Yield Bearing Collateral

What is a Yield Bearing Asset?

Yield bearing assets are assets that earn yield. Some examples are LP tokens, Yearn Vault Tokens, aTokens, cTokens, and more.

Why does Yeti Finance allow Yield Bearing Assets as Collateral?

On Avalanche, there are already well-developed lending markets to borrow against base-level assets such as WETH or AVAX. But for many yield-bearing assets, there is no place to borrow against them and lever up. Borrowers on Yeti continue earning yields on their collateral while also now being able to lever up on these assets.

What Yield Bearing Assets will Yeti Finance Accept?

Yeti Finance will be accepting a variety of highly liquid collateral from the largest projects in the Avalanche ecosystem. This includes:
  • Staked assets e.g. sJOE
  • Trader Joe and Curve LP tokens
  • Deposited collateral on the Benqi, Aave, and Banker Joe lending markets.
Yeti Finance will also accept base-level tokens such as WAVAX, WETH, WBTC, and JOE as collateral. Yield-bearing collateral will continue to earn the farming rewards they otherwise would have. For example, Trader Joe LP tokens are staked on behalf of users to continue earning JOE rewards. Similarly, Curve LP tokens used as collateral continue earning any farming rewards and Avalanche rush incentives. The same is true for collateral from the lending markets listed above.

How does auto-compounding/farming yield work?

We automatically auto-compound farming rewards for your collaterals deposited in Yeti. What that means is when you deposit through Yeti, you maximize your yield earned on assets.
On most collaterals, we take a cut of the farming reward at the time of the auto-compound. This is true for Curve and Trader Joe LP tokens as well as sJOE.
However, for lending market collateral (deposited collateral on Aave, Benqi, or Banker Joe), we also take a cut of the intrinsic yield generated by the collateral.
Our philosophy is we want to make the best farming experience possible while building a sustainable economic model around it. We realize that the best way to do this is to align incentives. The one-time fees will be a one revenue stream, but the primary way we make money is auto-compound/cut of yield. And it's incentive-aligned in the sense that the protocol only makes money if our users do.
Our site displays yield opportunities net of Yeti's cut of yield, which varies depending on the collateral type.
Collateral
Autocompound/Farm Mechanism
Joe LP Tokens
JLP tokens deposited on Yeti earn JOE rewards through the Trader Joe Master Chef Contract. JOE rewards are sold (auto-compounded) for more LP tokens and the Yeti treasury takes a cut of JOE here.
Curve av3CRV LP Tokens
av3CRV LP tokens deposited on Yeti are deposited in a Curve gauge to accrue WAVAX rewards from Avalanche Rush incentives as well as CRV rewards. The rewards are sold (auto-compounded) so each av3CRV depositor acquires more LP tokens. The Yeti treasury takes a cut of the WAVAX and CRV rewards on auto-compound.
sJOE
JOE deposited into sJOE accrue USDC yield. This yield auto-compounded for more JOE tokens which are deposited into sJOE. The Yeti treasury takes a cut of the USDC on each auto-compound.
Aave Deposited Collateral
Aave deposited assets earn WAVAX rewards (from Avalanche Rush) along with an intrinsic interest rate. The WAVAX is periodically auto-compounded for more aTokens and the Yeti treasury takes a cut on auto-compound. The treasury also takes a cut of the intrinsic yield on these assets.
Benqi Deposited Collateral
Benqi deposited assets earn QI, and WAVAX rewards (from Avalanche Rush) along with an intrinsic interest rate. The QI and WAVAX is periodically auto-compounded for more qiTokens and the Yeti treasury takes a cut on auto-compound. The treasury also takes a cut of the intrinsic yield on these assets. It's not possible to utilize qiTokens as collateral on both Benqi and Yeti Finance at the same time.
Banker Joe Deposited Collateral
Benqi deposited assets earn JOE rewards (from Avalanche Rush) along with an intrinsic interest rate. JOE rewards are periodically auto-compounded for more jTokens and the Yeti treasury takes a cut on auto-compound. The treasury also takes a cut of the intrinsic yield on these assets.

How do fee discounts work?

More details will be coming soon as we finalize this. Fee discounts will not be live when mainnet launches. But post-launch you will be able to put your accumated veYETI toward reducing the protocol's cut of your farming yield.
We want to reward longer-term stakers with the opportunity to access even more favorable farming strategies.