Everything You Need to Know About Yearn Finance

Wondering what Yearn Finance is? What are yTokens? Why is it gaining popularity? This article will answer all these questions. 


Table of Contents 


  • Yearn Finance: A Newly Launched Cryptocurrency 
  • Working Mechanism of yTokens 
  • Yearn. Finance’s Entire Ecosystem 
  • A Sudden Jump to YFI 
  • Concluding Lines 


Yearn Finance: A Newly Launched Cryptocurrency 


Yearn.finance, also known as yEarn, is a yield aggregating platform built on Ethereum Blockchain. It was officially introduced on July 17, 2020, by Andre Cronje, and since then, it has become one of the most valuable ‘decentralized finance coins. Its official website defines it as a decentralized platform that “automates yield-maximizing profit switching opportunities for liquidity providers and yield farmers.” It utilizes decentralized finance protocols such as Compound, Aave, and others for optimizing token lending.

As yEarn is getting mature and popular worldwide, it has grown its complete ecosystem that aims to maximize annual percentage yields, also known as APY for its prestigious users. 


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Working Mechanism of yTokens


yEarn holds a unique place in the crypto world and is recognized as one of the most decentralized projects. When a user deposits tokens, they are converted to yTokens such as yUSDC, yUSDT, and yDAI. What happens is when a user deposits their funds, the smart contract checks the APR, which operates similar to oracle but not identical; the major difference is that Oracle checks off-chain while here, you can consider everything as on-chain. When user deposits, yEarns allow users to earn lending fees and the trading fees off of Curve both. 


Let’s understand this differently. Consider there is a USDC pool. So when he deposits USDC tokens, the smart contract asks the APR Oracle where the highest APR is, and if it reports that it’s Aave, for example, it transfers such tokens to Aave, which helps him to earn Aave interest. 


Yearn. Finance’s Entire Ecosystem 


yEarn supports various stablecoins such as DAI, USDC, USDT, TUSD, and sUSD and moves these stablecoins between multiple supported DeFi protocols like Compound, Aave, dYdX, and Curve, on the basis of which asset pool is offering the highest yield. Without going in-depth, let’s see what all yearn.Finance ecosystem consists of:


  • yearn.finance – It is a profit switching lender that aims to enhance lending yields. 
  • ytrade.finance – Its purpose is to create leveraged stable coin trades.
  • yliquidate.finance – Zero capital automated liquidations for Aave protocol.
  • yswap.exchange – It is a single-sided automated market maker 
  • iborrow.finance – Credit delegation vaults for a smart contract to smart contract lending.


To utilize the Yearn Finance ecosystem, users can choose either of the following categories. These are ‘Earn,’ ‘Zap,’ ‘APR,’ and ‘Vaults.’ 

‘Earn’ allows users to connect a wallet and find out the best returns. ‘Zap’ allows access to the stablecoin lending facilities through Curve Finance. 

APR helps in cross-reference interest rates(as already discussed). ‘Vaults’ optimize pool liquidity by depositing digital assets that will be managed in the most efficient system.


A Sudden Jump to YFI 


According to Buy Shares, on September 8, it was reported that its token market capitalization hit $690.1 million at the beginning of this week, indicating a high jump of 435% in a single month. Statistics have been identified, showing that the price of the YFI token was 127 percent higher than the price of Bitcoin.

In comparison to Bitcoin, whose price was $10,130.73, the market price for Yearn reached $23,031.37. It was announced on July 30 that the YFI token’s market cap was $123 million. This price soared to $985.7 million by more than 700 percent in August and topped over 1002 million on September 1. However, the price fell by $311.9 million shortly after a week, on September 7.

On the other hand, YFI token’s weekly trading volume was reported to be more than $2.2bn.


Concluding Lines 


Yearn Finance is the latest cryptocurrency that is gaining a lot of public eyes. As it allows regular people to access advanced strategies, it is pretty sure that it holds a promising future in the crypto world.


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