Yearn.finance prepares for a new stablecoin-based Defi protocol StableCredit that has the features of other decentralized lending protocols by skipping the governance token as we read more in today’s altcoin news.
StableCredit is a new lending protocol by Yearn.Finance whose patrons can use the stablecoin as collateral to borrow other assets in the automated market maker. Unlike other Defi projects, this one doesn’t have a governance feature. As Yearn.finance prepares a new project, the creator said they are going against the grain by getting away from the governance token craze that boosts the crypto assets lending protocols. This seems like a deliberate break from the DeFi landscape which Andre Cronje referred to as “degenerate finance.”
“StableCredit is a protocol that combines tokenized debt stable coins, lending, [automated market makers], and single sided AMM exposure to create a completely decentralized lending protocol.”
Andre Cronje gave a step by step explanation on how to use it. First, the users have to put in some USDC with each unit of roughly $1.00 since it is a dollar-pegged stablecoin. USDC is a stablecoin pegged to the dollar so it doesn’t mean that it will always equal $1.00. Then, an oracle delivers the exact price of the dollar to the USDC stablecoin and mints the StableCredit USD at that same rate.
Mixing equal parts USDC and StableCredit USD goes into the automated market maker which tries to keep the value of these assets equal. After that, things get complicated. What the users get is a specific amount of StableCredit USD which is a tokenized version of the US dollar which they can eventually use as collateral to borrow other assets with the AMM. It might seem like any other Defi protocol but with one key difference. The crypto researcher Hasu Noted:
“The innovation is a lending protocol without governance.”Therefore, there’s no need for token voters or to extract rent from users.”
Governance tokens are at the rage and the first lending platform Compound was the one that initiated it. After Compound came Synthetix then lending protocol Aave and then everyone started using governance tokens as a way to redistribute control of the platforms and protocols for everyone to use them. Governance tokens are meant to serve the utility by giving the users voting or governance rights in exchange for providing liquidity which became hot properties in their own rights because users look to leverage them for more interest.
Cronje’s YFI is now trading for over $33,000 though he said that it was designed to have “0 financial value.” It’s too early to know what StableCredit will bring but according to Cronje, the user interface will be ready at the end of the month.
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