Yield is a P2P lending dapp. From the perspective of the traditional, non-crypto world, Yield is essentially Mintos. Naturally, there are significant differences since Yield exists on the Ethereum blockchain and there’s no Yield company behind the scenes.
As a non-custodial, defi lending platform, anyone can place a lending offer or borrow request on the Yield app and have it funded by the corresponding peer, no questions asked. The loan can be repaid at anytime and assuming it is, the lender earns a fixed, guaranteed interest starting at 2% while the borrower earns up to 350 YLD.
Why P2P?
If you’ve played around with the app and are an active participant of the defi lending space, you’ve probably noticed this one is not quite like the others — for one, it lacks the usual “supply”/”deposit” lingo and mechanics. That’s because most defi lending platforms today use a money-market model — you deposit/supply funds in the platform which gets added to a pool with everyone’s funds and from this, borrowers can “borrow”, collateralizing some of their deposit. This interplay of “supply” and “borrowing” is how their respective rates are determined. The benefit of this model, for lenders, is you can simply send in funds and have it passively earn interest while, for borrowers, there’s usually funds available to borrow.
The downside to the money-market model? Lack of control/agency. Because it operates on a pooled-model, there are no guarantees. Should SpongeBob have deposited Dai in Compound while the APY on the dashboard was showing 13% or so, right now it’ll be showing ~9%:
A week or two from now it might be showing 3%. This dynamism also affects borrowers who might see one rate while borrowing and a wildly different one not too long after. In the same vein, because you have no control over the rates but are at the mercy of the pool dynamics, the earnings are, well, rarely worth even the gas fees paid:
This is where Yield comes into play: it gives you control back. When creating a lending offer, you can choose anything from 2% up to 12.5% interest. The same goes for borrowers, and to compensate for the usual favoring lenders over borrowers, for every loan successfully repaid on Yield, the borrower can earn up to 350 YLD. The YLD earned by borrowers increases as the principal and/or interest to be paid increases, up to the cap limit. Once an offer/request that was created is filled, the specified interest is exactly what will be earned/paid regardless of when the loan is repaid and whatever happens on the platform or the wider crypto market. It’s fixed, guaranteed, and immutable.
What’s the Downside?
As you might’ve noticed, there’s a “downside” of sorts — unlike the money-markets where, for lenders, it’s a bit more hands-free after the initial deposit, Yield requires an approach that’s more active. And for borrowers, there won’t always be a pool of funds to simply take from.
