After its launch in 2020, Yearn.finance (YFI) quickly became one of the fastest-growing DeFi projects, attracting over $800 million in digital assets in its first month. In eight months, the total value locked (TVL) on the platform had grown to $1 billion. Yearn Finance offers a range of lending and trading services that provide impressive earning potential for crypto asset holders.
What is the Yearn Finance platform?
Yearn.finance (YFI) is a decentralized finance platform consisting of a group of protocols built on the Ethereum blockchain. These protocols allow users to maximize their digital asset-earning potential through staking, lending aggregation and yield generation services.
The aim of the Yearn Finance project is to make DeFi (decentralized finance) trading less complicated and more accessible to less technically-minded traders. The platform utilizes automation to allow traders to maximize profits from yield farming.
Yearn Finance consists of four core products:
- Earn – establishes the highest interest rates that users can earn from lending crypto assets.
- Zap – groups together several trades in one click, reducing costs and labor.
- APY – comprehensive data table that analyzes interest rates across various lending protocols.
- Vaults – investment strategies developed to yield the highest returns from other DeFi projects.
Through locking supported cryptocurrencies in Yearn Finance smart contracts integrated into the Curve DeFi and Balancer trading platforms, users earn YFI tokens and can engage in yield farming practices. The more crypto assets that users lock into these protocols, the more tokens they receive.
In order to operate efficiently in a decentralized manner, Yearn Finance built an impressive system of automated incentives rewarding participants who act in accordance with the outlined governance proposals with its YFI tokens. These proposals are voted in by YFI holders.
Who created Yearn Finance (YFI)?
Yearn Finance was launched in February 2020 by a prominent contender in the crypto space, Andre Cronje. Cronje led the launch of the platform having received no funding or reserving any tokens for himself, an exceptionally rare occurrence in the crypto assets and DeFi projects space.
On top of that, he also holds important roles at smart contract ecosystem Fantom and CryptoBriefing - a premier go-to resource for anyone interested in Initial Coin Offerings (ICOs) or crypto media.
How does the Yearn Finance (YFI) platform work?
Yearn Finance offers users custom-built tools that act as an aggregator for other DeFi projects such as Aave, Compound, and Curve DeFi trading platforms.
Built on the Ethereum blockchain, Yearn Finance deploys contracts on other compatible decentralized exchanges such as Balancer and Curve to maximize the earning potential for its users.
These contracts can be categorized into the four core products mentioned above, with most of the platform's services centered around lending or trading digital assets, and generating a passive income.
The earn product acts as a lending aggregator and searches across a selection of reputable different lending protocols to find the best interest rates, allowing users to tap into the best rates when lending cryptocurrencies. Users can then deposit USDT, USDC, DAI, sUSD, or TUSD into liquidity pools directly through the Yearn Finance platform to tap into those interest rates.
Saving time, costs and transaction fees, the zap product allows users to conduct several transactions in one click. For example, a user can trade DAI for yCRV in one smooth movement, as opposed to several transactions on other DeFi projects.
APY (annual percentage yield)
Aggregates the earning potential on an annualized basis based on how much capital is invested by searching across the various lending protocols utilized by the Earn product.
The more complex of the services offered by Yearn Finance, the Vaults product allows users to tap into active investment strategies designed by the platform's own self-executing code. These essentially work as actively managed mutual funds with Yearn Finance being the financial intermediary.
Users looking to engage in this product, noting that it is still in experimental stages, would need to have some technical know-how to investigate how these strategies work as they are presented in Solidity (a smart contract-orientated programming language). Utilizing the product, however, is less complicated, simply requiring users to deposit USDC or DAI in each strategy which then invests the funds in various liquidity pools.
What is the YFI token?
Launched in July 2020, the YFI token is based on the ERC-20 token standard and operates as a utility and governance token across the ecosystem. While anyone can make a proposal, only YFI holders are able to vote on proposals put forward regarding the governance and future development of the platform. The higher one's YFI token holding, the more voting power the YFI holders have. A proposal requires more than 50% of the votes in order to be passed.
The maximum supply of YFI tokens was 30,000, however, YFI holders voted to increase this. Following the successful proposal, the total supply is now 36,666 YFI tokens.
Holders are able to earn YFI tokens through revenue received through fees charged on the platform. These are generated through the 0.5% fees charged for using the Earn feature and 5% for the Vault service. Users can also earn YFI tokens by providing liquidity on the platform.
How can I buy the Yearn Finance token?
Whether looking to actively engage in the yearn.finance (YFI) platform, other DeFi protocols, or simply acquire and hold the YFI token, Tap provides a simple and secure solution. Fully regulated and licensed, the Tap mobile app requires users to create an account and complete the account verification process in order to gain access to a wide range of vetted cryptocurrencies.
Once approved, users can buy, sell, store and trade the YFI token or any of the other supported cryptocurrencies from the convenience of their mobile phone.
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