The DeFi sector has taken a bit of a breather over the past month or so and there have been much fewer new offerings. However, this hasn’t stopped a new platform called Yield Protocol from launching fixed term and rate loans to the industry.
The introductory post from Yield stated that most of the popular DeFi protocols are floating-rate, with the two prime examples being Maker and Compound. It added that this new system is different as it introduces volatility.
It continued to state that fixed rate is the dominant form of lending in traditional finance and DeFi has several use cases that would be greatly improved with fixed-rate, fixed-term borrowing, and lending.
Yield Protocol Live on Mainnet
The protocol has just gone live on mainnet as a beta launch according to today’s Twitter post.
We are thrilled to announce the beta launch of the Yield Protocol on Ethereum.
— Yield Protocol (@yield) October 19, 2020
The platform has created a new type of token called ‘fyTokens’ (fixed yield), the first of which will be fyDai to enable fixed-term and rate borrowing/lending using the MakerDAO stablecoin.
Liquidity provisions for Dai have been enabled, and once enough has been pooled, the asset can be borrowed at fixed rates for quarterly periods using ETH as collateral. The announcement added that the platform will likely be in the beta testing phase until early November, once the October liquidity has successfully matured.
The interest rate reported by the Yield dApp for this period was 1.49% at the time of press. While this doesn’t sound like much compared to other high-yielding DeFi protocols, it does beat most high street banks which are very close to negative interest rates.
Yield Protocol stated that its smart contracts were audited by Trail of Bits and that it does not have administrative keys or the ability to change the smart contract. It added that any funds placed in the pools may be subject to total loss during the beta period and that there was no governance token so users should beware of fakes.
A Safer DeFi?
While Yield Protocol has yet to gain any real momentum so soon after launch, it does offer a more stable way to gain exposure to DeFi in a time when some banks may begin charging for deposits. This would only be the case, however, if Ethereum gas prices also remain stable and do not spike again.
Once it finishes the beta phase and has sufficient liquidity, it may prove to be as popular as Maker’s own Dai Savings Rate was. At the moment the DSR has yet to move up from 0% following the loss of its peg during the March market crash.