How Does Youves Work?

CDP|Risk C+|5 mechanisms|4 interactions

Youves is the largest DeFi protocol on Tezos, offering synthetic assets (uUSD stablecoin and uBTC) backed by overcollateralized CDPs with $23M TVL. Its C+ grade reflects custom oracle implementation with limited validators, extreme ecosystem concentration as 69.7% of Tezos DeFi, and thin market liquidity that could amplify liquidation cascades.

TVL

$22M

Sector

CDP

Risk Grade

C+

Value Grade

D-

Core Mechanisms

6.1.1

Overcollateralized CDP with 300% target ratio for uUSD and uBTC

Standard CDP pattern with higher collateral requirement

6.4.3

Novel

Custom oracle network on Tezos for synthetic asset pricing

Custom oracle with limited Tezos validator participation

6.3.1

Auction-based liquidation of undercollateralized vaults

Standard auction liquidation

7.1.1

YOU token liquidity mining for LP rewards

Standard liquidity mining

5.1.1

YOU token DAO governance

Standard token-weighted governance

How the Pieces Interact

Custom oracle on Tezos↔CDP liquidation triggersHigh

Custom oracle with limited validators is more susceptible to manipulation, potentially triggering incorrect liquidations

Tezos ecosystem concentration↔Collateral liquidationHigh

69.7% of Tezos DeFi TVL means liquidation faces insufficient buyer demand during ecosystem stress

uUSD peg mechanism↔Low Tezos DEX liquidityMedium

uUSD peg depends on arbitrage requiring sufficient DEX liquidity; thin Tezos markets make peg defense harder

YOU governance token↔Low participation DAOMedium

Small user base means governance may be dominated by few large holders

What Could Go Wrong

  1. uUSD and uBTC synthetic assets rely on a custom oracle on Tezos with limited validator participation, creating higher manipulation risk compared to established oracle networks.
  2. 300% collateral ratio creates capital inefficiency, and during Tezos ecosystem stress, liquidation may face insufficient buyer demand given Tezos DeFi limited liquidity.
  3. As 69.7% of Tezos DeFi TVL, Youves is highly concentrated in a single ecosystem — any Tezos-specific issues directly threaten protocol viability.
  4. DAO governance on a low-participation chain means decisions may be controlled by few large holders.

Oracle Manipulation Triggering Cascading CDP Liquidations

Moderate

Trigger: Custom oracle price feed manipulated or delayed 5+ minutes during 20%+ XTZ price drop, triggering incorrect liquidations of vaults above 300% collateral ratio

  1. 1.Custom oracle reports stale or manipulated XTZ price during rapid decline — Liquidation engine triggers on vaults that would survive with accurate pricing
  2. 2.Liquidation auctions flood thin Tezos DEX markets with collateral — Insufficient buyer demand causes deep discount sales
  3. 3.Discounted collateral sales push XTZ price lower on Tezos DEXs — More vaults fall below threshold creating cascade
  4. 4.uUSD peg breaks as confidence in collateral backing erodes — uUSD holders rush to exit on illiquid markets
  5. 5.Protocol TVL (69.7% of Tezos DeFi) collapses — Broader Tezos ecosystem confidence damaged
See all 2 collapse scenarios in the full risk report →

Risk Profile at a Glance

Mechanism Novelty3/15
Interaction Severity6/20
Oracle Surface7/10
Documentation Gaps4/10
Track Record6/15
Scale Exposure3/10
Regulatory Risk3/10
Vitality Risk4/10
C+

Overall: C+ (36/100)

Lower score = safer

More on Youves

Is Youves Safe?

Safety analysis

Is Youves a Good Investment?

Value analysis

Full Risk Report

All mechanisms & interactions

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