What is Yearn.finance?
Yearn.finance is a platform that allows users to earn income from their crypto assets. It includes a group of protocols for lending your assets, investing them in other DeFi projects, or for typical crypto trading.
Story
Andre Cronje, a South African entrepreneur, founded Yearn.finance in 2020 to help crypto users generate income from their assets. In July 2020, the platform launched its native token YFI.
How does Yearn.finance work?
Yearn.finance transfers crypto assets between different DeFi investment platforms (e.g. UniSwap and Curve) to enable users to maximize their returns. This allows you to find your crypto assets and use them in the most profitable investment strategies of various DeFi platforms.
Yearn.finance features
Yearn.finance represents an ecosystem of crypto investment features including:
iborrow.finance
This feature allows you to lend your crypto assets such as DAI and USDC and earn interest of up to 50%. Lending is an effective way to put your assets to work and earn rewards rather than idle them, and Yearn.Finance makes it easy by giving users access to various vaults where they can deposit money to lend to others and predetermined interest earning rates.
For example, if you have $50,000 USDC and find a vault offer 5% interest afterwards 90 days you can deposit your money and make a claim $2,500 in the interest of the end 90 days.
Yliquidate.finance
This feature allows users to get flash loans, which are unsecured loans that are borrowed and returned within seconds. Flash loans are useful for arbitrage trading and debt refinancing and help bring liquidity to crypto platforms.
yswap.exchange
Yswap is a single source for manually depositing funds into various DeFi protocols. You can deposit tokens into liquidity pools and in return receive a share of the transaction fees charged to traders using that pool. The fee varies depending on the transaction pool, but you can expect a difference 0.1% And 5%.
ytrade.finance
This feature allows you to open long and short positions on stablecoins – DAI, BUSD, USDT and USDC – with up to 1000x Leverage. Using leverage can increase your trading profits (and losses).
For example, if you place a $1,000 Trade BTC with 11x Leverage, which means you take out loans $10,000 and spend in total $11,000. When the price of BTC increases 10% After a month you can sell your position for a $1,100 Profit instead of just $100 without leverage. Alternatively, the price of BTC may decline and bring further losses, so be careful.
Yearn.finance safes
Vaults work like savings accounts for your crypto assets. They are like investment banks that accept deposits and invest your assets for the best possible return. There are many vaults with different investment strategies on Yearn.finance, so you can choose the one you feel most comfortable with.
How do safes work?
Vaults accept deposits from users, invest their money and earn a portion of the profits from the investments. The investment strategy behind each vault is designed by a person or team called strategists, and Yearn.finance reviews each strategy before accepting it as a vault into which users can deposit funds.
The fee structure for each vault is as follows:
- 20% performance fee: Deducted from the investment return.
- 2% administration fee: A lump sum amount withdrawn from vault deposits each year. This fee is deducted through the creation of new vault shares and the dilution of existing participants.
There are different strategies for each safe, and it's up to you to choose one that you like. A typical example is collecting deposits from customers and lending the deposits as collateral for margin trading on another exchange. The vault then distributes the interest accordingly to all shareholders.
The strategists behind each vault take care of it 10% the revenue fees generated as compensation.
achieve income
The yield is the amount of profit you can make on your deposits in each vault, described as a percentage increase. Different safes offer different returns. However, keep in mind that there is no guarantee that you will receive the exact yield. The final return could be lower or higher depending on market conditions.
What is YFI crypto?
YFI is Yearn.finance’s native token based on the Ethereum blockchain. YFI holders can vote on the rules for the Yearn.finance platform.
Delivery
The total number of YFI tokens in circulation is 36,666. There is no additional offer, so users must exchange these limited quantities with each other. The limited supply makes a single token quite expensive, costing over $8,000 at the time of writing.
Network speed
YFI uses the Ethereum blockchain, so the speed of the network depends on the congestion on the network and the gas fee you pay to process a transaction.
liquidity
YFI is a most commonly traded asset on various exchanges such as Binance and Coinbase. For example, the daily trading volume on Binance is over $20 million, which means sufficient liquidity.
Payout
The entire supply of YFI tokens was paid out to liquidity providers, not a single one of them was reserved for the founding team. This token has one of the most equitable distributions, so no single person owns an outsized percentage of tokens.
guide
YFI holders can vote on the rules for Yearn.finance. It is as democratic as it can be and gives every token holder a say in how the Yearn.finance platform is run.
Credit records
Many lending protocols support the YFI token, including popular ones like Aave, Compound, and dXdY.
Where to buy Yearn.finance (YFI)?
You can purchase the YFI token on various centralized or decentralized exchanges including:
How to choose a wallet for YFI
Factors you should consider when choosing a wallet to store your YFI tokens include:
- Security: Choose a wallet provider with no history of lax security practices. Ideally, your wallet provider should support two-factor authentication to prevent unauthorized access.
- Low Fees: Choose a wallet provider that allows you to exchange tokens at low fees compared to other platforms.
- Fiat entrance/exit: Not all wallets allow exchanging fiat money for digital tokens – some only support token-to-token swaps. Look for a wallet with fiat on-ramp and off-ramp tokens if you want to exchange fiat currencies for YFI tokens and vice versa.
How to earn YFI
There are multiple ways to earn YFI tokens including:
- Mark out – You can use your existing cryptocurrency to validate transactions on a blockchain and receive rewards in the form of YFI tokens. YouHolder supports YFI staking.
- Lending – You can lend existing YFI tokens and earn additional tokens as interest through various lending protocols.
How to make money with Yearn.finance
Yearn.finance allows users to earn profits from their crypto assets in the different ways listed below.
Buy YFI
You can buy and hold YFI tokens if you expect the token to increase in value in the short or long term. If your belief is true, the value of your assets increases and you make profits.
Yield farming with YFI
Yield farming involves lending or staking your crypto assets to earn additional tokens. Yearn.finance connects you to various yield farming protocols through which you can earn significant interest on your crypto assets.
Leveraged Trading
The ytrade.finance feature allows you to open short positions on stablecoins with up to 1000x Leverage. When the value of the stablecoins decreases, you make significant profits.
The future of Yearn.finance
Since Yearn.finance launched in 2020, the platform has gradually added features that allow users to earn income passively or actively. It continues to offer support for more lending and staking protocols, giving users more ways to earn interest on their existing crypto assets.
Yearn.finance reported revenue of $80 million in 2021, representing unprecedented growth in the platform's first full year of operation. We expect this growth to continue in the near future, although it will be somewhat slowed by the crypto market crash in 2022.
Yearn.finance Review: Our Final Verdict
Yearn.finance is a good example of innovation in the DeFi space. This allows you to earn income from your crypto assets without a third-party intermediary. It offers users access to high-yield investment opportunities, but they come with significant risks.
The main disadvantage of Yearn.finance concerns security. The platform suffered several hacker attacks that lost it $15 million in 2020 and $11 million in 2021, although it compensated users for the latter. DeFi platforms are vulnerable to hacker attacks and you risk losing your funds if you fall victim to them.
frequently asked Questions
No, Yearn.finance is an active platform with many users around the world and has a native token with a high trading volume.
Yes, Yearn.finance is a legitimate decentralized platform whose governance is determined by YFI token holders.
No platform is 100% secure, especially decentralized ones. There is always a risk of losing your funds to theft and hacking, but Yearn.finance has proven to be fairly safe by compensating users for a previous hack.
The price of YFI is expected to increase slightly in the short term and significantly in the long term.
The value of YFI has fallen in 2022. It would be a good investment if you expect the crypto markets to recover soon and the platform to add more users competing for its limited token supply. Remember that every investment carries risks and it is impossible to know whether it will be a good or bad investment in the long term.
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