Yearn Finance is a gateway for a set of Decentralized Finance solutions, powered by the Ethereum blockchain, that allows one to maximize your investments through lending aggregation, yield-generation, and insurance. The revolutionary YFI can be seen as the first step towards a secured and better investment in the DeFi. While volatility seems to be the most consistent characteristic of the overall cryptocurrency market volatility, its effect on the YFI token seems undeniably low.
The following article explores what Yearn Finance is, the basics, and how you can use it.
Tl;dr – think yield farming on autopilot.
1. What is Yearn Finance?
Essentially, Yearn Finance allows users to automatically get the highest yields on several DeFi platforms. Like we mentioned before, Yearn Finance runs on the Ethereum blockchain and provides lending aggregation, yield generation, and insurance.
It’s maintained by a series of independent developers while being governed by YFI holders. It was developed by Andre Cronje, a well-known cryptocurrency expert with extensive knowledge in mobile development and distributed systems. Prior to dedicating his time to developing Yearn Finance, Cronje was a Head of Technology for several companies where he started grasping blockchain and cryptocurrencies. After that, he dove deep into this technology and performed roles as advisor, engineer, analyst, and consultant for a series of companies such as CryptoCurve or Kosmos Kapital and projects such as FUSION foundation or Fantom Foundation.
Yearn Finance comprises four core products that function together seamlessly to enable a smooth running of the protocol and enable users to gain on their investment:
Vaults: A passive-investing tool that automatically generates yields through capital pools;
Yinsure: A KYC-less insurance policy for smart contracts;
Zap: A tool that allows you to swap in and out of certain liquidity pools;
Earn: A lending aggregator that continuously searches for the best interest rates.
2. Highs and Lows of YFI
To better understand the Yearn Finance of today, let’s take a look at its history.
Initially, Yearn.Finance was created by Cronje with the goal of allowing investors to find the best yield for their investments in a practical and automatic way. Its native token is called YFI and acts as a governance token concerning voting and decision-making on the protocol.
YFI was listed on Coinbase Pro on the 11th of September of 2020, and four days later it was ready to be used for trading. Coinbase described Yearn.Finance as a decentralized platform with the automated functions of aggregated liquidity and marketing movement of providers’ funds between platforms like dYdX, Aave, and Compound.
The surge of YFI is one of the more unexpected coin booms in recent cryptocurrency history.
Just four days after its listing on Coinbase Pro, YFI’s price grew from $32,382 to $41,381. This burst in per-token price met with Bitcoin’s price at around $43,966.
Experts concluded that the explosive burst of YFI might be related to its union of strong technical, new products, yield farming, and the growing popularity of DeFi liquidity pools.
The DeFi and Yearn Finance communities look towards its products such as Vaults, Yinsure.Finance, and “StableCredit USD” to further push the network (and price) forward.
3. The evolution of Yearn Finance
The Yearn Finance protocol started under the name of iEarn and it was built single-handedly by Andre Cronje. The protocol suffered an attack in 2020, which led to the founder taking time off the platform following an outcry from the project’s community.
This attack basically exploited the fact that Cronje tests his software in a “live” environment. This allowed a user to “lose” more than $400k via slippage in Curve Finance, but it also allowed his friend to step into the scene with large pockets and reverse the slippage. This then resulted in a small loss for the first user mentioned here and a small profit for a third user. Even if a lot of people were suspicious, the attack was not as damaging as it could have been.
In any case, he came back to the protocol and the project was rebranded to Yearn Finance.
The rebranding also resulted in the introduction of new products on the platform such as Vaults, StableCredit, yInsure, and Earn. However, it was the introduction of the protocol’s native token YFI that projected the protocol to the spotlight.
Before the token’s introduction, the available liquidity on the protocol was just $8M but this changed swiftly to more than $400M in just a week after launching the token.
Initially, only the Founder Cronje had the right to mint tokens, which has since been extended to include 9 members. These nine members are the closest there is to a board of directors. To make any changes to the protocol, at least 6 out of those 9 members need to approve through a Multi-sig wallet. Only active members of the DeFi community are included in the Multi-signature ownership and Cronje is not included as part of the signatory.
The Yearn Finance community members and contributors have explored the addition of extra YFI tokens to incentivize developers. They planned to add 6666 tokens to the existing pool of 30.000 and voted on the proposal on January 28, 2021. The vote to inflate the token supply by 22% passed with 1670 YFI voting in support of the proposal and 331 YFI voting against it.
4. How to use Yearn Finance
Now that you know what is Yearn Finance, let’s explore how people are actually using it.
You can use Yearn Finance for trading and lending through its product known as Earn, Zap, and APY. For example, Earn allows users to earn the highest interest on lending via all lending protocols. Earn searches all these lending protocols to get the best rate for users. Users can earn these interest rates by depositing USDT, sUSD, DAI, USDC, and TUSD on the Yearn Finance protocol.
Zap enables users to make many investments in a single click. That means that you can exchange your USDC for yCRV in a single stroke rather than repeated steps across different platforms. This is time-saving and cheaper in terms of the transaction cost. If tokens like yCRV are unfamiliar to you, do not worry. They do involve a few more steps to get but once you dominate the platform, it will come naturally to you.
Annual Percentage Yield (APY) on the other hand, analyzes the lending protocols available to Earn users then gives an estimation of the amount of interest they should expect to make annually for a specific amount of money.
You can also use Yearn Finance vaults on the protocol to gain earnings on your investment. However, it is a bit more complex than the other products we have talked about. Yearn Finance vaults utilize the protocol’s self-executing code to enable traders to track active investment strategies. There are 10 vault strategies available to users as of August 30, 2020.
However, for users to grasp how vaults work they have to be familiar with code as the strategies on it are expressed in Solidity. It sounds complicated, but actually investing in a vault isn’t as technical as it seems. The user interface on Yearn Finance does a pretty good job at simplifying the process.
Essentially, users will see a list of vaults with historical ROIs and can deposit USDC into any given vault. Then, the profits generated are used to invest in the same asset of each vault, creating a “continuous buy-and-hold strategy”. Finally, for those that wish to withdraw their funds, they will be proportionally allocated, based on the share of contribution of each investor to the pool.
Final Thoughts: Is Yearn Finance Legit?
The astronomical rise of its token YFI put it on the radar, but Yearn Finance is more than just a rapidly growing token. Yearn Finance has cemented itself as a key player in the DeFi market due to its ability to interface with multiple pools and offer the best possible rates.
Its technical capabilities allied with a valuable token and a large and passionate community make this project one of the most exciting ones in the DeFi space. The expectation of getting new products, new Vault strategies, and new integrations cannot allow any crypto enthusiast to avoid following the Yearn Finance community.
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Bitcoin Can Be a ‘Highly Speculative’ Instrument According to the SEC
The United States Securities and Exchange Commission (SEC) alerted mutual fund investors about the risks in the Bitcoin futures market. The US agency even described the cryptocurrency as a ”highly speculative” asset.
Don’t Ignore the Risks
The price of the primary cryptocurrency skyrocketed during 2020 and continued its rally in the first months of 2021 reaching an ATH of around $65,000 in mid-April.
Consequently, many individuals and mutual fund investors took the opportunity to jump on the Bitcoin bandwagon and allocate their capital to it. However, the US SEC warned market participants to be especially careful when doing so.
The US watchdog advised that even though the digital asset has become very popular and tempting for investors, it still hides its risks as it is volatile and traded in a poorly regulated market. SEC went further calling Bitcoin a ”highly speculative” instrument.
The agency reminded of its primary mission to protect investors and enable fair and efficient markets. It also alarmed that every individual willing to trade with the cryptocurrency ought to investigate thoroughly the matter and keep in mind its risky nature:
”Protecting investors and assessing the regulatory compliance of these funds is a top priority for staff.”
Additionally, the SEC plans to explore whether the crypto industry is capable of supporting ETFs. In the course of the process, agency officials intend to examine the valuation of assets by funds, analyze the liquidity of the cryptocurrency market, and determine the efficiency of risk management.
Who Else Sounds the Alarm?
The Securities and Exchange Commission is not the only regulator to warn investors of the potential hazards connected to Bitcoin trading.
The UK Financial Conduct Authority was among the first to do so earlier this year. According to the British institution, many of these companies lack regulation and promise high returns. FCA further stated that people dealing with such organizations should be prepared for worst-case scenarios, including losing all of their money.
On the other side of the globe, the New Zealand financial regulator – the FMA – shared a very similar warning. The agency advised investors of the dangers that Bitcoin trading hides and same as the FCA told people that they can lose all their money.
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Ethernity Chain Memorializes Tony Hawk’s Latest 540 Skate Trick With NFT
Tony Hawk, an iconic skater, will soon have his NFT collection, thanks to Ethernity Chain. As per the announcement, Hawk’s new non-fungible token (NFT) collection will be launched on Wednesday, May 12, 2021. The collection will be available starting from noon ET and will be available for 24 hours.
Hawk recently performed what he dubbed as his last ollie 540 skate trick. Hawk first performed the trick in 1989. An ollie is a skateboarding trick that involves the rider and the board leaping into the air without using the rider’s hands. The trick is essential in helping riders leap onto, over, and off obstacles. While announcing the news, Hawk pointed out the dangers he has faced over the years performing the trick. Hawk is revered in part for doing the first-ever 900-degree skateboard rotation trick at the 1999 X-Games.
The NFT will reportedly immortalize Hawk’s last ever 540 skate tricks. Notably, the winning bidder will also receive the actual skateboard and shoes used in the final trick. Hawk stated in a post:
“Today, I decided to do [the trick] one more time … and never again. My willingness to slam unexpectedly into the flat bottom has waned greatly over the last decade.”
The legendary skater’s last-ever 540 constitutes just part of a coveted collection co-created by influential digital artist Ondrej Zunka.
Ondrej Zunka explained:
“I spend a lot of time around skateparks, and there’s always a lot of graffiti everywhere, so I made this public Graffiti Wall inviting friends, family, and the public to add a note to Tony. I’ve created a texture from all of these messages and projected them onto the ramps, so whoever participated is now part of these two NFTs.”
Hawk will also provide one of his skateboards, modeled after the inverted handstand and represented as an NFT. This skateboard will be raffled by Eternity randomly to a buyer of the NFT. The collection, a colorful artwork featuring contributions from skating enthusiasts in the form of messages, drawings, and slogans etched on a blank canvas, was completed by Graffiti Wall.
The Ethernity Network has helped many in the sports and gaming industry create and earn vast sums of money. Hawk joins the likes of soccer star Pele.
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