YOP Documentation
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Strategies
Strategies are the building blocks of YOP

What are the Strategies?

Strategies can be thought of as the building blocks that interact with different DeFi protocols to generate yield. All aspects of interaction with the target DeFi protocols, from depositing, to claiming, to re-investing, to withdrawing are fully automated and encoded within the Strategies.
In the illustration below, we can see representations of four Strategies with additional protocols added in each one - leading to progressively more complex logic. Leveraging multiple DeFi protocols in this way typically results in increased yield, but with increased reward usually comes increased complexity and risk.
Stacking of protocols to build strategies
While building Strategies, the YOP team invests significant time to risk profile and analyse the target DeFi Protocols - so as to be able to make informed decisions about which protocols to interact with and understand what the risk/reward ratio looks like. For more details about this process, see the Risk Engine.

What are the types of Strategies?

Strategies can include providing liquidity to decentralised exchanges, lending protocols and insurance pools. A part of the Strategy could also include using bridges to access favourable returns on alternative blockchains. In the section below there is a brief description of the various types of Strategies that could be used.
Lending
Staking
Liq. Provision
Insurance
Options
Lending protocols enable users to deposit their tokens into a pool where others can borrow tokens using collateral. The borrowers pay an interest rate to the lenders. Borrowers and Lenders also receive rewards in the base token of the protocol. Lending via DeFi offers complete transparency whilst also enabling a very fast processing speed for loan originators. Examples of these types of Protocols would be Compound and Aave.
Staking is a novel mechanism to generate a return on assets - specific to certain types of blockchains and protocols. The process involves locking-up a portion of tokens as a way of securing our contributing to the blockchain network. By doing so, stakers earn rewards in the form of additional tokens. This strategy is usually done by utilising decentralised staking-as-service providers in order to run "nodes" that secure the network on behalf of users. Example include Lido and Stakefish.
Liquidity provision within DeFi involves depositing one or more assets into a liquidity pool to facilitate trading on a decentralised exchange. The liquidity provider earns fees on the trades that are done in the pool. Examples of decentralised exchanges include Uniswap and Curve.
Insurance protocols offer coverage for a wide range of products (such as stablecoins) and protocols (smart contract risks coverage). This coverage is purchased by the users and is insured by underwriters (or liquidity providers). The participants that supply capital to the insurance protocol earn a return through the premiums paid by the purchasers. Examples of insurance protocols include Nexus Mutual and Unslashed.
This strategy uses utilises derivatives such as options to generate a yield on the token. An example would be an options selling strategy, which would earn yield on a weekly basis through writing out-the-money options and collecting premiums. More information will be released once these strategies are integrated.