yvToken as Collateral
Overview of Yearn Vaults as Collateral
Yearn vault tokens are yield-generating wrappers around underlying assets. Ideally, they are a great way to hold collateral because they are secure and grow in value over time rather than remaining as idle capital.
However, there are some risks to consider with some implementations of Yearn vaults before onboarding them as a collateral type in lending markets.
Aside from obvious risks involved with smart contracts (including the vault contract itself, it’s strategies, and protocols farmed by the strategy), lending protocols should also study the risks involved with how a vault’s pricePerShare is calculated, as this function is important in computing the vault token’s value.
Why Use yvTokens as Collateral?
They’re Yield Generating
A Yearn Vault token is a yield-bearing version of a token, so when locked up as collateral it will still generate yield. A single vault token can run up to 20 yield-generating strategies. All Vaults at yearn.fi run "up-only" strategies.
The Safest Yields in DeFi
Vaults strategies are constantly audited to practice the highest security standards of DeFi. Grow with us one day at a time. More information at:
- Vaults & Strategies Deployment Security Guidelines
- Yearning for Yearn: Messari Report
- Yearn Security Processes