4 Reasons why syUSD is an Exciting “Wrapper” for yUSD

4 Reasons why syUSD is an Exciting “Wrapper” for yUSD

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The concept of a stablecoin is very simple, in theory, if the sYUSD team is to be believed, it is time to elevate this idea to a whole new level. There are a few interesting benefits to using this approach, assuming people show an interest in it. 

Bringing Stability to yUSD

It seems a bit odd to wrap one’s existing crypto asset into a different one. At the same time, Wrapped Ethereum only exists on the Ethereum blockchain, and it is successful in its own way. syUSD is a stablecoin wrapper for yUSD, and will do so in the form of an ERC-20 token. 

Having the somewhat volatile yUSD currency converted into a more stable asset can prove beneficial. The value of yUSD has fluctuated between $0.93 and $2.45 since its inception. Using it to create a stablecoin can be interesting, both from a DeFi standpoint and otherwise.  It all comes down to having service providers supporting syUSD in some capacity. 

Ever-Increasing Liquidity of Sorts

As long as yUSD will keep trotting along, holders can generate an increasing syUSD stablecoin balance in their wallet. More importantly, every syUSD will always be redeemable for the initially converted amount of yUSD. For those who prefer to hedge against potential volatility, exploring this option with [part of] one’s yUSD holdings can prove worthwhile. 

Constantly Updating Balances

To maintain a virtual peg to 1 US Dollar, the pricing mechanism of syUSD is a bit more complex. The value of yUSD goes up over time, yet the wrapped stablecoin cannot exceed $1 in value. This requires a constant updating of user balances and the total supply of this stablecoin. 

Minting and Burning

Perhaps the most interesting aspect is how the minting and burning works. Minting the stablecoin requires wrapping existing yUSD into syUSD through the smart contract. Users can lock any amount they see fit, as there doesn’t appear to be a minimum nor a maximum.limit.

Burning syUSD and obtaining the initial token again requires a smart contract interaction as well through the ‘burn” function. This function needs to be called with the amount of yUSD they want to get out again. 

Do keep in mind this contract is extremely experimental. Using large amounts is ill-advised at this point in time. Anyone can analyze the contract to ensure there are no hidden functions. More details can be found on the GitHub page. 

The post 4 Reasons why syUSD is an Exciting “Wrapper” for yUSD appeared first on CryptoMode.

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