YUSD

Introduction

YUSD is our flagship yield-bearing stablecoin, designed to provide users with stable returns while preserving the dollar-pegged value of their assets. It represents the perfect entry point for DeFi users seeking yield without exposure to volatile crypto assets.

YUSD implements our full ERC4626 standard with yield vesting, providing a smooth and predictable yield accrual mechanism. The token maintains a stable value while gradually incorporating yields, making it suitable for both short-term liquidity needs and long-term savings strategies.

Underlying Asset

YUSD's native underlying asset is USDC (USD Coin), a fully-backed stablecoin pegged to the US dollar. USDC is issued by Circle and is widely regarded as one of the most trusted stablecoins in the ecosystem, with regular attestations of its reserves. We selected USDC as our primary asset due to its strong regulatory compliance, wide adoption across DeFi protocols, and robust liquidity.

Supported Assets

While USDC is the native asset for yUSD, our Manager contract supports deposits of additional stablecoins including:

• USDT (Tether): The highest-volume stablecoin in crypto on CEXs

• DAI: A decentralized, overcollateralized stablecoin

• USDe (Ethena): A synthetic stablecoin backed by diversified crypto assets and delta-hedging strategies.

• Pendle PT Tokens: Principal tokens representing the yield-free portion of underlying assets, allowing for fixed-rate returns

When these non-native assets are deposited, the process follows a two-step approach:

1. The user deposits the non-native asset (e.g., USDT) through the Manager contract and receives a Receipt NFT representing their pending deposit

2. An off-chain executor then processes this deposit by via Manager:

   • Calculating the equivalent value in USDC terms based on current exchange rates

   • Updating the totalAssets in YTokenL1 accordingly

   • Minting the appropriate amount of yUSD tokens to the user

This executor-based model is more gas-efficient than on-chain swaps and allows for optimal value conversion between different stablecoins.

Yield Strategies

YUSD employs a diversified approach to yield generation, focusing on three primary categories:

1. Yield Trading Protocols - Pendle, Spectra, Napier etc.

   • Deployment in tokenized yield markets focusing on stable instruments with predictable returns.

2. Lending Platforms - Morpho, Aave

   • Enhanced lending yields and access to stable, battle-tested lending yields in established stablecoin markets.

3. Delta-Neutral Strategies

   • Basis Trading: Capture of funding rate differentials between spot and futures markets.

   • Hedged Positions: Yield generation with neutralized market exposure through strategic hedging.

The yield strategy allocation is actively managed to balance risk and return, with strict exposure limits for each protocol to ensure diversification.