Learning the friendly way

Crypto lending might be the hot new product in the cryptocurrency space, but before you dive in be sure to first understand what it entails. The concept grew great traction with the rise of the decentralized finance (DeFi) movement, with platforms offering users high yields for borrowing crypto assets. 

Let’s get started with what crypto lending is, and then explore how the product works. 

What is crypto lending?

Crypto lending is a traditional banking service curated to the crypto world. With the DeFi space remains largely unregulated, many crypto exchanges and other platforms have started offering these services, with added security. 

Crypto lending involves a user lending crypto assets to a platform in return for interest, which allows other users to then borrow said crypto assets, paying interest on the amount borrowed. The platform will then take a small percentage of the interest paid. 

Depending on the platform and other factors, crypto lending platforms may be centralized or decentralized and offer exceptionally high-interest rates, with annual percentage yields (APYs) of 15% or more. With the interest rates being higher than traditional bank accounts, lenders gain access to much greater yields, increasing their returns. 

Another advantage to crypto lending is that users are still exposed to price gains in the market. Meaning that if you deposit your Bitcoin when it's worth $20,000 and the price rises in value to $50,000, you are still able to realize these returns and earn interest for the duration of the loan. 

Note that interest rates might fluctuate with market conditions on some platforms, increasing when the prices increase and decreasing when markets are down.

How does crypto lending work?

Cryptocurrency lending platforms function as middlemen connecting lenders to borrowers. Lenders deposit their digital currency into high-interest lending accounts, and borrowers utilize the lending platform to acquire loans. These systems then lend money utilizing the crypto that investors have provided them.

The platform controls its net interest margins by establishing the interest rates for both lending and borrowing.

Rates on platforms differ from cryptocurrency to cryptocurrency, some platforms might offer higher interest rates to lenders willing to commit to a certain time frame. There is no standard interest rate for cryptocurrencies, as each platform has its own set of rules.

Centralized crypto lending means putting your money in the hands of a corporation or other entity to manage and make the process easier. Accounts are created for borrowers and lenders, and loans may be requested by applicants.

Lenders and borrowers may connect their cryptocurrency wallets to a decentralized crypto lending protocol, ​​which uses smart contracts to automate the lender-borrower relationship. Smart contracts are automated digital agreements that execute once certain criteria is met. 

The advantages of crypto lending

There are several benefits to crypto lending when comparing it to a regular bank account.

Borrowers have access to these financial services without having to pass a credit check, making it more financially inclusive than traditional banking services. They are also exposed to lower interest rates than regular banking loans.

Lenders that give loans in the form of cryptocurrencies can make a lot more money from their crypto assets than savings accounts. It may also be a more adaptable choice to crypto staking, which requires users to lock up their cryptocurrency and submit it to a blockchain security method. Depending on the platform, lending usually gives users access to their funds.

The downside to crypto lending

The agreement with crypto loan companies is generally made on individual terms by institution borrowers. As interest rates vary across platforms and cryptocurrencies, each company is different.

There have been several cases where lending platforms have been hit by severe liquidity crisis, notably Celsius, Voyager Digital, and BlockFi. Glenn Huybrecht, COO of Cake DeFi, said, “Some lending providers have been very generous with low collateral requirements, which then puts them in hot water when one of their customer's defaults.”

Due to the ongoing regulation battles, these crypto services are also not backed by government safety nets, like the traditional banks are. However, some platforms do hold insurance and the necessary regulatory accreditations so be sure to seek one that has all of the above.

Closing thoughts

Crypto lending platforms differ greatly from one another so be sure to check each platform, their interest rates for all the various currencies supported, and if there are any lock-up periods or fees payable. 

You've likely come across the term "token" in your crypto ventures, or heard Bitcoin and Ethereum described as a token, but what does this all mean? In this article, we're breaking down what a token is, and how to distinguish a coin from a token and how it can be used as a tool to store value.

Token Definition

A token, in the cryptocurrency sense of the world, represents a particular asset or utility. It's worth noting in this item that tokens and cryptocurrencies are terms often used interchangeably however they technically differ. Tokens typically fall into one of the following three categories:

Payment tokens

These tokens allow users to purchase goods and services outside of the blockchain, offering an alternative currency. 

Security tokens

Similar to initial public offerings (IPOs) on the stock market, security tokens offer users an ownership stake or entitle the holder to dividends in a blockchain project. 

Utility tokens 

Utility tokens offer users access to a service within a particular ecosystem, similar to loyalty points on a Starbucks card. These points hold value within their own ecosystem but cannot be used outside of that. ‍

Coins vs Tokens

Getting more technical, when exploring coins vs tokens, tokens are categorised as crypto assets that have been built on top of another blockchain while coins are built on their own blockchain. 

Ether, for example, is the native token to the Ethereum blockchain, however, the platform allows developers to create a range of token standards on top of it. Based on this information, all ERC-20 tokens are therefore categorised as tokens as opposed to coins. 

USD Coin (USDC) and Tether (USDT) are therefore tokens as they are built on top of the Ethereum blockchain. While each network is operated by its own leadership, both use Ethereum's blockchain to facilitate all transactions.‍

How Are Tokens Traded?

Much like coins, tokens can be bought, sold and traded on exchanges, or sent directly from one wallet to another. This is facilitated by blockchain technology, in the same way that coins are transferred from one location to another. Unlike coins, which are all fungible in nature, tokens can sometimes be non-fungible, meaning that they are not identical in value and function. 

Tokens are sent using the wallet address of a recipient's blockchain-compatible wallet. The address is often represented by a barcode in the form of a QR code, or through a lengthy alphanumeric code. All transactions take place from the wallet holding the tokens and are sent directly to the wallet of the recipient without the need for a centralized authority like a bank. Tokens can typically be bought on exchanges, often with Visa or Mastercard, or exchanged between users.

How is an NFT Different from Cryptocurrency?

Non-fungible tokens (NFTs) are all different from each other as they each represent a real-world object, whether a digital piece of artwork or a bottle of fine wine. Bitcoin can be traded for anything around the world, whereas NFTs are unique in nature and while they hold value they cannot be used interchangeably. 

What Are NFTs Used For?

NFTs are used to represent a particular asset, whether it be physical or digital. When minted, these tokens will permanently represent that asset and cannot be changed. For example, one NFT could represent an apartment in London while another could represent a song by Kings of Leon. The possibilities are endless, and the marketplaces are huge.

Users can easily trade NFTs on marketplaces (through a website or mobile app) such as OpenSea or Rarible. Once you own an NFT you are credited with the ownership rights of the asset the NFT represents. Due to the nature of blockchain technology, this is permanently displayed on the network's public ledger for anyone to review. This process ensures that the ownership of an NFT cannot the changed and the information is available for anyone to credit.

Note that several blockchain networks currently support the minting of NFTs, and the holder will need a wallet specific to that blockchain in order to hold the NFT.

Are Tokens Regulated?

When it comes to regulation, countries around the world are currently drawing up legal frameworks to better implement cryptocurrencies into our current financial system. This includes the likes of tokens.

Once cryptocurrencies are regulated by government authorities, they could provide the world with unrealized use cases like being used to manage a prescription at a pharmacy or clinical services or to provide feedback to IT support. While there are plenty of tokens available on the market today, it's likely that this is only the tip of the iceberg in terms of their potential to improve issues faced around the world.

Tether (USDT) consistently ranks among the top cryptocurrencies by market cap and regularly posts the highest daily trading volume in the entire crypto market. It's become an essential tool for traders worldwide.

While critics point to crypto's volatility as a weakness, stablecoins like Tether offer a different value proposition: the speed and accessibility of digital currency with the stability of the US dollar.

What Is Tether (USDT)?

Tether (USDT) is a widely used stablecoin, a type of cryptocurrency designed to maintain a fixed value by being pegged to a fiat currency, in this case the United States dollar. Unlike Bitcoin, whose price fluctuates based on supply and market demand, USDT is meant to stay close to $1 USD, providing stability in otherwise volatile markets.

Originally launched in 2014 under the name Realcoin, Tether was rebranded and built to act as a bridge between fiat money and digital assets. It enables traders, exchanges, and users to move value quickly, reliably, and with less exposure to cryptocurrency volatility.

Because of its stability and liquidity, USDT is often used as a “parking spot” in crypto trading, when the market is unstable, investors might convert volatile tokens into USDT to preserve value without leaving the crypto ecosystem entirely.

As of 2025, Tether is consistently ranked among the top 3 cryptocurrencies by market capitalization, and its daily trading volume often surpasses that of other major tokens.

In this article, we’ll dig into how USDT works, why people use it, the risks and controversies, and how to buy and use it responsibly.

Who Created Tether?

As mentioned above Tether was initially called Realcoin when it was launched in 2014 and was created by Bitcoin investor Brock Pierce, entrepreneur Reeve Collins and software developer, Craig Sellars. It later changed its name to USTether, eventually settling on USDT. 

All three co-founders have profound experience within the crypto industry, each co-founding and actively involved in several cryptocurrency and blockchain projects.

The business has also created a number of other stablecoins solving the volatility problem across numerous markets, notably a Euro-pegged Tether coin (EURT), a Chinese Yuan-pegged Tether coin (CNHT), and a gold-pegged Tether coin (XAUT).

How Does USDT Work?

Reserve Backing & Peg Mechanism

To maintain its peg (i.e. USDT = 1 USD), Tether claims each USDT in circulation is backed by reserves. These reserves include cash, cash equivalents, repos, commercial paper, U.S. Treasury bills, and other short-term assets.

In recent attestations, Tether reports that about 81.5% of its reserves are in cash and U.S. Treasuries, with smaller portions in other assets.

When demand for USDT increases, Tether issues (mints) new tokens; when demand falls, tokens can be destroyed (burned) to reduce supply. This dynamic supply adjustment helps keep the exchange rate close to 1 USD.

Blockchain Infrastructure & Multi-Chain Support

Tether does not have its own dedicated blockchain. Instead, USDT operates as a token on various blockchains, including Ethereum (ERC-20), TRON (TRC-20), Solana, Algorand, EOS, and more. This multi-chain deployment enhances accessibility and interoperability.

Transactions are handled by the underlying networks: you need to send USDT on the same chain type, or bridges/wrapping mechanisms if moving across chains. Mistakes sending USDT on mismatched chains can lead to permanent loss.

Minting, Burning & Peg Maintenance

Tether monitors supply vs demand. If too many redemptions occur, USDT supply contracts; if demand surges, new tokens are minted. The reserve assets are used to maintain liquidity for redemptions and guarantee that each USDT has backing.

To preserve the peg, Tether also relies on arbitrage: if USDT drifts slightly above $1, there’s an incentive to redeem or sell, and if it dips below, it encourages buyers. Combined with market forces and reserve backing, this helps anchor the price.

Why Do People Use USDT?

• Users often convert volatile crypto into USDT during turbulent markets to protect value without exiting the digital asset ecosystem.
• USDT is accepted in a vast array of exchanges and trading pairs, making it a preferred medium of exchange.
• Because it behaves like USD but lives on the blockchain, USDT can move quickly across borders without traditional banking friction.
• Many decentralized finance platforms use USDT as a base asset for lending, yield farming, and stable lending markets.
• In regions with unstable local currencies, USDT often provides a stable alternative for savings, payments, or transfers.

Is USDT Safe? Risks & Concerns

While USDT offers utility, it also attracts scrutiny and criticism.

Centralization & Counterparty Risk

Tether Limited acts as the central issuer. That means users must trust that the company actually holds sufficient reserves and will honor redemptions. This centralized model contrasts with fully decentralized cryptocurrencies.

Transparency & Reserve Audits

Tether publishes regular attestation reports, but has yet to provide a full independent audit by a Big Four firm in many periods.
In 2025, Tether announced it is in talks with a Big Four accounting firm to pursue a full audit.

Historical controversies include a fine by the New York Attorney General in 2021 over misrepresentation about reserve backing.

Regulatory & Legal Uncertainty

Stablecoins face evolving regulatory environments globally. Some jurisdictions may impose stricter rules, reserve requirements, or classification of USDT as a regulated instrument.

Reserve Composition & Liquidity Risk

Though cash and Treasury bills dominate reported reserves, some portion may be in less liquid assets. In times of mass redemptions, liquidity risk may strain backing.

Price Deviations & Peg Risk

While USDT is generally stable, in extreme market stress, the peg might deviate briefly. Arbitrage, reserve liquidity, and market confidence are key to restoring balance.

How to Buy, Sell & Use USDT

Buying USDT

You can acquire USDT on most major cryptocurrency exchanges (e.g. Binance, Coinbase, Kraken). Many platforms allow purchase via fiat currencies (bank transfer, card) or by trading other crypto for USDT.

In the Tap app, you can buy USDT and have it stored in your wallet, making it easier to manage alongside your other assets.

Storing USDT

Store USDT in wallets that support the relevant chain (ERC-20, TRC-20, etc.). Hardware wallets like Ledger or Trezor support ERC-20 USDT (via Ethereum).

Converting USDT to Fiat

On many exchanges, you can sell USDT for fiat (USD, GBP, EUR) and withdraw to your bank.

Using USDT for Payments or Transfers

Some platforms accept USDT as payment. You can also transfer USDT peer-to-peer across wallets quickly and globally, with network transaction fees (gas) depending on the chain used.

USDT Reserve Composition & Transparency

Tether provides quarterly transparency reports detailing reserve breakdowns, but falls short of full independent audits historically.

As of recent attestations, ~81.5% of reserves are held in cash & U.S. Treasuries, while smaller portions are in other assets.

Tether held over $127 billion in U.S. Treasuries as of Q2 2025.

Reserve composition evolves over time; Tether has reduced reliance on commercial paper and shifted toward safer instruments.

While attestations improve transparency, critics assert a full, external audit would bolster confidence.

USDT vs Other Stablecoins

While USDT remains dominant, several alternatives exist:

• USDC: Known for stricter auditing and regulatory compliance
• DAI: Decentralized, over-collateralized stablecoin
  
  

USDT held around 62–63% of the stablecoin market share as of 2025. It maintains dominance due to liquidity, widespread adoption, and support across exchanges and DeFi. However, users might opt for alternatives for perceived transparency or regulatory comfort.

Investment Considerations

USDT is not designed as a growth asset; its value is meant to remain stable. Its role is more of a utility token: liquidity provider, trading medium, and stability anchor.

That said, you can earn yield on USDT via lending platforms, DeFi protocols, or savings accounts, though returns may be modest and come with risk.

Consider that holding large amounts of USDT long-term yields little upside, and inflation or counterparty risk may erode value.

Always balance USDT exposure within a diversified strategy, rather than viewing it as an investment vehicle.

Conclusion

Tether (USDT) plays a critical role as the most widely used stablecoin in crypto, offering a digital dollar alternative that combines stability with blockchain utility. While its popularity and liquidity make it indispensable in trading and DeFi, it operates under risks tied to transparency, centralization, and regulatory shifts.

If using USDT, treat it as a tool for stability and liquidity, not speculative growth. Used wisely, USDT helps you move between crypto and fiat more fluidly, manage volatility, and access global financial systems with fewer intermediaries.

‍

Polkastarter represents one of the leading decentralised launchpad platforms in the blockchain ecosystem, focused on empowering early-stage crypto projects to raise funds and launch tokens. First launched in December 2020, it has established itself as a prominent player in the Initial DEX Offering (IDO) space, providing a secure and efficient environment for project launches.

The platform has facilitated the launch of over 100 projects, demonstrating its significant impact on the crypto funding landscape. Polkastarter also features a dedicated marketing team, including video production and design, providing support beyond just the technical infrastructure.

TLDR

Multi-chain launchpad: Polkastarter is a decentralised platform that enables crypto projects to conduct token sales and fundraising campaigns across multiple blockchain networks.

Fixed-price swaps: The platform's main offering is its fixed-swap smart contract, which allows projects to easily launch liquidity pools that execute orders at a fixed price, rather than using traditional AMM models.

Cross-chain support: Polkastarter currently supports Ethereum, BNB Chain, Polygon, Celo, and Avalanche, providing flexibility for projects across different ecosystems.

Native token (POLS): POLS serves as the platform's utility token, providing access to IDO participation, governance rights, and various platform benefits.

What is Polkastarter (POLS)?

Polkastarter is a decentralised launchpad platform designed to democratise access to early-stage crypto investments through Initial DEX Offerings (IDOs). The platform serves as a bridge between innovative blockchain projects seeking funding and investors looking for early access to promising tokens.

The platform's core innovation lies in its fixed-swap mechanism, which provides predictable pricing for token sales rather than the variable pricing models used by automated market makers. This approach offers greater transparency and certainty for both projects and investors during token launch events.

Beyond the launchpad functionality, Polkastarter runs an internal incubation and advisory program, bringing together experience and lessons learned from 100+ project launches to nurture and grow Web3 projects, helping to ensure that projects launched on the platform receive proper guidance and support.

The platform takes security seriously by carefully reviewing each project before allowing it to launch. This screening process helps ensure that only legitimate, high-quality projects reach investors, protecting users from scams and poorly developed tokens.

Who created Polkastarter?

Polkastarter was founded in 2020 by Daniel Stockhaus, Tiago Martins, and Miguel Leite. The founding team brought together diverse expertise in business development, technology, and product management to address the growing need for reliable fundraising infrastructure in the decentralised finance space.

Daniel Stockhaus serves as CEO and Co-founder, leading the platform's strategic direction and business development efforts. Under his leadership, the platform has grown from a startup concept to one of the most recognised launchpad platforms in the crypto industry.

The founding team recognised the challenges faced by early-stage crypto projects in accessing capital and the difficulties investors encountered in finding legitimate investment opportunities. Their solution was to create a platform that could serve both sides of this equation while maintaining high standards for security and project quality.

How does Polkastarter work?

Launchpad mechanism

To participate in token launches, users need to hold POLS tokens, with different amounts unlocking various access levels. The more POLS you hold, the better your chances of getting into popular launches and the more you can invest.

Projects set fixed prices for their tokens rather than using changing market prices. This means investors know exactly what they're paying and how many tokens they'll get before they invest.

Multi-chain infrastructure

Polkastarter works across several different blockchains, so projects can pick the one that best fits their needs. Some chains have lower fees, others are faster, and some have different user communities.

Project curation and support

As mentioned above, before any project can launch on Polkastarter, it goes through a thorough review process. The team checks the technology, verifies who's behind the project, and evaluates whether the business makes sense.

Projects also get help with marketing, strategy advice, and technical support to give them the best chance of success both during their launch and afterwards.

What Is POLS?

POLS is the native utility token of the Polkastarter ecosystem, serving a range of functions within the ecosystem:

• Tier access: Users must hold and stake POLS tokens to access different participation tiers in IDO launches, with higher holdings providing better benefits and guaranteed allocations.
• Governance rights: POLS holders can participate in platform governance decisions, voting on proposals that affect the platform's future development and policies.
• Staking rewards: Token holders can stake their POLS to earn rewards while maintaining their tier status for IDO participation.
• Platform fees: POLS can be used to pay for various platform services and may provide discounts on transaction fees.

How can I buy and sell POLS?

POLS tokens are available on Tap, allowing verified users to easily buy, sell, and trade the token. Before investing in POLS, we encourage you to consider how useful the token is on the Polkastarter platform and how much the launchpad space is growing. The token’s value depends largely on the platform’s success and how widely IDO fundraising is adopted.

‍

TradFi (short for traditional finance) is a term popularized by the cryptocurrency and decentralized finance community to describe the long-established financial system that predates blockchain technology. It refers to conventional financial institutions such as banks, stock exchanges, insurance companies, and investment firms that operate under government regulation and centralized authority.

These old organizations manage money, credit, payments, and investments through regulated financial services that rely on trust, legal frameworks, and decades of institutional development. While the term emerged in contrast to cryptocurrency and DeFi, TradFi remains the backbone of the global economy and continues to shape how individuals, companies, and governments interact with finance.

Core Components of the TradFi System

The TradFi ecosystem is made up of interconnected financial organizations, each providing specialized services that support economic activity and capital flow.

Commercial banks sit at the center of traditional finance, offering deposit accounts, savings products, loans, mortgages, credit cards, and payment services to consumers and businesses. Investment banks focus on capital markets, underwriting stock and bond issuances, facilitating mergers and acquisitions, and advising corporations and governments. Stock exchanges enable the buying and selling of financial instruments such as equities, bonds, and derivatives, providing liquidity, price discovery, and market transparency.

Insurance companies play a critical role in risk management by offering protection against financial loss, covering everything from health and property to business operations. Central banks, such as the Federal Reserve, oversee monetary policy, manage currency supply, stabilize markets, and support the broader financial system. Additional entities like asset managers, credit unions, payment processors, pension funds, and fintech companies expand access to financial services and improve operational efficiency across the system.

Key Characteristics of Traditional Finance

Several defining characteristics distinguish TradFi from decentralized finance models. First, TradFi is highly centralized, relying on trusted intermediaries to manage financial transactions, verify identities, and enforce contracts. This centrality supports stability and consumer protection but can increase costs and reduce flexibility.

Regulation is another core feature. TradFi institutions operate under strict legal and regulatory compliance requirements, including Know Your Customer and anti-money laundering rules. These measures help prevent fraud, protect consumers, and maintain market integrity. Traditional finance also benefits from established infrastructure built over decades, offering reliability, standardized processes, and legal recourse.

However, TradFi systems often involve slower settlement times, limited operating hours, higher fees, and access barriers for certain populations. Despite these limitations, long-standing trust, government oversight, and institutional expertise continue to make traditional finance the default choice for most individuals and organizations.

TradFi vs DeFi: A Clear Comparison

The contrast between TradFi and decentralized finance highlights two very different financial models. TradFi relies on centralized institutions such as banks and brokerages to act as intermediaries. These entities manage customer funds, approve loans, process payments, and execute trades within regulated frameworks designed to protect users and maintain economic stability.

DeFi, by contrast, operates on blockchain-based computing platforms using smart contracts to enable peer-to-peer financial transactions without intermediaries. Services like lending, trading, and asset management are executed automatically through decentralized applications, often with greater transparency and 24/7 availability.

TradFi offers advantages such as consumer protection, access to professional financial advisers, deposit insurance, and established dispute resolution mechanisms. It also provides structured credit systems and investment services familiar to most users. DeFi, meanwhile, prioritizes decentralization, accessibility, efficiency, and innovation, often reducing costs and barriers to entry.

Each system carries risks. TradFi can be slow, bureaucratic, and exclusionary, while DeFi exposes users to technical risk, volatility, and limited regulatory safeguards. Understanding both models allows investors and consumers to make informed choices based on their needs and risk tolerance.

The Role of Regulation in TradFi

Regulation is foundational to traditional finance. Governments and regulatory authorities establish laws that govern banks, financial services companies, and capital markets to protect consumers and maintain trust in the system. Regulatory frameworks enforce transparency, manage systemic risk, and reduce fraud through compliance requirements such as KYC and AML checks.

While regulation can increase operating costs and slow innovation, it also provides legal clarity, accountability, and consumer protection. Central banks use regulatory tools and monetary policy to manage inflation, stabilize markets, and respond to financial crises, reinforcing the role of TradFi in maintaining economic order.

The Future of Traditional Finance

Traditional finance is evolving as new technologies reshape the financial landscape. Blockchain, distributed ledger systems, automation, and digital currencies are increasingly influencing how TradFi institutions operate. Many banks and financial companies are exploring blockchain-based settlement, open banking, and central bank digital currencies to improve efficiency and transparency.

Rather than being replaced, TradFi is likely to converge with decentralized technologies, adopting elements of Web3 while maintaining regulatory oversight and risk management standards. Competition from DeFi and fintech continues to drive innovation, encouraging traditional institutions to modernize their services and improve accessibility for a global population.

Conclusion

At the end of the day, TradFi remains the foundation of the global financial system, providing structure, stability, and trusted financial services to individuals, businesses, and governments. And while it faces challenges from digital innovation and decentralized finance, its regulated framework, institutional experience, and consumer protections ensure its relevance. Understanding how traditional finance works is essential for navigating today’s financial ecosystem and appreciating how emerging technologies are reshaping the future of money.

‍

After its launch in 2020, Yearn Finance (YFI) quickly became one of the fastest-growing decentralized finance projects in the cryptocurrency market, attracting over $800 million in digital assets within its first month. In less than a year, the platform’s total value locked (TVL) surpassed $1 billion, reflecting strong market demand for automated yield strategies. By combining blockchain technology, smart contract automation, and community governance, Yearn Finance offers a compelling alternative to traditional finance for users seeking passive income from digital assets.

What Is the Yearn Finance Platform?

Yearn.finance (YFI) is a decentralized finance platform built on the Ethereum blockchain that aggregates multiple DeFi protocols into a single computing platform for yield optimization. Its core purpose is to help end users maximize returns on their cryptocurrency holdings through automated lending, yield farming, and asset management strategies.

Designed to improve accessibility, Yearn Finance reduces the complexity typically associated with decentralized finance by automating decisions that would otherwise require constant monitoring, manual trading, and technical expertise. This makes it especially appealing to users seeking exposure to DeFi investment strategies without managing every financial transaction themselves.

Yearn Finance consists of four core products:

• Earn: Automatically identifies the highest interest rates available across lending protocols, helping users optimize returns on deposited assets.
• Zap: Bundles multiple financial transactions into a single point-and-click action, reducing gas fees and execution costs.
• APY: A real-time data aggregation tool that compares interest rates, yields, and market conditions across supported protocols.
• Vaults: Automated investment strategies that deploy user capital across DeFi markets to generate yield, similar to actively managed mutual funds.
  

By locking supported cryptocurrencies into smart contracts integrated with platforms like Curve, Balancer, Aave, and Compound, users participate in yield farming while maintaining custody of their assets. The more capital deposited, the greater the share of generated yield and protocol incentives.

Governance and Incentives

Yearn Finance operates as a decentralized autonomous organization (DAO), where governance decisions are proposed and voted on by YFI token holders. This governance model aligns incentives across the ecosystem, rewarding participants who contribute to protocol sustainability, innovation, and long-term value creation.

Automation plays a central role in Yearn’s business process design, ensuring strategies adapt to changes in supply and demand, interest rates, and market liquidity without requiring constant user intervention.

Who Created Yearn Finance (YFI)?

Yearn Finance was launched in February 2020 by software developer Andre Cronje, a notable figure in decentralized application and blockchain innovation. Unlike many cryptocurrency projects, Yearn launched without venture capital funding, token pre-mines, or insider allocations, reinforcing its open-source and community-driven ethos.

Cronje has also contributed to broader DeFi research and development through his involvement with the Fantom ecosystem and crypto media platforms, helping advance transparency and experimentation within the industry.

How Does Yearn Finance Work?

Yearn Finance functions as a DeFi aggregator, deploying smart contracts on Ethereum-compatible decentralized exchanges and lending platforms. Rather than competing directly with protocols like Aave or Compound, Yearn integrates them into automated strategies that dynamically allocate capital based on risk, yield, and market conditions.

At its core, the platform optimizes capital efficiency by continuously reallocating assets to the highest-yielding opportunities, reducing opportunity cost for users.

Earn

The Earn product searches across multiple lending markets to identify the most competitive interest rates. Users can deposit stablecoins such as USDC, DAI, USDT, TUSD, or sUSD, allowing Yearn’s algorithms to route funds where returns are highest at any given time.

Zap

Zap simplifies complex DeFi interactions by combining multiple trades and liquidity deposits into a single transaction. This reduces transaction fees, improves execution speed, and enhances the end-user experience.

APY

APY provides transparent measurement of expected annual yield based on real-time data, offering users a clearer view of potential returns and risk exposure across different strategies.

Vaults

Vaults are Yearn Finance’s most advanced product, enabling users to participate in actively managed investment strategies expressed in Solidity, Ethereum’s smart contract programming language. These vaults automatically rebalance funds across protocols, optimize gas costs, and reinvest profits, making them a powerful tool for long-term asset growth.

What Is the YFI Token?

Launched in July 2020, YFI is an ERC-20 cryptocurrency that serves as both a governance and incentive token within the Yearn Finance ecosystem. YFI holders can propose, vote on, and implement changes to protocol parameters, fee structures, and new product development.

Originally capped at 30,000 tokens, the supply was later increased to 36,666 YFI following a community governance vote. YFI derives value from its role in protocol governance, revenue sharing, and its influence over a growing decentralized finance infrastructure.

Platform fees (such as 0.5% on Earn and 5% on Vaults) are distributed to YFI holders, aligning token ownership with long-term protocol performance and capital efficiency.

How Can I Buy Yearn Finance (YFI)?

Whether you’re looking to actively engage with Yearn Finance’s decentralized investment strategies or simply gain exposure to the YFI cryptocurrency, Tap offers a secure and regulated entry point. Through the Tap mobile app, users can purchase, store, and manage YFI alongside other digital assets using an integrated cryptocurrency wallet.

Once verified, users can trade YFI, track price movements, and manage their portfolio directly from their mobile device, combining ease of access with institutional-grade security.

Bottom Line

For users exploring decentralized finance beyond Bitcoin, Yearn Finance offers exposure to one of Ethereum’s most established yield-focused projects. Whether the goal is long-term investment or active participation in DeFi strategies, acquiring the YFI cryptocurrency provides direct access to the protocol’s governance and ecosystem.

Where to Get Yearn Finance (YFI)?

Through the Tap app, users can find YFI, monitor its price in real time, and manage it alongside other cryptocurrencies.

‍