Last update:
June 26, 2023, 6:56 a.m. EDT | 3 minutes read
Yearn Finance's (YFI) recently launched yield farming using Treasury assets is generating “significant amounts” of revenue and is expected to bring in “increasing amounts” in the future, the yield aggregator protocol said in its Q1 report.
Source: Adobe/concept w
The team reported total revenue of $6.016 million, a net loss of $12.48 million, and adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) of $4.8 million in the most recent quarter, with March 3, USD 1 million was generated (almost as much as the five months of the 2020 financial year). These results have not been audited by a professional accounting firm.
Source: Yearn Finance
Launched in early 2020, the YFI token that governs the protocol was distributed in July, and yVaults soon followed as Yearn's core business. It allowed users to deposit capital into smart contracts and “specialized yield farming experts,” known as Strategists, to automatically earn returns on behalf of the depositors.
Vaults are a way to earn funds stored in tokens. Vaults allow users to hold a token while increasing the value of their holdings. By depositing a token they hold into the vault, users can earn income as Yearn Finance lends stablecoins against their deposits. Liquidity providers receive a token that represents their participation in the pool.
“yVault revenue was the primary driver of Adjusted EBITDA. However, we expect Treasury yield farming to make an increasing revenue contribution in the future,” the report said.
While yVault's revenue was the primary driver of Q1 adjusted EBITDA, Yearn began yield farming treasury assets in late February, “generating significant amounts of revenue.” […] earn about $500,000 per month.
Cash flows from Treasury yield farming are expected to continue, while based on the run rate for March 31 data, Yearn yield farming is estimated to bring in $5.5 million per year .
Additionally, yVaults Version 2, launched in March, is expected to drive “meaningful revenue growth going forward.” yVault's revenue growth “exploded in the first quarter of 2021, particularly in March 2021, and the annualized revenue data for 1Q21 suggests approximate values.” [USD] 21.9 million yVault revenue,” the report said.
Other important financial factors include non-cash expenses (contributions) and one-time items (airdrops, donations, one-time unforeseen losses and capital gains/losses). The yYFI vault also saw a sharp increase in sales in March as depositors were encouraged to migrate to the v2 vault.
Yearn's total value locked exceeded $2 billion in the first quarter and stood at $3 billion as of April 15.
It owns about $195 million worth of assets, mostly YFI, and owes $25 million in debt to two decentralized finance (DeFi) protocols.
According to an analyst at crypto research firm Messari and a participant in Yearn's governance forums, Ryan Watkins, the key highlight is the new dashboard that shows Yearn's vault revenues in real time – with April revenues annualized Yearn Finance stands at more than $50 million in revenue and more than $60 million when adding treasury farming activity, assuming it has been consistent since March.
“It’s all organic. No token incentives,” commented Watkins, arguing that this makes Yearn the second-highest earning protocol in DeFi after MakerDAO (MKR).
As of 09:28 UTC, YFI is trading at $45,528 and is up 7% in a day, paring its weekly losses to almost 3%. The price has increased by 39% in a month.
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