Yamfore is a decentralized, non-custodial lending protocol on Cardano that offers crypto-backed loans with no margin calls, no ongoing interest repayments, and indefinite loan terms.
Yes, Yamfore is a lending protocol that is fundamentally long on the price appreciation of ADA over time. This means that borrowers who deposit ADA collateral with Yamfore are never at risk of liquidation, regardless of the price action in the market. All crypto-backed loans facilitated through Yamfore are directly funded from the protocol's internal stablecoin treasury. This removes many of the counterparty requirements of the lenders, such as ensuring the value of the borrower's collateral never falls below a certain threshold or requiring ongoing interest repayments. Yamfore primarily operates by collecting the accrued interest repayments from closed loan positions. When a borrower closes their loan position to retrieve their deposited ADA & CBLP collateral, the owed principal amount as well as any accrued interest from the loan position must be paid back to the protocol.
The Yamfore protocol is funded through two methods:
- 1.Interest payments from closed loan positions: When a borrower closes their loan position, they must pay back the principal amount and any accrued interest to the protocol. The protocol then sends the collected principal and interest to its stablecoin treasury to facilitate further borrowing.
- 2.The $CBLP treasury: The Yamfore protocol holds an internal treasury that contains 50% of the total fixed supply of the native governance and utility token, $CBLP. Individuals can indirectly provide liquidity to Yamfore by depositing their stablecoins into the protocol's $CBLP auction portal. In return, individuals will acquire an allocation of $CBLP tokens, which is determined through fair market supply and demand mechanisms.
To acquire a loan, users must first provide ADA as collateral. They must also deposit a corresponding amount of $CBLP tokens. The ADA/CBLP lending ratio is determined by on-chain governance. The loan amount is always proportional to the dollar value of the deposited ADA collateral, since the protocol only gives back a 1:1 dollar value exchange for any deposited ADA collateral. The $CBLP tokens deposited alongside the ADA collateral act as a security deposit for establishing a loan position. They are always returned to the borrower in their entirety when the loan position is closed.
The Yamfore protocol primarily operates by collecting accrued interest repayments from closed loan positions. When a borrower closes their loan position to retrieve their deposited ADA and CBLP collateral, the owed principal amount as well as any accrued interest from the loan position must be paid back to the protocol. The borrower will then receive the entirety of their deposited ADA and CBLP collateral back. The collected principal and interest amount are then sent to the stablecoin treasury to facilitate further borrowing.
During their loan term, borrowers are not subject to margin calls or liquidation risk, regardless of the price action of their collateral. Borrowers also do not have to make ongoing interest payments and have an indefinite loan term. Yamfore crypto-backed loans are more similar to perpetual long positions on the price appreciation of ADA than traditional crypto-backed loans from other protocols or platforms.
Individuals who want a simple and completely passive loan position with no margin calls, liquidation risk, ongoing interest repayments, or indefinite loan terms will choose community-backed lending protocols like Yamfore. More risk-tolerant and financially savvy individuals who want a wide range of money markets to borrow, lend, short, long, and the like, will choose other more traditional lending protocols or platforms.
The main risk for borrowers who initiate a crypto-backed loan through Yamfore is over-exposure to the protocol's native utility and governance token, $CBLP. The $CBLP token is inherently riskier than ADA due to its relatively limited use case and smaller market capitalization. Ideally, any user taking out a crypto-backed loan against their ADA would prefer to have the majority, if not all, of their deposited collateral denominated in ADA.
Although borrowers' deposited $CBLP tokens are always returned in full upon closure of a loan position, the market value of those tokens can vary greatly from the start of the loan term to the end. It is possible for a borrower to close their loan position and be in profit on their deposited ADA collateral while being neutral or even down in price on their deposited $CBLP collateral.
Yes, Yamfore will go through external auditing before mainnet launch. You can keep an eye out on our official Audit page to keep up to date with any code reviews.