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What is Yearn.Finance? – A Detailed Guide

  • Yearn.Finance was founded by Andre Cronje.
  • YFI is the native governance token of Yearn and it has seen a growth of 4400% so far before correcting downwards.
  • Currently, Curve users can convert their tokens into ytokens such as yDAI, yUSDT, and yUSDT.

Source: Kryptomoney

Yearn.Finance has become extremely popular in the DeFi space since its inception in August this year. YFI is Yearn Finance’s governance token and it has grown by 4400% since mid-July. It’s protocol has attracted millions of dollars of investments from various investors.

The craze for Yearn Finance has been such that YFI token even eclipsed Bitcoin in terms of USD pricing. On August 20, YFI’s price soared to $16,600 on Binance. No other cryptocurrency has ever done anything similar yet.  

YFI’s current price is over $34000 and that is more than three times that of Bitcoin’s price. This has led to many people asking “What is Yearn.Finance.” This report aims to answer that question.

Yearn.Finance’s Massive Traction

Yearn.Finance started gaining popularity after the launch of yInsure Finance – Its tokenized insurance product. Andre Cronje is the founder and developer of yearn.finance, an Ethereum blockchain-hosted yield aggregation platform. Today, yEarn has become a fully-operational ecosystem that aims to offer its users the maximum annual percentage yield.

Source: Cointelegraph

Yield farming is the hottest DeFi trend of this year and Yearn.Finance is playing an important role in it. It’s growth rivals the success of another popular DeFi project – Compound protocol. So, how does yEarn optimize its token lending? For that, yEarn leverages Compound, Curve, dYdX, and Aave. 

You can consider yEarn a sophisticated protocol that aims to find the best returns for its users. yEarn diverts liquidity to other DeFi protocols to achieve its goals. yEarn’s yPool is the most well-known feature on Curve, allowing users to convert their tokens into the yield optimized tokens or ytokens. These ytokens are yDAI, yUSDT, and yUSDT.

Converting tokens into ytokens, users earn trading fees on Curve along with the usual lending fees. yPools is leading the DeFi sector when it comes to offering the best lending rates this year.

Initial Yearn.Finance Product

Yearn.Finance began by Cronje handling money for his family and friends. He was looking for a way to profit from stablecoins such as Compound, Aave, Fulcrum, and dYdX at that time. Cronje had to put in lots of hard manual work to find which of these platforms offered the best annual percentage returns. 

Moving tokens between different protocols soon became cumbersome and costly and Cronje was exhausted from the manual process and eventually led him to code a smart contract to do all the heavy work, leading to yToken’s iterations.

yTokens completely changed the dynamics as they were able to read the normalized APR outputs. On the basis of it, they could move to the protocols that were offering the best returns. 

Cronje kept the newly created system for himself initially but soon offered it to other users as well. He made this decision as more users means further improvements in the protocol. With each use, the smart contract checks if there’s a need for rebalancing.

YFI’s Price Movement

Source: Coinmarketcap.com

YFI is the governance token of Yearn.Finance. On July 21, each YFI token was worth $771. Within 4 days of its launch, its price was hovering around $3663 – That’s 500% growth within just five days. On the first day of August, the price of the YFI token was around $4314.

There was a slight downward slide in YFI’s price from August 1 to August 15. On August 15, each YFI token was worth $4272. But just five days later on August 20, YFI was trading for $15,934 – Its price rose by almost 400%. 

By the end of August, YFI had crossed the barrier of $30,000 as each YFI token was trading at $31,524 on August 30. Fifteen days later from August 30, the price of YFI token saw a growth of 30%. Thus, each YFI token was trading at $41,387 on September 14. Currently, the YFI token has lost more than 20% of its September 14th value with its current price hovering above $34,000.

Future of Yearn.Finance

DeFi has certainly become quite complicated for an average user. Cronje, too, agrees to this sentiment. It’s for this reason that DeFi projects that simplify the process and offer a better user experience stand a greater chance at succeeding in the DeFi space.

yEarn has simplified yield farming and has seen excellent results. They offer very high returns to their users and judging by the popularity of yield farming, we expect that Yearn.Finance will maintain their current momentum. An intuitive and simple user experience coupled with a strong design core suggest that Yearn.Finance will be a big player in DeFi for the foreseeable future.

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