Minting and Burning
The acts of creating and terminating synthetic assets on the platform are called minting and burning. This works as follows:
Minting#
After a user connects their wallet to Youves, they can create and fund a vault. Once the vault is funded with eligible collateral (such as XTZ), the user can create synthetic assets within the vault, up to a limit determined by the value of the collateral.
With the v3 engines, it is possible for a user to mint tracker tokens such that the collateral ratio of their vault approaches the emergency collateral ratio for the selected engine. But, when the collateral ratio is near the emergency level, there is a higher risk of liquidation (e.g. if the price of the collateral suddenly drops in comparison of the price of the minted asset).
Therefore, the front-end specifies a target collateral ratiofor each engine to serve as a safety buffer, allowing users to mint at the target level without the risk of being too close to the emergency level.
Minting Fee#
The platform deducts a one-time minting fee from the loan at the time of minting, which will be part of the platform revenues. Engines which are marked with “0%”, will not deduct this minting fee. The owner of the vault is now a minter and the corresponding amount of collateral is locked in a smart contract on youves.
Tracking#
After a new vault is successfully created, the vault tracks the outstanding tracker tokens. It is the minter's responsibility to keep the collateralization ratio at (applicable to v3 engines) or above the emergency collateral ratio, otherwise, the vault becomes available for a step in (partial liquidation).
Interest Rates#
The outstanding youves tracker tokens in a vault are subject to an interest rate.
Tradability#
The youves tracker tokens can be transferred, purchased and sold.
Baking Rewards#
If the collateral is tez, minters will receive 100% of the baking rewards, after deduction of 3rd party fees for baking, which are directly deducted by the respective 3rd party baker. A user can set or change the baker at any time. Remember that it will take some days until the first baking rewards start to accrue after a new baker was set.
Burning#
If minters want to retrieve the locked collateral, they can repay their loan by posting outstanding synthetic assets into the vault and burning the tokens. This will release an amount of locked collateral in proportion to how many tracker tokens were burned.
Minting Example Diagram, using tez Collateral#
The following illustration explains the minting process with uUSD which is referred to as “Stable Token”.
