UMA Protocol’s “Yield Dollar” Concept to be Implemented on renBTC
DeFi protocol UMA has recently announced to roll out a “Yield Dollar” concept on the renBTC platform to enable Bitcoin to leverage permissionless on the Ethereum network. The launch of this new product line came along with the “joint liquidity” incentive, which is also a three-asset yield farming incentive.
With the launch of the new “Yield Dollar” concept, users will be able to mint renBTC from BTC and can also lock renBTC into UMA to use that as collateral to mint the uUSD, which is the “Yield Dollar.” This uUSD can then again be used to buy renBTC tokens, thereby creating a more leveraged and permissionless position.
Before the “Yield Dollar” concept was launched, a three-asset yield incentive was rolled out. According to that concept of yield incentive, while any user mints the uUSD or the Yield Dollar, he has the liberty to farm by staking uUSD that he has minted into any associated balancer pools to farm three assets simultaneously; $REN, $BAL, & $UMA and hence given the name ” three-asset yield farming incentive.”
Successful contributors of the USDC & the uUSDrBTC-OCT into the balancer pool would be rewarded with farming incentives where each contributor would be receiving all the three assets. Accordingly, the Balancer pool will get 25,000 REN per week and 10,000 UMA per week. BAL tokens would be received as per calculations of Balancer, which are calculated per 256 blocks.
Each reward period is calculated at 23:00 UTC each Monday, and the rewards would be given out precisely after the lapse of 24 hours from the announcement of the awards to the contributors. This liquidity mining infrastructure for “Yield Dollar” is similar to the UMA’s liquidity mining pilot, which too offered incentives to contributors of liquidity backed by ETH. The Yield Dollar has some specific properties like it has a specific expiry date, after which it can be adjusted to $1 of price/earnings to growth ratio.
The APR is calculated based on how much liquidity is provided by each contributor over the entire week, which is not possible to predict. Therefore, the calculation is made on assumptions. Users can log into the official website of UMA and click on the Tools tab to find out the current APR at any particular point of time to avoid any miscalculations.
This renBTC backed Yield Dollar is the second yield dollar product launched by UMA for promoting liquidity mining campaigns after the ETH-backed yield dollar, yUSD, that was launched in July. The renBTC backed Yield Dollar provides a 125% collateralization ratio with maturity scheduled on October 1st. The launch of the Yield Dollar solidifies the position for permission-less derivatives.