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Why Yama

This is how Yama is designed, but of course there are risks involved. Please read the risks page.

1. Highest leverage

Simply put, Yama outcompetes not just other stablecoins, but also lending protocols in general. It provides very high leverage on GLP (17x) with plans for more collateral. This amount of leverage is possible because of its fast liquidations and the fact that it's the first protocol to allow users to lend stablecoin liquidity directly to the protocol.

This means that given the same leverage multiple (e.g. 3x) and assuming the other risk parameters are the same, it's safer to leverage up on Yama than competing protocols with lower maximum leverage, as the margin of safety is larger for Yama. This reduces risk of liquidations in times of volatility.

2. Sustainable, incentive-aligned stablecoin yield

Users can lend USDT to earn stablecoin yield. They provide buy-side liquidity, which makes it possible for borrowers to leverage up. As a result, borrowers pay interest that largely goes to the lenders. The lenders provide value to the protocol, and they earn yield as a result. Everybody wins.

3. Zero-slippage, zero-fee swaps

Yama is novel in that the protocol doesn't care about its liquidity on open markets. Yama doesn't incentivize providing liquidity to a Curve or Balancer pool. Instead, Yama offers zero-slippage, zero-fee swaps through its PSM. This means that users can swap Yama for USDT and vice versa without paying any fees or slippage. This liquidity is sustainably incentivized thanks to the interest the borrowers pay.

Until Yama becomes the dominant stablecoin, the PSM will be the primary way to swap between Yama and other assets.

4. Omnichain

With the addition of the bridge module (not integrated yet), Yama can scale omnichain. This means that it can be bridged without slippage or significant delay. Thanks to Hyperlane's customizable consensus, Yama can do this in a decentralized and secure manner.

5. No ponzi elements or zero-sum games

The way to outcompete other stablecoins is not by building a complicated liquidity mining system. No ve tokens. No token emissions. No ponzi schemes.

The focus is on building the core product.

6. Very liquid

Liquidity providers generally prefer to earn stablecoin yield instead of diluting token emissions. Thanks to PSM incentives, Yama provides exactly that. This means that Yama is designed to be more liquid.

7. Collateralized

Unlike Beanstalk and other algo stables, Yama is collateralized. This means Yama is designed such that that every $1 of Yama is backed by at least $1 of collateral. This is important because it means that during times of significant capital outflows (such as the UST depeg), Yama will has a lower chance of being rendered insolvent and lose its peg.

However, note the risk of collateral insolvency caused by unusual market conditions, which is still applicable to some extent to CDPs.

8. Not directly reliant on USDC

Yama is not directly reliant on USDC.

Most stablecoins depeg if USDC depegs. Yama is the opposite--if USDC depegs, Yama is not directly affected, but if USDT depegs, Yama depegs.

Yama is arguably less prone to depegging than very decentralized stablecoins such as Liquity thanks to the liquidity provided by the PSM.

However, risks including market turmoil still have an effect. Read the risks page for more details.