Depositing cryptocurrencies to earn rewards and returns is becoming a norm in the industry. DeFi products have made it easier by providing services for average users. Some aggregate multiple products to offer better options and make it easier for those looking for more income.
Founded by Andre Cronje, Yearn is an aggregator in the DeFi ecosystem that combines many services and products in a single protocol. The combination of services in Yearn.Finance adjusts the risk of income for users.
Yearn Finance combines multiple DeFi (decentralized finance) products in a single platform to create a more straightforward way of earning interest for depositors. It supports lots of digital assets, and users from various blockchain protocols can benefit from services.
The combination of lending protocols, liquidity pools, and yield farming strategies in Yearn Finance helps users ease their minds about deposition and returns risks. All of the protocols and services combined in Yearn are based on Ethereum.
What Is It?
Yearn acts as an aggregator and combines “best-in-class” products and services needed for earning income from depositing digital assets. Each product and service in Yearn has a specific mission and use-case to answer a user’s needs.
The products in the Yearn platform offer yield farming, coin swapping, profit switching, and insurance. As a result, Yean Finance provides all the services needed to become an alternative to traditional deposition services.
How does it work?
There are four core products in Yearn Finance that each one completes a unique part in financial service. The core products are:
vaults are yield farming robots. They act in a community-driven protocol and are the first services users engage with when starting to deposit digital assets.
The vaults are called yVaults in Yearn ecosystem. The fundamental system and strategy in yVaults are designed somehow to maximize the yield of assets.
Depositors who are looking for the minimum risk and maximum return from their digital assets trust these strategies to use Yearn as the complete DeFi system.
The Earn service in Yearn is another fundamental component that focuses on money markets. Lending providers in the Yearn ecosystem can switch their profits in this service.
The yield-aware money markets in the Earn service act as the building blocks for yVaults. Because of the aggregator nature of Yearn, it supports multiple finance-focused blockchains.
Lending providers can move their earnings using Earn between dydx, Aave, and Compound autonomously.
Yearn Finance provides the swapping service as a fundamental tool for depositors. They can swap between multiple stablecoins using the Zap service.
Zap supports many stablecoins and also a basket of interest-bearing stablecoins or pools. Yearn provides yTokens and yCRV in Zap to complete its offerings for depositors.
Zap focuses on saving gas fees for users. Depositors who work in curve pools to earn interest from holdings can directly swap coins without paying a gas fee.
No financial service is complete without offering insurance to depositors. Yearn Finance provides the risk insurance service via the Cover component.
Cover is the go-to solution for those who want to avoid financial losses. It is a yInsure pooled insurance that covers the risks and is underwritten by Nexus Mutual.
Nexus Mutual is one of the leaders in the decentralized insurance industry, and working with them has made Yearn a trustful coverage provider.
YFI – The Token Of Yearn Finance
Like all of the other DeFi services in the cryptocurrency industry, Yearn has a fundamental token with multiple use-cases in the platform. The primary use-case for YFI token is governance in the Yearn community.
YFI holders can submit proposals and vote on the existing ones that affect the overall platform.
Yearn Finance describes the voting mechanism in short:
“Proposals that meet quorum requirements (>20% of the tokens staked in the governance contract) and generate majority support (>50% of the vote) are implemented by a 9 member multi-signature wallet.”
The multi-signature mechanism in Yearn’s voting wallet is designed to maximize the democracy and decentralization in the platform. Six out of nine wallet signers have to sign the new changes before they are finally implemented. YFI holders vote for wallet signers, and no signer is chosen permanently. The community can propose to change each wallet signer.
Only 30,000 of YFI has been minted, and all of it is distributed in multiple phases. But if voters propose minting more YFI tokens, the governance can do so.
Any token in Yearn.Finance is demonstrated by a yToken. According to the official project website:
“When you deposit into any yearn service, your deposit is wrapped and returned as a yToken representing the liquidity provided. For example, if you deposit DAI in y.curve.fi, you will receive yDAI in return.”
Two of the yTokens in the Yearn ecosystem are more important than others. yCRV is the first one that acts as an LP token in a Yearn pool. It’s an interest-earning token that represents the user’s share in the Y pool. yUSD is the other one that acts as LP token in yCRV yVault. In other words, users receive yUSD when depositing yCRV in yVault.
How To Get YFI?
The distributed YFI is now available to buy for interested users. They can use it to vote on the Yearn community or start staking in available pools. The easiest ways to buy YFI are decentralized exchanges. 1inch exchange and Balancer are some of the DEXs offering YFI pairs.
Yearn Finance tries to combine all of the services needed in the DeFi ecosystem. The protocol can become a standard among crypto enthusiasts who are looking for comprehensive solutions.
The fast and cheap swapping solutions with the addition of insurance and pooling options make Yearn.Finance a logical alternative to traditional financial services.
Based on Ethereum, Yearn can become the best example of disruption in the financial industry via smart contracts. But marketing and attracting more regular users are still the most challenging parts of this project, too.