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Yearn logo

Yearn

YFI

5957.85

0.00

Market Cap

$198.349343M

24h Volume

$17.671M

Volume/Market Cap (24h)

8.91

Circulating Supply

33.292075k YFI

Total Supply

36.646532k YFI

Yearning for Yield: Explaining Yearn Finance in Cryptocurrency

Searching for the best rates in decentralized finance (DeFi) applications is a potentially lucrative strategy, but it’s also time-consuming. Rates for crypto borrowing, lending, and staking are constantly shifting, making it challenging for crypto traders to keep tabs on the latest DeFi deals. 

Yearn Finance entered Ethereum’s ecosystem in 2020 to simplify this search for interest in DeFi. Thanks to data aggregation and integration from multiple protocols, the Yearn Finance platform—a staple DeFi software—offers traders a one-stop portal for automatically entering high-yield positions and capturing crypto rewards.

Yearn Finance’s history

Yearn Finance began as a personal project for South African software developer Andre Cronje in 2020. Cronje deployed the Yearn protocol on Ethereum to allow for a decentralized and passive way to maximize his yield potential throughout the DeFi ecosystem. Despite Yearn’s initial aim of being a personal financial tool, word spread about Cronje’s project, and millions of dollars in crypto began pouring into the decentralized application (dApp). 

In response to this massive demand, Cronje and fellow developers continued building the Yearn infrastructure, offering more products and services to enhance the DeFi yield farming process. Later in 2020, Yearn merged with another DeFi yield platform called Pickle Finance, and it introduced its proprietary governance token YFI to early users. Unlike other DeFi dApps, the Yearn team didn’t keep any YFI tokens for themselves, and Cronje didn’t seek any venture funding to back Yearn Finance’s development. 

Although Yearn Finance is on Ethereum, it has since expanded its services to layer 2 blockchains in the Ethereum ecosystem, such as Polygon (MATIC) and Arbitrum (ARB).

How does Yearn work?

Yearn Finance describes itself as a DeFi yield aggregator, which means it collects data from multiple DeFi protocols and deposits cryptocurrency in the best opportunities. When traders deposit crypto into one of Yearn’s products, such as its signature “Vaults,” pre-programmed “smart contract” commands use the deposited funds to earn token rewards in linked decentralized exchanges (DEXs), staking protocols, or crypto borrowing dApps and deliver rewards directly to a user’s wallet. Examples of Ethereum DeFi protocols Yearn integrates with include Curve Finance (CRV), Aave (AAVE), and Balancer (BAL).   

Because smart contracts run on coded commands, no centralized intermediaries manage the swaps for Yearn’s financial services. Traders who use Yearn trust the protocol’s code to manage their crypto assets and generate consistent returns into their accounts.  

Yearn typically advertises the average annual percentage yield (APY) or annual percentage rate (APR) for a particular Vault strategy, which gives a historical estimate of the average return traders receive using a specific program. Note: These interest rates constantly fluctuate depending on the latest DeFi market dynamics, and there are no guarantees the actual returns from Yearn match the expected gains. 

Yearn Finance FAQs 

What is the Yearn coin price? 

YFI is the ticker for Yearn’s proprietary DeFi token, which entered the crypto market in 2020 as a free “airdrop” to liquidity providers on the Yearn Finance protocol. Besides serving as an incentive for traders contributing to Yearn’s dApp, the YFI token carries governance rights, meaning anyone with YFI can vote on upcoming updates to the Yearn dApp. 

At the time of writing, the max supply of YFI tokens is 36,666, giving this cryptocurrency extra scarcity and a high Yearn price per coin. For the latest details on YFI’s market value, traders search for the real-time Yearn price chart on reputable exchanges or crypto price aggregators like CoinMarketCap. 

What is yield farming in crypto? 

Yield farming refers to a strategy of generating returns (or “yields”) on cryptocurrency by actively participating in multiple DeFi protocols. This high-risk, hands-on strategy involves providing liquidity, staking, or lending digital assets in various DeFi platforms in exchange for interest, fees, or reward tokens. “Yield farmers” constantly search for the highest APRs and APYs to maximize their short-term gains. 

How do traders use Yearn Finance? 

Crypto traders who want to deposit digital assets into Yearn first need a self-custodial crypto wallet compatible with the Ethereum blockchain (e.g., MetaMask). After depositing compatible ETH-based assets into this wallet, traders link it to Yearn’s official dApp on “yearn.fi” and choose the service or product they’re most interested in using. 

Disclosures

The content of this article (the “Article”) is provided for general informational purposes only. Reference to any specific strategy, technique, product, service, or entity does not constitute an endorsement or recommendation by dYdX Trading Inc., or any affiliate, agent, or representative thereof (“dYdX”). Use of strategies, techniques, products or services referenced in this Article may involve material risks, including the risk of financial losses arising from the volatility, operational loss, or nonconsensual liquidation of digital assets.  The content of this Article does not constitute, and should not be considered, construed, or relied upon as, financial advice, legal advice, tax advice, investment advice, or advice of any other nature; and the content of this Article is not an offer, solicitation or call to action to make any investment, or purchase any crypto asset, of any kind.  dYdX makes no representation, assurance or guarantee as to the accuracy, completeness, timeliness, suitability, or validity of any information in this Article or any third-party website that may be linked to it.  You are solely responsible for conducting independent research, performing due diligence, and/or seeking advice from a professional advisor prior to taking any financial, tax, legal, or investment action.

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