Securities.io is committed to rigorous editorial standards. We may receive compensation when you click on links to products we review. Please view our affiliate disclosure. Trading involves risk which may result in the loss of capital.
Table Of Contents
The next-gen DeFi platform Yearn.finance (YFI) continues to make waves across the sector. This decentralized ecosystem was built to eliminate the most pressing issues facing the market. Today, Yearn Finance has a reputation for providing users with the highest annual percentage yields (APY) on their deposited cryptocurrencies in the industry.
What Problems Does Yearn.finance (YFI) Solve?
Yearn Finance combines various technologies to combat centralization within the sector. Everything about Yearn Finance reflects a strong commitment to decentralization. For example, the company never hosted an initial coin offering. Additionally, there was never a pre-mine of YFI tokens. These factors have earned Yearn Finance a reputation as one of the most decentralized projects in cryptocurrency.
The current state of the DeFi sector is volatile and speculative. Investors purchase these tokens with the hopes that they can resell the tokens at a later date for a higher value. This dependence on arbitrage trading places the entire market at risk.
Speculative investors are notoriously jumpy in terms of selling their assets. These selloffs spur more investors to sell their assets to try and avoid losses. These actions can lead to runaway sell-offs that occur in minutes and shed millions in market cap from a project.
DeFi investors also take a hit in terms of their return rates. In the past, DeFi platforms have managed to secure healthy fees by reducing the rates they pay investors. These low returns only hurt the industry as they create an artificial barrier to adoption.
DeFi is Complicated
DeFi is still in its infancy stage. As such, there is still a lot of confusion surrounding what this new sector encompasses, the main functionalities, standards, and overall profits. To a new investor, especially someone who is unfamiliar with blockchain investments, these factors can be a hindrance.
Benefits of Yearn.finance (YFI)
Yearn Finance changed the game via its unique toolset that leverages proprietary protocols to increase investor yields. Users of Yearn enjoy a streamlined approach to DeFi. The platform provides unmatched security and an open-source code that has been vetted by the community.
How Does Yearn.finance (YFI) Work
Yearn Finance is an open-source network that automatically moves user funds between DeFi lending protocols based on the ROI of their investment. The platform will switch your holdings between reputable yield farming platforms such as Compound, Aave, and Dydx to maximize APY. This simplistic protocol continuously monitors the market leaders to ensure your funds remain in the highest paying pools. Notably, Yearn. Finance currently supports DAI, USDC, USDT, TUSD, and sUSD
When a user deposits a stablecoin into the Yearn.finance, the network converts the coin into an equivalent amount of ytokens. Ytokens are also called “yield optimized tokens” in the network. It’s these funds that Yearn.finance automatically shuffles between Compound, Aave, and DyDx pools with the highest yield.
For their efforts and network maintenance, Yearn.finance takes a small fee. This fee deposits into the Yearn.finance pool. Importantly, this pool is only accessible to YFI token holders.
Yearn.finance didn’t become the industry leader on accident. The platform introduces a host of functionalities that helped set the pace for the DeFi revolution. Here are some of the current and expected features that make Yearn Finance a titan in the sector.
This feature allows users to long or short stablecoins with 1000x leverage. Shorting cryptocurrencies has long been a dream for traders. Yearn makes this dream a reality via this next level protocol.
The yliquidate.finance feature introduces flash loans in Aave. The purpose of these loans is to liquidate funds in an expedited and efficient manner when needed.
The yswap.exchange feature is another critical component of the Yearn Finance ecosystem. This feature acts as a single source from which users can manually deposit funds to and between various DeFi protocols.
Yearn also offers iborrow.fiance. This feature tokenizes debt in other protocols with the assistance of Aave. Once tokenized, this debt can be used in additional DeFi protocols. In this way, Yearn opens up new liquidity streams for the industry.
The YFI token is the main governance token of the Yearn Finance network. This ERC-20 token serves many purposes within the system. Primarily, it’s used to govern the protocols within the ecosystem. Keenly, there is only a max supply of 30,000 YFI tokens. Since none of these tokens were premined, the only way aside from trading on exchanges to get YFI is by providing liquidity to one of Yearn Finance’s platforms.
Yearn Finance is community-governed via a voting system. Like most DeFi platforms, the more governance tokens you hold, the more sway you have in the decision-making process. Notably, proposals to the Yearn.finance ecosystem can only be tabled if 33% of YFI token holders agree.
Origins of Yearn.finance (YFI)
Yearn.finance is the brainchild of the well-known cryptographic programmer Andre Cronje. The Yearn.finance journey began when Cronje began working closely with Curve Finance and Aave to create the iEar protocol. Since the beginning of Yearn, Cronje has displayed full confidence in his platform. Notably, he was the first one to put funds in Yearn’s pools.
How to Buy Yearn.finance (YFI)
Binance – Best for Australia, Canada, Singapore, UK, and most of the world. USA residents are prohibited from buying YFI. Use Discount Code: EE59L0QP for 10% cashback off all trading fees.
BitPanda – This is the best option for residents of Europe, they do not accept clients from outside of this jurisdiction.
Easy Crypto – This regulated exchange is best for Australia, New Zealand, & South Africa.
Kraken – This is the best option for USA residents.
Yearn.finance (YFI) – An Industry Leader in the DeFi sector
Yearn.finance raised the bar in terms of returns and features within the DeFi market. It’s no surprise to see that this platform continues to gain popularity. You can expect to see more users adopt this unique platform as its benefits continue to become common knowledge in the industry. For now, Yearn.finance offers features and convenience not found anywhere else in the market.
You may like
Investing In Stacks (STX) – Everything You Need to Know
Investing In Chia Network (XCH) – Everything You Need to Know
Investing In Casper (CSPR) – Everything You Need to Know
Investing In Mask Network (MASK) – Everything You Need to Know
Investing In Clover Finance (CLV) – Everything You Need to Know
Investing In Nervos Network (CKB) – Everything You Need to Know