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Currencies, Commodities, Precious stones, Stocks, Indexes, and Bonds will always be among the most sought-after investment opportunities available in today's modern financial system; however, the complexity of the modern financial system creates several difficulties associated with actually owning these assets.
In a similar vein to typical financial derivatives, which get their value from the value of other underlying assets, synthetic assets are intended to achieve the same goals as physical assets without the requirement of owning the physical asset itself.
The long and the short of it is that one can hold synthetic USD, Gold, Stock tokens that replicate the real-world value of the underlying asset.
Youves is a new decentralized, non-custodial, and self-governed platform for the creation and management of synthetic assets built on tezos.
The three main focuses of youves
Minting: On Youves will be able to mint assets with your XTZ as collateral. At a later stage, you will also be able to use other Tezos-based tokens as collateral. The first available asset will be a stable coin called uUSD, with a soft-peg to the USD dollar.
Saving: On Youves you will be able to save and earn interest. The first savings solution that Youves will offer is for users to hold uUSD and earn fees in savings contracts.
Staking and Earning: On Youves you will be able to stake: earn, hold and stake YOU tokens to get a cut of the platform’s revenue in the form of staking rewards in uUSD.
{The YOU token is the governance token of the youves platform}
Minting
You will be able to mint synthetic assets while by locking XTZ as collateral in a smart contract. This way you basically borrow the synthetic assets while providing XTZ as collateral.
You can only get access to the full amount of XTZ that you set up as collateral, by burning the amount of synthetic asset you minted plus the accrued interest you need to pay over the loan.
And as we’re accustomed to in Tezos DeFi, the XTZ that you have provided as collateral continues to earn staking rewards. You will be able to select your baker.
Costs
There is a 1.5625% platform minting fee that is deducted from the uUSD(the first synthetic asset, others will be determined later on by governance) that you mint. No fee will be charged when you burn your uUSD.
The minting platform fee is part of the platform revenue from which you can take a cut by staking the Youves governance tokens (YOU tokens). You will earn YOU tokens over the uUSD you have minted.
Once you have minted uUSD, you will pay an interest rate, which will function as the stability fee for the uUSD – USD value peg. The stability fee starts at approx 0.4% yearly.
There is an interest rate response mechanism on the platform that will adjust the percentage automatically. More on that topic here.
You only pay that interest rate if you minted uUSD, not if you bought or traded it on a DEX or Exchange
Step-in mechanism
As with any cryptocurrency, the value of XTZ can be volatile. Users have to provide XTZ as collateral to mint uUSD. This means that the dollar value of the collateral can drop.
To prevent under collateralization, Youves has included a partial liquidation mechanism which is called a “Step-in”.
This means that if your collateral value drops below a certain threshold, in this case, 200% of the total dollar value that you have minted, then any other third party can step in and provide the needed uUSD to get the XTZ – uUSD value ratio back to 300%.
For providing the uUSD to get the collateral ratio back up, the third party will earn XTZ and a bonus which will be subtracted from the collateral which is under partial liquidation.
Before you mint uUSD, it is important to understand the consequences of a possible partial liquidation in detail. You will lose part (or all) of your XTZ that you put up as collateral if you don’t manage your collateral ratio.
You can read the detailed explanation on this subject here.
Other assets as collateral
At a later stage, other Tezos-based assets will be allowed to be provided as collateral. There is an incredible amount of new and exciting FA1.2 or FA2 assets on Tezos and we all know that diversification mitigates risks. This would facilitate basket-type products too.
Save and earn interest
When you hold uUSD, you can choose to lock your uUSD into a savings account on the platform. Currently, there is no lock-up time for saved uUSD, so you can lock and unlock at will. This might change in the future though.
Once you’ve locked up your uUSD in your savings account, you start to earn interest. The interest rate is variable and depends on the percentage of the uUSD circulating supply that is locked up in saving accounts.
You can read more about the applied interest rates here.
Staking YOU tokens
As a minter, you will earn YOU tokens, which are the governance tokens of Youves. Holders of YOU tokens can participate in the platform’s evolution through governance.
Every week 40,000 YOU tokens are issued that minters can claim. There is a limited supply of YOU: the distribution number will halve periodically (annually for now).
You can also buy YOU tokens on Quipuswap, but no YOU tokens will be pre-minted. So the initial supply will be very limited.
YOU tokens will be distributed to minters proportionally.
You can read more about governance tokens here.
All revenues collected by Youves are allocated to YOU holders that secure the platform. YOU tokens can also be used to earn revenue.
By staking YOU tokens on the platform, you will earn a portion of the platform’s revenues in uUSD. This means that you earn a percentage of the platform minting fee and stability fee. These fees are collected in a smart contract and distributed automatically.
There is no lock-up period for staking YOU tokens.
