A new vault launched on yearn.finance is recognized by the community for permanently restoring the Dai (DAI) fixation. the project’s algorithmic stablecoin MakerDAO (MKR).
As Cointelegraph previously reported, Maker has struggled to maintain a strict DAI fix of $ 1 since the earnings wars * began in mid-June.
Despite all the ups and downs, the DAI price moved around $ 1.02 in the past 30 days. As of this writing, the price has dropped to $ 1.
The community is Accreditation this achievement for the project yearn.finance, which introduced a new anti-revenue strategy based on minting DAI to obtain the CRV curve token. The YETH vault in which this strategy is implemented quickly gained popularity, blocking 10% of DAI’s current circulating supply.
The reason for this seems to be the high rate of return the strategy offers, which at the time of this writing corresponds to an annual interest rate of 93%. Essentially, the vault receives Ether (ETH), uses it to mint DAIs, and then sends the same DAI to the pool of Curve and CRV. A group of different stick coins, consisting of DAI, USD Coin (USDC), TrueUSD (TUSD) and Tether (USDT).
This entitles the vault to both trading commissions earned by other users trading their stablecoins with one another and all CRV tokens released in this pool. Their combination gives a yield of 93%, which is high by traditional standards but very low compared to other profitable farms.
L.The safe manages the positions automatically. You will regularly withdraw, sell and return the CRV tokens earned for ETH to the vault to increase profits. Basically, the liquidation rate is also managed in Maker, as there is a risk that the price of Ether will drop.
The vault aims for a 200% guarantee rate to ensure that users’ assets are not liquidated. Liquidations come with a 13% penalty that could quickly wipe out any profits from this complex strategy. It’s worth noting that even without liquidation, users will continue to be exposed to ETH price fluctuations, both highs and lows.
Using yearn.finance to generate the CRV token has certain advantages for its users: One of them is saving on gas prices. Because the log consolidates the assets of all users, you pay a lower cumulative fee than each individual doing so. For less-savvy users, the process is also fully automated, although there is a log fee for the service. The downside is the technical risk, as unforeseen mistakes in one of the smart contracts involved can result in the loss of user funds.
For Makers, the vault activity helps stabilize the DAI fixation. The strategy requires selling the DAI to the other three components of the group and the CRV, which puts downward pressure on the price. This is a notable change in the mechanics of using DAI for compound yield farming.
As Cointelegraph previously reported, The connection is the largest single target for the coinage of DAI. However, users don’t have to sell DAI to earn COMP, so they don’t add to selling pressure at all. With 10% of all DAI deliveries minted in the YETH vault, the pressure to sell is considerable.
However, Maker token holders do not benefit directly from this inflow of new funds. The community has decided to cut the interest rates to zero on almost all collateral. Although the pinning has been restored for the time being, the Maker Log does not receive any revenue from it.
* The DeFi ecosystem terms are in English