Yearn.finance

Yearn.Finance allows users to automatically get the highest yields on several DeFi platforms.

What is Yearn.finance?

  • Yearn.Finance is a platform that provides yield farming, lending, and cover services requiring users to deposit their cryptocurrencies to get the returns.
  • YFI is one of the Governance Tokens from the Yearn.Finance Protocol that holders are eligible to vote and comment on Yearn Product policies and strategies such as Vault, Earn, and Ygrift. Holders also have a part in Yearn’s management and can stake their YFI in the Governance Contract. Returns are allocated according to the proportional percentage that is staked in year-end finance.
  • Launched in February 2020, the service, formerly known as iEarn, has seen huge growth in recent months as new products debuted and developers released in-house token YFI.

Key Metrics

TickerYFI
Token NameYearn.finance
Token Type/ProtocolERC-20
Total Token Supply36,666 YFI
Current Circulating Supply See coinmarketcap
Market CapitalisationSee coinmarketcap
Token Creation DateFebruary 2020
Can it be mined?Yes

Who is behind Yearn.finance?

Andre Cronje is one of the investors who invests in Yield Farming in Decentralized Finance (DeFi). He had been spending his days searching and selecting the DeFi protocol that provides the best return and deposited his tokens to earn a rewarding yield.

He started to question why we don’t create something which could help to automatically manage and select the DeFi protocol. This concept eventually allows him to come out of the loop and that’s the origin of Yearn.Finance. 

What is the purpose of Yearn.finance?

Its goal is to simplify the ever-expanding DeFi space for investors who are not technically minded or who wish to interact in a less committal manner than serious traders.

Insights

Yearn.Finance’s products include yVault, yEarn, yZap, ySwap and yTrade.

  • Vaults or yVaults, one of the popular products that grabbed top attention, is a capital pool which collects all deposited cryptocurrency, and generates yields for users. Vaults are managed by a controller with automated strategies (The strategies are assessed by the Yearn Community). The deposited tokens are invested in different DeFi protocols such as Liquidity Provider, Providing Collateral Loan, and Yield Farming to generate returns for users. Vaults also benefit users by using the yields from one protocol and reinvesting in other DeFi platforms to maximize the return rate within a specific period.
  • Earn or yEarn is a financial lending aggregator that optimizes the DeFi protocol with the highest yield at a specific period to invest in stablecoins (such as DAI, USDC, USDT, TUSD, sUSD, or wBTC) for its users. For instance, after depositing DAI, Earn will compare the lending pool between AAVE, dYdX and Compound which has the highest yield through smart contracts. Funds are automatically shifted between the lending pools as interest rates change between these protocols, ensuring the appropriate return rates of deposited stablecoins in Earn. 
  • Zap or yZap is a function allowing users to exchange tokens within one click which helps save time and reduce gas (transaction fees) as there are many steps of exchanging tokens in Yearn. Below are the sample steps of depositing ETH in Vaults.
    • Step 1: Convert ETH to a form of yTokens which is yETH
    • Step 2: Get approval from Yearn
    • Step 3: Deposit yETH into Vaults
  • As all the above steps are a separate on-chain transaction, users therefore need to pay high GAS fees and waste time on the complex steps. Figure below refers to the steps comparing between manually depositing in Vault and using Zap.
  • ySwap is a decentralized trading pool in the form of Automated Market Maker (AMM), similar to Uniswap, which allows users to trade their tokens. ySwap, however, has amended the pool feature, requiring only one single coin to be staked in the pool while Uniswap needs a pair tokens proportional to 50:50.
  • yTrade is a stablecoin trading platform supporting four various coins including DAI, USDC, USTD and BUSD. Users can lend all those four coins in leverage ratios of 75, 100 and 1,000. Yearn aims that the platform will be a solution to facilitate all arbitrage investors.

Risks

  • Returns are fluctuated and token holders are not guaranteed on the return. Investors should fully understand the asset before staking the token in the pool. 
  • Any funds deposited into Yearn can be at risk as the high return protocol persuades some hackers. In 2020, around $5 million was stolen by a hacker who exploited a smart contract vulnerability. Also in 2021, DAI vault was hacked, deluded to invest in an AAVE flash loan and drained of $11 million worth of assets.

News and Updates

  • Yearn launched its upgraded version two (V2) in January 2021, with a slew of changes including new fee structure, additional multi-strategy vault, and distinct strategy system to differentiate and facilitate its partner’s ecosystem. Furthermore, Frax Finance, a stablecoin protocol, has added FXB assets on Yearn Vaults and Yearn is becoming a great choice for banks for a truly decentralized financial system.
  • The Yearn community voted for increasing the supply by 22% of a minting of 6,666 YFI. Of those 6,666 tokens, 2,222 will be distributed to the contributors while 4,444 will be used for the establishment of a treasury overseen by the Operations Fund and cannot be used for voting in the governance protocol. Investors are rapidly shifting from trading gold to Bitcoin which is held as a Store of Value.

Community & Whitepaper Links

Disclaimer: 
All investment is speculative and involves substantial risk and uncertainty. Investors should understand the nature of digital assets including the terms of return and the risk of assets. We encourage investors to fully understand the assets and the risk associated with them prior to making any investment.  

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