Yearn Finance is DeFi yield aggregator that runs on the Ethereum blockchain. It acts as a portal or gateway to various DeFi products with the aim to create an intelligent and easy to use interface. Yearn Finance users can earn interest and maximize their returns on their cryptocurrency while also saving money on transaction fees and time spent researching.
The platform is made up of several different products; Vaults, Earn, Zap, Cover, and the Dashboard. Although they have these different products the idea is all the same. Yearn will take the tokens that are provided to it and allocate them to the most profitable lending providers and liquidity pools.
What Are YFI Tokens?
The Yield Finance (YFI) coin has gone up 50 times since hitting the market. By owning YFI gives you a say in future governance and functions as a cryptocurrency. The interesting thing about the token is that they released the entire supply of just 30,000 and, the founder Andre Cronje chose not to keep any for himself or the team. So to get YFI now, users can only buy it.
What Are Yearn Finance Vaults?
Vaults are where you can deposit your assets and automatically use advanced strategies for higher risk and return. Using strategies to automate the best yield farming opportunities available and minimise risk. These vaults were designed so that the community could work together to build new strategies to find the best yield.
Vault strategies are generally more active than lending out your assets in the standard Yearn protocol. Vault strategies can do many different things to maximise the returns. These can include supplying collateral and borrowing other assets (such as stable coins), providing liquidity, and collecting trading fees or farming other tokens, and selling them for profit. And strategies are created by the controller who manages the vault, with new strategies being voted on by the community through governance proposals.
By connecting up your Ethereum or web3 wallet you can choose from the likes of depositing curve.fi LP tokens, ETH, Dai and Yearn Finance (if you’re lucky enough to have the tokens). With some huge earning potentials.
However, at present, Yearn Finance users are unable to deposit ETH/WETH and Yearn Finance’s official Twitter account announced that the team has paused the vault deposits.
What is Yearn Finance Earn?
Earn performs profit switching for lending providers moving your funds between different lending platforms. So you can deposit stablecoins such as Dai, USDC, Tether, Susd and they do have wrapped Bitcoin too. Once deposited Earn will get you the highest yield for your coins at all times by shifting your tokens between Aave, dYdX, and Compound.
Obviously you could deposit directly into these platforms but Earn differs from providing liquidity direct, is that Yearn will automatically move your assets to the protocol with the best returns. In turn, this should save you money in fees as opposed to if you were manually moving the funds around yourself.
Similar to any lending protocol, once you’ve deposited you’ll receive tokens back that represent your share of the liquidity pool which are wrapped and returned back to you. With Yearn, that’s “Y Tokens” similar to “A Tokens” with Aave, etc. Which you can then Claim from the site.
What is Yearn Finance Zap?
Zap is an access point for Zapper.fi, allowing users to swap various assets into pooled interest-bearing tokens. Zaps were originally made by DefiZap which is now Zapper.fi as an all in one DeFi routing service. You can zap into Curve.fi pools with DAI, USDC, USDT, TUSD and BUSD. Then zap out of curve.finance tokens to receive stable coins in return.
What is Yearn Finance Cover?
yInsure, which is also known as Cover, provides insurance against smart contract risk and is underwritten by Nexus Mutual. The great thing about this insurance is that there’s no KYC required.
And it’s is a pooled coverage system providing pooled insurance coverage.
yInsure, it’s made of 3 components. “Insurer Vaults”, which hold the assets that are used to insure claimaints, then there’s “Insured Vaults” which hold the assets claimants desire to be insured and finally “Claim Governance” which represents the insurance arbitration process.
There are several contracts available to insure, and users simply state a term (above 30 days) that they’d like cover for, and enter in the amount that they’d like covered and the quote details including cost will then display.