Yearn Finance
Yearn finance is a group of protocols running on the Ethereum blockchain that allow users to optimize their earnings on crypto assets through lending and trading services.
Last updated
Yearn finance is a group of protocols running on the Ethereum blockchain that allow users to optimize their earnings on crypto assets through lending and trading services.
Last updated
yearn.finance is a group of protocols running on the Ethereum blockchain that allow users to optimize their earnings on crypto assets through lending and trading services.
One of a number of emerging decentralized finance (DeFi) projects, yearn.finance provides its services using only code, removing the need for a financial intermediary like a bank or custodian. To do this, it has built a system of automated incentives around its YFI cryptocurrency.
The yearn.finance platform consists of several independent products, including:
APY – A data table that shows interest rates across different lending protocols.
Earn – Which identifies the highest interest rates users can earn lending an asset.
Vaults – A collection of investment strategies designed to generate the highest returns from other DeFi projects.
Zap – Which bundles several trades in one click, saving on costs and labor.
Users earn YFI tokens by locking cryptocurrencies in yearn.finance contracts running on the Balancer and Curve DeFi trading platforms, using the yearn.finance platform.
In this way, yearn.finance capitalizes on a practice commonly called “yield farming,” in which users lock up crypto assets in a DeFi protocol in order to earn more cryptocurrency. The more assets users lock in a platform, the more tokens they are awarded by the protocols.
In its first month of operation, the yearn.finance platform attracted nearly $800 million in assets, making it one of the fastest-growing DeFi projects to date.
Yearn.finance was launched by independent developer Andre Cronje in 2020.
Notably, Cronje received no funding for the yearn.finance protocol and reserved no tokens for himself prior to yearn.finance’s launch. This makes yearn.finance different from most DeFi projects, which typically raise investment from venture funds then assemble a team to develop the protocol.
In July 2020, the yearn.finance platform launched its native cryptocurrency, YFI.
yearn.finance is a protocol designed to deploy contracts to the Ethereum blockchain as well as other decentralized exchanges running on it, such as Balancer and Curve.
In this way, users are trusting that YFI’s contracts, as well as those in associated contracts on Balancer and Curve, will deploy on Ethereum in order to provide the advertised services.
The majority of yearn.finance’s services – Earn, Zap and APY – seek to enable users to lend or trade their cryptocurrency.
Earn is a way for users to get the best interest rate on lending, and it works by searching across different lending protocols, such as Aave or Compound, to find the best rates.
Users can then deposit their DAI, USDC, USDT, TUSD or sUSD on the yearn.finance platform to receive those interest rates.
Likewise, Zap allows users to complete several investments with one click. For instance, a user can trade DAI for yCRV (another DeFi cryptocurrency) in one action, compared to three actions across the yearn.finance and Curve platforms.
This saves the user time, opportunity cost and transaction fees.
APY (which stands for annual percentage yield) searches across the lending protocols that Earn uses, and gives the user an estimate for how much interest they can expect to earn, on an annualized basis, for a certain amount of capital.
Vaults, yearn.finance’s most complex service, allow users to follow active investment strategies using the platform’s self-executing code. In this way, Vaults are like actively managed mutual funds.
As of Aug 30, 10 strategies are available on Vaults.
Still in its experimental stages, these strategies are expressed in Solidity, meaning a user will need some familiarity with code to understand how the Vaults operate.
However, investing in a Vault is straightforward. yearn.finance’s user interface allows a user to deposit popular coins such as DAI and USDC in each strategy, with each strategy displaying its historical return on investment.
