Yearn Finance (YFI)
Yearn Finance offers a suite of investment strategies powered by robots that contain “wisdom sourced from the crowd” — Yearn’s own community.
What is Yearn.finance (YFI) and how does it work?
One of the fastest growing DeFi projects, Yearn.finance has spawned a range of core products that provide passive earnings on crypto assets.
Launched in July 2020, Yearn.finance has emerged as one of the major players in the emerging decentralized finance (DeFi) space that provides services such as staking, lending aggregation and yield generation on the Ethereum blockchain. Boasting the most user-friendly crypto trading services that are being meted out autonomously, the project uses its native ERC-20 Yearn Finance (YFI) cryptocurrency to incentivize those who lock their crypto tokens in Yearn.finance contracts through any of the supported platforms such as Balancer and Curve DeFi.
With all of its protocols operating on the Ethereum blockchain, Yearn.finance is managed through developers that act in accordance with governance proposals voted for by YFI holders. Crafted with the vision of simplifying the process of investing in DeFi products, the Yearn.finance platform also offers its users the ability to invest in other DeFi protocols in addition to earning a percentage of the platform’s fees in proportion to their YFI holdings.
Who is behind Yearn.finance?
A veteran of the cryptocurrency and DeFi space, Andre Cronje launched the Yearn.finance protocol without raising any funding either through public or private means. Instead, the software architect relied on his over two decades worth of software development experience to launch the protocol first and then issued YFI tokens to retail investors, which are currently limited to a maximum supply of 36,666 tokens.
Apart from the extremely rare approach adopted by Cronje, the Yearn.finance platform has benefitted from his previous experience as the founder of the Keep3r Network and his association with notable DeFi projects that include the likes of PowerPool, Hegic, Cover, Pickle, Cream V2, SushiSwap and Akropolish, among others. Unlike other founders, Cronje didn’t reserve any YFI tokens for himself prior to the Yearn.finance protocol’s launch, believing that a truly decentralized blockchain technology-based platform should not have the founder hanging on and dictating its future course.
In fact, the history of Yearn.finance can be traced back to his efforts over the past five years to launch cost-effective financial products for the unbanked segment of the world’s population and has been heavily influenced by his efforts in Africa toward achieving the same. By choosing to focus on creating value for the entire DeFi ecosystem of developers, partners and investors on the Yearn.finance platform, Cronje has provided scores of crypto entrepreneurs with a new perspective on how to build DeFi products for the masses.
What is Yearn.finance (YFI) and how does it work?
Built on the Ethereum blockchain, the Yearn.finance protocol eliminates the need for a financial intermediary like a bank and offers crypto investors and tokenholders access to its range of lending and trading services that include Vaults, Zap, Earn and APY. The Yearn.finance protocol can deploy its smart contracts on the Ethereum blockchain as well as other decentralized exchanges that operate on it. Offered through a simplified web interface, Yearn.finance is a radical experiment in the DeFi world and has one sole aim- to maximize returns on crypto assets for its users.
The most complex among its products is the Vaults product, which acts as a mutual fund of sorts and has 50+ different vaults or staking pools for Yearn.finance’s users to deposit their tokens in. These Yearn.finance vaults are basically investment strategies in other DeFi projects like Convex Finance and Compound Finance, with pre-programmed logic deciding when to shift capital and code automation deciding the yield generation and rebalancing process. Users additionally benefit from the lower gas costs and low transaction fees levied by Yearn.finance on each vault-related transaction.
The Earn product, Yearn.finance’s first product, relies on the interest rate changes on the Aave, dYdX and Compound protocols to let its users benefit from the best interest rates at all times. A lending aggregator, in principle, Earn allows Yearn.finance’s users to allocate their crypto tokens to either or all of these liquidity protocols and earn higher interest rates than that provided by traditional finance instruments. For those invested in stablecoins such as Binance USD (BUSD), USD Coin
, Tether USDT
$1.00, TrueUSD (TUSD) or Dai DAI
$1.00, the Zap product enables them to swap between liquidity pools on the Curve Finance platform and deposit into any of Yearn.finance’s vaults using almost any token on a single click.
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