Yield Protocol V2 Quickstart Guide
This guide will walk you through how to borrow, lend, and pool on Yield Protocol Version 2.
Borrow
Borrowing with Yield at a fixed-rate is easy. You choose how much you want to borrow, choose from a few maturity dates for the loan, and provide collateral to back the loan.
Below we walk you through the steps needed to create a loan.
- Go to https://app.yieldprotocol.com
- To borrow, select the “Borrow” tab
In the borrow window, you begin by providing an amount of a token that you would like to borrow. For example, you may choose from a drop down menu whether you want to borrow USDC or DAI. In the input box, you may enter the amount you wish to borrow. As you update the amount, the user interface will recalculate the fixed-rate you will receive based on the size of your loan.
Next, you may choose the maturity you want to borrow for. Maturity represents the fixed-rate life of the loan. The fixed rates you receive are guaranteed until the series matures. After that, your interest rate will change to a floating rate. You may repay the loan at any time. Repayment before loan maturity may impact the effective interest rate you receive.
3. Choose collateral
First, from the collateral selection dropdown, you may select the type of collateral for the loan, such as ETH, WBTC, or USDC. Next, you may input an amount of the collateral to add to the loan, or click max to post all available assets. The recommended collateral ratio is at least 250% to avoid any liquidation risk. You may also click “Use Safe Minimum” to use a suggested value at the recommended collateral ratio. Please keep in mind that even at the safe minimum, you should routinely check to ensure that you have sufficient collateral to avoid liquidation.
4. Review the transaction
Review the transaction. If everything looks good, click the “Borrow” button to confirm. You will then be prompted by your wallet to sign necessary approvals and transactions. For users who are interested in sending transactions with lower gas fees, please be aware that preset slippage limits may cause the transaction to fail.
Your transaction will then be submitted to the network for confirmation. After network confirmation, you will see a confirmation popup in the top right and your vault displayed at the bottom right. You have now successfully borrowed with Yield Protocol.
Managing a Debt Vault
A debt position in Yield Protocol is called a vault. You can view open vaults by clicking “Dashboard” or by viewing the list of vaults on the bottom right corner of the borrow page. Each vault is given a randomly generated name and identifier to make it easier to distinguish from other vaults. Also, vaults are shown with an emblem of the borrowed asset encircled by colors representing the maturity date of the vault. A logo representing the collateral is embedded in the emblem. Each vault has collateral of a single type and debt of a single base asset of a particular series.
To manage your debt vault, click on the vault card on the bottom right of “Borrow” screen.
As you can see from the Vault page, you may perform the following actions on a vault:
Repay Debt — repay any debt you have outstanding plus the interest. You may repay early if you choose, but repaying early may result in you not receiving your original fixed rate.
Roll Debt — You may roll your debt to a later maturity to extend the term of your loan. You will receive a new fixed rate for that maturity.
Add More Collateral — add more collateral to your position to reduce the risk of liquidation
Remove Collateral — remove collateral to reduce your collateral ratio
View Transaction History — view the vault’s history of transactions
Lend
When you lend in Yield, you are buying future cash payments from borrowers at a discount. These future cash payments are represented by tokens that we call “fyTokens”. A fyToken is a token that can be redeemed one-for-one for a base asset on some future date. fyTokens don’t pay interest themselves, rather the interest earned is determined by the difference between the face value of the fyToken and the price you pay for it.
fyTokens are fungible and can be bought and sold at any time. This means you can exit or close your position early by selling your fyTokens. However, changes in interest rates may affect the effective interest rate you receive when redeeming early.
Users can lend Dai or USDC at a fixed interest rate until maturity through the “Lend” tab.
- Go to https://app.yieldprotocol.com
- To Lend, select the “Lend” tab.
3. Choosing asset type
From the dropdown, select the asset you would like to lend. Then enter the amount you wish to lend into the input box. As you update the amount, the user interface will recalculate the fixed-rate of return you will receive based on the size of your loan.
Next, choose the maturity series you want to lend to. Each series will offer a different fixed rate until maturity. You must hold the lending position until maturity to earn interest at the quoted rate.
Finally, click next step.
4. Review Transaction
Review the transaction and if everything looks good click “Supply XX …”.You will then be prompted by your wallet to sign necessary approvals and transactions. For users who are interested in sending transactions with lower gas fees, please be aware that preset slippage limits may cause the transaction to fail.
Your transaction will then be submitted to the network for confirmation. After network confirmation, you will see a confirmation popup in the top right. You have now successfully lent with Yield Protocol.
Managing a Lending Vault
After successfully creating a lending position, you now have a lend vault of a single asset type and a maturity series. You can see the maturity date, portfolio value at maturity, current value by clicking on the vault.
To manage your debt position, click on the lending card on the bottom right of your screen.
As you can see from the vault page, you may perform the following actions:
Redeem DAI — closes out your lending position by redeeming fyDAI for DAI.
Roll Position — You may extend your loan to earn additional interest by rolling to a later maturity.
View Transaction History — view the vault’s history of transactions
Pool (Liquidity Provider Strategy)
Pooling your liquidity in Yield Protocol earns you fees from borrowers and lenders.
Yield Protocol v2 has improved the experience for providing liquidity. Users now contribute liquidity to strategies that support one Yield liquidity pool at a time. When the liquidity pool’s maturity date is reached, strategies automatically rollover liquidity from one pool to a later pool and require no user intervention.
The various liquidity strategies rollover in a predefined way. A “six month” strategy rolls liquidity to the next six month pool when it matures. v2 is launching with two six month strategies to start. One rolls every March/September, and the other rolls every June/December. It is suggested that you provide liquidity to the strategy that aligns with how long you expect to provide liquidity. Generally, you should be able to remove your liquidity at any time.
An important note about providing liquidity in Yield Protocol: Yield Protocol v2 strategies pool all funds in Yield Protocol liquidity pools to earn variable fees. These liquidity pools are automated market makers like Uniswap or Curve. Accordingly, by pooling liquidity in Yield, you may experience impermanent or actual losses in times of significant interest rate moves. Earning a return on the pool is not guaranteed. Additionally, pooling requires buying or borrowing fyTokens, so your position may be impacted by trading fees and/or interest. While we have worked hard to create sensible defaults, you should take the time to understand the tradeoffs associated with various ways to provide liquidity and how market conditions can affect your position. If you have any questions about how liquidity providing works in Yield, please ask us questions in our Discord.
To provide liquidity, you may follow these steps:
- Go to https://app.yieldprotocol.com
- Select the “Pool tab”
3. Select the asset you would like to provide as liquidity. During the beta, you can provide liquidity to earn fees in USDC and Dai.
4. Input an amount of liquidity to provide. Please note that during the beta, debt limits may limit the amount of liquidity you may provide. The protocol will use up to the amount indicated, but may take less, depending on protocol conditions.
5. Select a strategy to provide liquidity to.
6. Click “Next step” to bring up the confirmation screen.
7. Choose a pooling method. The two available methods are:
Buy and Pool — this strategy is best for users that are adding smaller amounts of liquidity. It minimizes gas costs while maximizing the amount of pool tokens received. This is the strategy recommended for most users.
Borrow and Pool — this strategy is best for users that are adding significant amounts of liquidity to a pool. Although it may use more gas, this strategy will not impact the current interest rate for the current series.
In certain cases, only one method may be available when pooling in certain strategies.
8. Review the transaction, and if correct, click the “Pool” button. You will then be prompted by your wallet to sign necessary approvals and transactions. For users who are interested in sending transactions with lower gas fees, please be aware that preset slippage limits may cause the transaction to fail.
After signing in your wallet, your transaction will then be submitted to the network for confirmation. After network confirmation, you will see a confirmation popup in the top right. You have now successfully provided liquidity with Yield Protocol.
Managing a Pool Position
To manage a pool position, click on the pool card on the bottom right of the screen.
Once opened, you can select “Remove Liquidity” to remove your liquidity.
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