Yearn Finance is a decentralized platform built on top of the Ethereum blockchain. The platform seeks to revolutionize how investors move funds between liquidity pools of various Decentralized Finance (DeFi) projects. It leverages smart contracts to ensure investors enjoy optimum returns whenever funds are transferred into various DeFi projects.
A brainchild of Andre Cronje, Yearn Finance was launched in July 2020. Over a short period, it’s grown to become one of the most valuable decentralized platforms in the industry. The platform has been able to automate yield maximizing opportunities for liquidity providers and yield farmers.
How It Works
Yearn Finance seeks to become a sophisticated and reliable yield farming automation tool. In this case, it moves funds supplied by investors into liquidity pools of various Decentralized Finance projects using smart contracts. The decentralized platform seeks to achieve the highest possible return on invested capital by transferring funds between liquidity pools.
The platform mostly supports stablecoins such as DAI, USDC, USDT and TUSD. Whenever people deposit tokens on the platform, they are converted to yTokens such as yUSDC, yUSDT and yDAI. It moves the coins over multiple DeFi protocols such as Compound Aave and Curve in pursuit of high yields.
Additionally, whenever people deposit funds in the platform, the decentralized platform can check the annual percentage rate. Upon checking the APR, the platform can recommend the best project to invest in for optimum returns in the form of interest.
For instance, if someone has a USDC pool on the platform, the smart contracts integrated on the Yearn Finance will ask the APR Oracle for the highest available APR project. If it is reported that the Aave open-source DeFi project is the best, then it is recommended from where one gets to earn Aave interest.
YFI is the native token that powers the Yearn Finance platform. The token accords holders the right to participate in decision-making on the direction the project should proceed. Depending on the amount of YFI tokens that one holds, one can vote on changes to the Yearn Finance protocol structure.
While the token has never been distributed to people, it can be easily bought and sold in cryptocurrency exchanges.
YFI price peaked at $88 at the beginning of May at the height of the crypto boom. Fast forward, the cryptocurrency has succumbed to bearish pressure and has been on a downhill ever since. However, with the sell-off wave losing momentum, a bounce-back could be in play, the crypto having found support above the $25,000 level.
The bounce-back has mostly been fuelled by Decentralized Finance growth. Given that the project acts as an aggregator, it remains well-positioned to profit as more people look to invest in the burgeoning decentralized finance space.
Yearn Finance is a blockchain project that seeks to make it easy for people to earn high yields in liquidity pools of DeFi projects. The blockchain project’s primary goal is to simplify the yield farming process for investors and allow them to generate optimum profits using automated processes.