What does “yfv” being replaced with “value” mean (what is a substitution rule)?

08/12/2023 23:32 • Metaverse Matters • 86 views

What does “yfv” being replaced with “value” mean?

Yfv is the native token of yEarnFinance, which converts yfv to its corresponding value through contracts. In the contract, yfv can be exchanged for fiat currencies (such as USD, RMB) or other assets. It is a special type of token that can be seen as a type of any ERC20 token. Therefore, it is also called “collateral”.

Essentially, collateral is what we call “borrowing and lending,” such as stablecoins like yUSD and xDAI. Why is that? Because there is leverage in current DeFi applications. But for users, they need to use collateral to trade and earn profits. So to understand this concept better, let’s first define the yfv exchange method on yswap. Simply put, you can also use a cryptocurrency as collateral to exchange it for fiat currency. If there were no such mechanism, your ETH would be liquidated as another ETH. But if you want to buy ETH, you have to choose a new BTC to pay the lender. When the interest rate is lower than the borrower’s interest rate, you can sell that ETH to another wallet. Then, when the interest rate is higher than the borrower’s interest, you can also buy more BTC to pay the interest and earn more income. This is one of the benefits of the yfv exchange process.

For example, suppose when the yfv price is $100, you want to buy 10,000 ETH, and then you set the yfv price 100 times higher (i.e., 1 billion). Then you can buy as many ETH as yfv wants to buy. And now, the total amount of yfv that you want to sell is 10 million, which is about 10,000 bitcoins of ywrve that can be sold. What is the significance here? Take a look at the picture below:

http://www.coinmarketcap.com/detail/usdt-and-eth1.html

What are substitution rules?

According to the latest data from CoinMarketCap, there are 10,888,530 tokens on Ethereum. This includes 4 cryptocurrencies: BTC, BCH, ETH, and XRP.

Substitution rules (Swap). When the exchange price of an asset is lower than the target price, users need to transfer funds to a new address for substitution; if the price of the trading pair is higher than the current target price (i.e., 1 bitcoin), the user’s funds will be transferred back to the original address; if the price of the trading pair is lower than a certain level, the user has no way to transfer their assets from the main address to the new contract address.

The substitution process will be automatically executed based on different conditions, but because smart contracts are open source, the substitution operation is not applicable to applications in the blockchain ecosystem. Therefore, conducting operations off-chain is very complex and time-consuming, and there are also various risk points in the substitution process. We can refer to the article “What are substitution rules” below.

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What does “yfv” being replaced with “value” mean (what is a substitution rule)?

What are substitution rules?

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