🚀 Shoot for the Stars With youves — Our Strategic Vision ✌️

Achievements, learnings, and next steps.

At youves, we have recently given considerable thought to the direction our journey should take in terms of platform growth, with perspective on the Tezos DeFi ecosystem and beyond. Today, we would like to present to you our strategic vision for youves.

What we were able to achieve

youves is a self-custodial decentralized finance platform. Since its launch in 2021, it has proven itself in the Tezos ecosystem and takes pride in its various achievements.

• Highest Total Value Locked in the Tezos ecosystem, which has been repeatedly acknowledged by Messari here and here.
• youves has been operational since 2021 without any incidents resulting in the loss of user funds.
• youves’ Oracle solution has demonstrated its reliability and solidity.
• youves offers the most actively traded and liquid tokens in the ecosystem, including uUSD, uXTZ, uBTC, and YOU.
• It is the sole Tezos DeFi platform that provides institutional access through an actively managed certificate setup.
• youves has played a significant role as a catalyst for Sirius adoption and growth.
• The platform’s engines have undergone extensive stress testing during volatile periods, and not a single loan has resulted in bad debt. Every loan at risk has been liquidated well before reaching undercollateralization.
• With 16 active engines offering a variety of collateral options to create synthetic assets, users can now pursue long/short trading strategies.
• The youves governance model successfully transitioned into a DAO, enabling community members to propose changes that, upon acceptance, will be executed on-chain.

What we learned so far

Originally, the youves platform brought together three primary user roles:

• Users who are willing to provide a digital asset as collateral and obtain a loan, while paying interest. We refer to them as “minters.”
• Users who are willing to fund these loans and earn interest in return. We refer to them as “savers.”
• Users who are interested in participating in youves’ governance and influencing decision-making processes. We refer to them as “stakers.”

As is the case with any platform that brings together diverse user groups, maintaining a balance between these groups is crucial for the platform’s continued growth (“chicken/egg problem”). After operating the platform for two years, we have gained a better understanding of how users utilize the platform and, more importantly, why they do so.

We have realized that minters primarily utilize the platform to leverage their collateral assets. This usage pattern is not unique to youves but is observed across most DeFi platforms. To further stimulate the usage of youves, we believe it is essential to optimize the platform for this particular use case.

The Savings Pools have proven to be highly popular among users. However, there are two issues with Savings Pools. Firstly, the synthetic assets held in the savings pool cannot be utilized by other users, resulting in unused capital. Secondly, a high interest rate on savings becomes counterproductive as it reduces the attractiveness of providing liquidity. Additionally, following the removal of the bailout function provided by the savings pool, borrowers (minters) have expressed concerns about limited liquidity in synthetic assets when attempting to repay their loans.

This also highlights an area that has not received sufficient attention: liquidity providers. Without sufficiently large liquidity pools, minters face difficulties in swapping their minted synthetic assets for the desired position or repaying their loans. This aspect requires improvement.

Let’s redefine the user roles

As a result of the lessons learned, there is a need for slight changes in user roles:

• Minters should be redefined as traders, requiring additional tools to leverage their collateral and engage in long/short directional bets.
• Savers should be transformed into liquidity providers, releasing unused capital from the savings pools and providing it as liquidity to traders.
• Stakers should remain as stakers and will continue to drive youves’ governance by determining the parameters of various components. They will still receive platform rewards, but they will also be responsible for providing the bailout fund in the event of bad debt in case the chosen parameters were chosen too progressively.

This vision aims to optimize the user experience to meet the expectations of traders and will allow youves to offer increased leverage compared to the current state. To implement this vision, we have identified key initiatives that will shape the future roles of youves users and contribute to the platform’s growth:

Upcoming missions to improve capital efficiency and boost growth

Turn unused capital of Savings Pools into liquidity

We propose redirecting all interest payments made by borrowers to the liquidity providers (LPs) who contribute to the flat curve pools (such as uxtz/xtz, ubtc/tzbtc, uusd/usdt, etc.). Savers will effectively transition into liquidity providers for these pools and will receive the interest rate generated from minting. Since the flat curve requires two tokens of equal value, the role of LPs will be very similar to the current role of savers. This adjustment will result in a significantly more capital-efficient setup.

Considering the magnitude of this change, we suggest implementing it first for the uXTZ engines and pools to assess its impact and effectiveness.

Transform the YOU Staking Pool (Unified Staking Pool)

The current YOU staking pool (Unified Staking Pool) serves as the primary destination for most YOU tokens. Similar to the savings pool, these YOU tokens cannot be utilized by other users.

To enhance the utilization of this capital, we propose two significant changes:

• Transition from the existing staking model to a voted escrow model, where stakers who choose to lock their YOU tokens for an extended period receive greater weightage for governance votes and increased rewards.
• Transform the YOU staking pool (Unified Staking Pool) into the buyer of last resort for potential bad debt, effectively transforming it into a bailout pool. While the platform has not encountered any instances of bad debt thus far, if we increase the loan-to-value ratios to allow for higher leverage, having a buyer of last resort will contribute to the system’s stability. Since YOU stakers are responsible for governing the platform, this alignment of incentives ensures that stakers have control over the progression of loan-to-value ratios and bear the consequences in the event of bad debt.
• Furthermore, the current setup requires separate contracts for YOU token buybacks funded by accrued interest rates and swap fees due to technical limitations of the Unified Staking contract. It is necessary to address these limitations and enable the complete implementation of the buyback mechanism within the future YOU staking pool contract.

Please note that these proposals are subject to approval and consideration by the youves community and stakeholders.

Increase the accessibility by supporting native cross chain assets as collateral

The existing flat curve pools have demonstrated excellent performance in maintaining the peg of synthetic assets. However, they necessitate the requirement for the “other asset” to have an equal value. The convertibility of the other asset is crucial for this mechanism, as exemplified by tzBTC.

To expand the range of assets that traders can utilize as collateral, we propose leveraging cross-chain protocols that enable the direct usage of native assets such as BTC, LTC, ETH, or XRP on youves. This approach will significantly enhance the offering of assets traders are able to supply as collateral and contribute to the scalability of the platform.

Simplify the user experience

The current user experience on youves is historically grown, is cumbersome and lacks optimization for traders. To address this issue, we have planned a redesign of the user interface that aims to cater to both traders and liquidity providers equally. We will take inspiration from the most successful DeFi trading platforms, such as gmx.io, to set the benchmark for an enhanced user experience. The redesigned UI will prioritize usability, efficiency, and intuitive navigation to ensure a seamless and intuitive trading experience on youves.

Simplify the tokenomics and reward scheme

Today’s most successful DeFi platforms exhibit an extremely straightforward tokenomic structure regarding rewards for different stakeholders. In order to effectively communicate the value proposition to traders, liquidity providers and stakers, we should strive to simplify these mechanics. By doing so, we can ensure that the narrative surrounding their engagement is easy to understand. Simplifying the tokenomics will enhance transparency and clarity, enabling all users to grasp the benefits and incentives of participating in the youves platform.

Increase marketing efforts

To increase the user base and capital involvement, we need to intensify our efforts to attract new users as youves evolves into a trading platform. Some ideas that are currently being considered include:

• Trading competitions: Organizing trading competitions will incentivize users to actively participate on the platform and showcase their trading skills.
• Influencer marketing: Collaborating with influential individuals in the cryptocurrency and trading space will help raise awareness about youves and attract new users.
• Onboarding institutional users: Expanding our reach to include institutional users will contribute to increased capital involvement and provide additional liquidity to the platform.
• Social components and leaderboards: Implementing social features and leaderboards will create a sense of community and competition among users, driving engagement and retention.
• Copy trading abilities: Enabling copy trading functionality allows less experienced traders to replicate the trades of more experienced users
• Improving analytics and APIs: Enhancing the analytics and APIs for third-party analytic platforms like Defilama will attract data-driven traders and provide them with valuable insights for making informed trading decisions.

Tear down entry barriers into Tezos DeFi

To foster the growth of users on youves and Tezos DeFi platforms in general, it is crucial to address the barriers that hinder entry into the Tezos ecosystem. We should identify the effective hurdles that users face when attempting to enter and then work towards simplifying and facilitating the transition. This encompasses various aspects, including wallets (e.g. by using Metamask Snaps), bridges, exchanges, interchain capabilities etc.

Increase cooperations within Tezos DeFi

The Tezos DeFi ecosystem is constantly growing, with new platforms coming up. We should strive to increase cooperations within the Tezos DeFi ecosystem between various platforms (trading, lending, analytics, oracle services etc.). To foster collaborations, youves should also provide tools for others to build upon (SDKs, APIs, oracles etc).

Conclusion

We are convinced that these initiatives will help to bring youves to a completely new level in terms of TVL and active users. We also believe that this vision aligns perfectly with the current state and needs of the Tezos ecosystem.

We invite you to actively take part in the discussion about youves’ future in our community channels on Discord, Telegram and in the youves governance forum.

We are excited and dedicated to continue building,
With ❤️, youves contributors.

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