Yamato Protocol

Yamato Protocol is a crypto-asset overcollateralized stable coin issuance protocol. V1 allows the issuance of CJPY (“Convertible JPY”, a Japanese Yen equivalent coin) using ETH as collateral.

What is Yamato Protocol?

Yamato Protocol https://app.yamato.fi/#/ is a decentralized and non-custodial CDP platform developed by DeFiGeek Community Japan https://defigeek.xyz/en/

CJPY serves as an ETH overcollateralized stablecoin designed to maintain a peg to the Japanese Yen. In the future, the Yamato protocol will expand to encompass various tokens as collateral, and a diverse range of fiat stablecoins will be introduced, initially including USD and EUR pegs.

Dune Analytics Dashboard for Yamato Protocol Statistics https://dune.com/dfgc/yamato

DefiLlama Page for Yamato Protocol TVL https://defillama.com/protocol/yamato-protocol

1 CJPY = 1 JPY peg mechanism

The CJPY is soft-pegged by game theory to be equivalent to 1 JPY.

What is game theory (mainly Nash equilibrium)? The idea is that each side behaves either selfishly or rationally, leading to a targeted equilibrium point (in this case, 1 JPY peg). Incentives and other motivators are needed in the dynamics that always outweigh aggressive (destructive, irrational) behavior.

  1. The minimum collateral ratio at the time of issuance is 130%, which means that 1CJPY can always be expected to be backed by collateral equal to or greater than 1 JPY.

  2. 1CJPY can always be redeemed against collateral equivalent to 1 JPY.

Force to repeg when the price is less than 1 JPY

  • Demand to purchase CJPY to repay or redeem

    • Debt of 1 CJPY can be repaid for less than 1 JPY, which increases the demand for purchases in the market.

    • Since CJPY obtained for less than 1 CJPY can be exchanged for 1 JPY worth of collateral through redemption, demand for arbitrage-oriented purchases will increase.

Force to repeg when the price is over 1 JPY

  • Selling demand from CJPY issue in Yamato

    • 1 CJPY borrowed can be sold in the market for 1 JPY or more and demand for arbitrage-oriented sells will increase.

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