateral, say with safety ratio of 1.05, your ICR will be 115.5% and your AICR will be 176% (Assuming adjusted ratio 1.6).
For stablecoin troves, if your trove ICR is above 110%, your AICR will be above 150% too, meaning you can't be liquidated in Recovery Mode or in Normal Mode.
We recommend keeping some threshold in case there are small movements in the stablecoin price. So if you're at a 115% trove collateral on a purely stablecoin trove, you should be comfortably safe from liquidation in all conditions except for a depeg in one of the stablecoins you've deposited as collateral.
If your stablecoin trove is at ICR > 115%, you'll have low liquidation risk unless the stablecoin collateral depegs, in both normal and recovery mode.
Last modified 6mo ago