Yearn Finance

Yearn.Finance has been one of the pioneers of decentralized finance(DeFi),an umbrella term for automated, blockchain-based financial services that let investors lend, borrow and earn yields on their..

What is Yearn.Finance?

Yearn.Finance has been one of the pioneers of decentralized finance (DeFi), an umbrella term for automated, blockchain-based financial services that let investors lend, borrow and earn yields on their crypto assets.

Built on top of the Ethereum blockchain, Yearn.Finance is a smart contract protocol that works like an Amazon marketplace for interest-bearing crypto products.

It aggregates the offerings of other DeFi protocols such as Aave, Curve and Compound and helps investors find the highest yields on the market so they can optimize their crypto investments for the best returns by “profit switching.” This simply means automatically moving funds around to make the most of the best interest rates.

The yield can come from gas fees, trading fees, staking rewards and lending interests.

What you can do with Yearn

First, you have to connect your crypto wallet to the Yearn.Finance protocol.

There are a dozen available wallet options, from hot wallets to cold storage, that Yearn can connect to including MetaMask, Coinbase Wallet, Ledger and Trezor.

Users can deposit crypto to their Yearn accounts through various blockchains that are integrated into the protocol: Ethereum, Fantom, Arbitrum.

Then, users can earn a yield by choosing different lending pools and strategies called vaults.

Vaults let users hold an asset they like while also earning yield denominated in that asset, so they can grow their stack. For instance, people who hold SUSHI, the token of decentralized exchange SushiSwap, can earn SUSHI by letting Yearn put their holdings into work.

Users deposit the asset into a vault and then Yearn borrows stablecoins against the asset. The stablecoins are then used to seek yield-farming opportunities, constantly rebalancing as opportunities shift.

What is the YFI token?

YFI is the native governance token of the Yearn platform.

When the token was launched in July 2020, it grabbed people's attention because Yearn's creator didn't set any tokens aside for himself or the company, as most cryptocurrency issuers tend to do. Instead, all of them were distributed to users who had deposits in certain key liquidity pools that benefited the project.

Initially, the circulating supply of the token was capped at only 30,000 YFI. Later, another 6,666 coins were added. According to the YFI documents, more can be minted if users vote for it.

So to get YFI now, users need to buy it.

Those who hold YFI can propose and vote on certain changes to be made to the platform. To do this, they have to stake their YFI tokens. Once votes have been cast, coins are locked for three days. Voters earn a small fee for participating in the decision-making process.