Yearn Protocol - Now Available On iGain IRS (on FTM)!
So far, Aave was the only lending/borrowing platform supported by iGain IRS. Users could realize fixed-interest lending and borrowing by buying Long or Short tokens on top of their capital borrowed or deposited via Aave.
We are excited to announce that from now on, iGain IRS also supports the DeFi platform Yearn on Fantom Network!
In general, profits in the yield aggregators like Yearn tend to be volatile. Thanks to iGain IRS, DeFi users can turn the variable interest lending into fixed interest lending.
However, as there is no borrowing function in Yearn, only the one-click lending function is supported on iGain IRS.
Nonetheless, compared to Aave, users now can utilize their capital more efficiently in fixed interest rate lending on Yearn, due to the different features available on the platform. Please refer below for detailed information.
Underlying Token
In iGain IRS, the way we select underlying assets varies from object to object. In order to boost capital efficiency, we can use “deposit certificates”, such as yToken on Yearn or cToken on Compound, as the underlying asset in lending/borrowing protocols or yield aggregators except for Aave. By doing so, users can get Short tokens directly with the certificate after they deposit, and no additional capital will be needed.
For example: if users deposit 1000 DAI in Yearn, they will receive 900 yDAI as a deposit certificate. Nevertheless, if we use DAI as the underlying asset in iGain IRS, then users will need additional DAI to buy Short tokens. On the other hand, if we use yDAI instead as the underlying asset in iGain IRS, then users can use yDAI to acquire Short tokens directly without additional expenses and thus improve capital efficiency!
However, if yDAI is used as the underlying asset, then Long and Short tokens will be priced as yDAI, and users will need to deposit on Yearn on their own first and then buy Long and Short tokens on iGain IRS afterward. Which is not optimal.
In order to simplify the procedure, we have integrated the Yearn service directly into iGain IRS. Users now only need to put DAI in, and the proxy contract will do the rest automatically, i.e. deposit DAI into Yearn for yDAI first and then trade yDAI on iGain.
Below are the procedures proxy contract executes:
Buy Long/Short tokens
- Put DAI in
- Deposit DAI into Yearn and get yDAI
- Use yDAI as the certificate to buy Long or Short tokens
Sell Long/Short tokens
- Sell Long or Short tokens in iGain IRS and get yDAI
- Exchange yDAI for DAI in Yearn
- Return DAI to sellers
Add liquidity
- Put DAI in
- Deposit DAI into Yearn and get yDAI
- Deposit yDAI into iGain IRS for LP
Remove liquidity
- Exchange LP for yDAI in iGain
- Exchange yDAI for DAI in Yearn
- Return DAI to users
According to the steps described above, we can notice that yDAI is needed in every single transaction. Thankfully, the frontend side and Proxy Contract will significantly simplify the procedure. So users can finish most of the transactions on iGain directly instead of going back and forth between two different protocols.
Therefore, with the Proxy Contract support, the user experience of fixed interest rate lending on Yearn will be as seamless as on Aave. Users will no longer need to deposit on Yearn by themselves to get yToken, but have significantly optimized capital allocation by using the fixed APY lending function.
In addition to convenient user experience and improved capital utilization, the value of yDAI will appreciate as time goes on. As a result, you can earn additional fluctuant lending interest rates just by holding Long/Short tokens or LP.
Arbitrage
On Aave, the balance between iGain interest rates is set by lenders, borrowers, and arbitragers. However, Yearn doesn’t have a borrowing function, so the interest rate on iGain is decided by lenders and arbitragers only.
Interface Walkthrough
Method #1: All-in-one Solution
Step 1: Click on ”Fixed APY”
Step 2: Enter amount to get estimated purchase number, capital needed, and APY
Step 3: Click on the “Approve for Yearn” , “Approve for iGain term” and “Unlock Token” button to unlock your account.
Step 4: One-click for both ‘Deposit to Yearn’ and ‘Buy Short token’
Method #2: Buy Long or Short Tokens:
Users need to lend crypto on the Yearn platform, and then purchase the corresponding amount of Long/Short tokens on iGain IRS to hedge against future interest rate changes on the “Trade” page.
Step 1: Enter a stablecoin amount to estimate fixed rate, price impact, and cost of Long/Short required for hedging.
Step 2: Click on the “Approve for Yearn” , “Approve for iGain term” and “Unlock Token” button to unlock your account.
Step 3: Review all terms on the Trade page (Asset, Expiry Day, Mark Average APY, Market Price, Leverage, and Balance).
Step 4: Click on “Buy” to get a corresponding amount of Long/Short Token.
Now, try it yourself!
Link: https://igain.finance/irs/fixed-apy
