CIP #25 - Yield Bearing USDT & USDC index

Executive Summary

The current bear market which began back in May 2022, has now lingered for well over 3 months. With Bitcoin & Ethereum dipping below $19,000 & $1,000 for the first time since 2018.

Stablecoins like USDT & USDC first emerged as a means for payments and safe haven for crypto traders in times of volatility, however, with deployed smart contract features and cross-chain functionalities have seen them shake up other areas of decentralized finance including yield farming.

Tether USD (USDT) is a cryptocurrency stablecoin pegged to the U.S. dollar and backed "100% by Tether's reserves which includes a mix of the cash and money market assets. Since it was launched in 2014 under the name “Real Coin”, USDT has retained its status as the most widely adopted stablecoin in the blockchain world. Since USDT was updated to work on the Ethereum, EOS, Tron, Algorand, and OMG blockchains it has become the most widely-adopted in stablecoin yield farming and other DeFi services.

USD Coin (USDC) is an Ethereum-based stablecoin – a type of digital asset whose value is pegged 1:1 with the U.S. dollar. Since it was launched in 2018, USDC has maintained its status as one of the most prominent stablecoins in the blockchain world. Due to USDCs reserves reliability and solid investor confidence, there has been an increasing demand for yield-bearing assets that encumber USDC.

During this extended downward market trend, Stablecoins have proven to be a reliable volatility shelter and a steady yield bearing asset for users in the blockchain space.Consequently, it is imperative for the Cook team to list New Yield Bearing Stablecoin indexes to allow users access boosted returns.

Problem Statement

With focus on the sustainable yield, most yield-bearing protocols may not provide efficient returns hence, there is a need to deploy yield boosting mechanisms to shore up the returns on the component assets of Cook Indexes.

Proposed Solutions

The Cook Team should list new indexes with a mix of Yield-bearing and Yield boosting strategies.

Rationale

By introducing Yield boosting strategies, it increases the returns on aggregate component assets of the Index without taking on additional risks.

Specifications

A new Yield Bearing USDT Index should be listed with the following components

50% Yield Yak AAVE V3 USDT Strategy 50% Vector Finance USDT yield boost pool

A new Yield Bearing USDC Index should be listed with the following components

50% Yield Yak Benqi V3 USDC Strategy 50% Vector Finance USDC yield boost pool

We hereby propose that the Cook tech team should list new indexes in accordance with the composition & strategy listed above.