Yearn.finance is one of the largest decentralized finance (DeFi) projects available today. Launched in August 2020, the protocol offers services such as yield generation, lending aggregation, and staking on Ethereum. Users who lock their cryptocurrencies in Yearn.finance’s contracts receive rewards in the form of the project’s native token, Yearn Finance (YFI).
In addition, YFI serves as the protocol governance token, letting its holders propose and vote on various proposals.
Yearn.finance aims to simplify the process of investing in products offered in the DeFi space. To that end, the protocol has integrated with other projects to give users the opportunity to diversify their investments.
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Who’s Behind Yearn.finance?
Prominent software developer Andre Cronje, who is well-known within the crypto community, is the man behind Yearn.finance. He once said he launched the project without relying on funding from venture capitalists. Cronje explained that he only distributed YFI tokens to retail investors after launching Yearn.finance. YFI’s maximum supply is capped at 36,665 tokens. Unlike other project developers, he did not retain any YFI tokens for himself, claiming that doing so would have given him the power to dictate the future of the protocol, contradicting the principles of decentralization.
Besides Yearn.finance, Cronje is the founder of keep3r Network. He has also contributed to the development of various DeFi projects such as Hegic, PowerPool, Akropolish, Pickle, Cover, Cream V2, and SushiSwap. His heavy involvement in the crypto industry has provided developers with a new approach to creating DeFi projects for the masses.
What’s Yearn.finance and How Does it Work?
Yearn.finance is an Ethereum-based DeFi protocol that gives users access to a wide range of trading and lending services, including Earn, Zap, Annual Percentage Yield (APY), and Vaults, without involving financial intermediaries like Banks. Its simple user interface makes it easy for anyone to start investing.
Yearn.finance provides staking pools for users to deposit their crypto assets. Funds committed to their pools are then invested in other DeFi projects, such as Compound Finance, Curve Finance, and Convex Finance.
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When Yearn.finance launched, Earn was the protocol’s first product. It allows users to deposit cryptocurrencies to liquidity pools of various decentralized exchanges and lending platforms in order to earn interest. The interest rates are usually higher than those offered by traditional financial institutions.
Zap enables users who have invested in stablecoins like USDC, USDT, and DAI on Curve Finance to swap between the liquidity pools provided. In addition, with just a click, they can convert their stablecoins into any crypto and deposit it into Yearn.finance’s vaults.
Yield.finance has an annual percentage yield tool that puts together interest rates provided by different DeFi lending platforms to help investors determine the right protocols to inject their funds into.
What Makes Yearn.finance Stand Out?
Yearn.finance was developed using the Solidity programming language. Therefore, anyone with a basic understanding of this language can monitor how the protocol is investing the funds deposited in vaults. Further, Yearn.finance lets developers create custom vault strategies, but they are subject to peer review before implementation.
Since its launch, Yearn.finance has shown its commitment to the decentralization principle of interoperability by integrating with other DeFi protocols in an effort to make services offered in the space easily accessible.
Is Yearn.finance Secure?
By giving YFI holders the right to propose changes and vote on them, Yearn.finance can be considered a truly decentralized protocol that puts its users’ interests above nothing else. Any YFI holder can initiate a proposal which is then put on a vote for its approval. Aside from the YFI use cases, the token is subject to price fluctuations, just like any other cryptocurrency. Therefore, it is essential to invest what you can comfortably lose.
Is YFI a Good Investment?
Today, Yearn.finance is considered one of the fastest-growing DeFi projects, with a total value locked of $6.94 billion. As it continues to see mass adoption, the price of YFI will likely appreciate. With that said, do your due diligence before investing.