Teller + Idle: Unlocking Yield Tranches & IDLE As Collateral
Fasanara USDC Senior Yield Tranches and IDLE tokens are now available as collateral assets on Teller, unlocking the opportunity to set up leveraged strategies.
Integration Overview
Teller
Teller is a non-custodial lending book built on Ethereum and Polygon that steps up DeFi lending by introducing a new approach to on-chain credit. Instead of relying on price-based liquidation pools, Teller replaces them with fixed collateral and fixed duration loans presented in concentrated liquidity order books.
This mechanism empowers borrowers to utilize any digital asset as collateral without incurring price-based liquidation risk. Additionally, liquidity providers can earn yields above money market rates and gain valuable insights into borrowers’ wallet repayment probability, as well as recourse options for on-chain credit defaults.
Yield Tranches
Starting today, liquidity providers in USDC Senior Yield Tranche based on Clearpool’s Fasanara borrowing pool can deposit their yield-bearing tokens into Teller as collateral assets to borrow digital assets. The same mechanism is also available for the IDLE token.
Yield Tranches (YTs) are an innovative DeFi primitive that segments yields and risks to cater to a wide range of users, offering two risk-return profiles, Senior and Junior. Senior holders retain a portion of their yield in exchange for funds coverage, while that yield is directed to Junior holders in return for their coverage of Senior funds.
On Clearpool, institutional borrowers can create open-access, individual borrower liquidity pools and compete for uncollateralized liquidity from the DeFi ecosystem. In this framework, YTs act as a powerful tool to bridge the gap between lenders with varying risk preferences and borrowers with different credit scores, effectively mitigating the inherent risk factors in the DeFi credit securitization market.
The integration with Teller presents a fresh use case for Yield Tranches users. In addition to benefiting from the intrinsic protection offered by Senior YTs, they now have the ability to strategically utilize the received yield-bearing tokens to borrow funds, increasing their capital efficiency.
Here’s how.
Setting-up a leveraged borrowing/lending strategy with Idle and Teller
As summarized in the image above, Idle users can now use the Teller platform to set up the following strategy:
- On Idle, deposit into USDC Senior YT based on Clearpool — Fasanara; you will receive a proportional amount of `AA_cp_FAS_USDC`, which represents your deposited USDC
2. On Teller, select and deposit USDC Fasanara Senior as collateral, and now you can borrow out USDC
3. On Idle, deposit the borrowed USDC back into the Fasanara Senior YT
4. On Teller, use the newly received yield-bearing tokens as collateral for another USDC loan
5. Rinse and repeat.
With the current gross APY of USDC Senior YT based on Fasanara standing at 6.14% and a 4.25% fixed-term loan APY on Teller, assuming a 4x leverage and applying the maximum Loan To Value available (i.e., 95%), this strategy provides an overall net APY of ~7.8%. All this while benefiting from the built-in coverage of Senior YT, currently standing at 30%, based on the liquidity deposited into the Junior YT.
About Idle DAO
Idle DAO is a decentralized organization that builds yield automation infrastructure for DeFi. From brand new protocols to institutional and DAOs, businesses of every size use Idle product suite to optimize capital efficiency and manage their treasuries.
Everyone deserves the best for their idle funds in terms of returns and risks. Over the past four years, Idle has rolled out the features and services, defining and shaping the yield aggregation and risk tranching space. To learn more about Idle’s strategies:
