YFI is the native cryptocurrency of the Yearn Finance platform: a collection of decentralized finance (DeFi) products that allow users to earn interest on their crypto assets using smart contract platforms like Ethereum. Yearn Finance’s yield products typically offer yields of 25% to 35%. Yearn Finance price When YFI was launched, the platform didn’t allocate […]
YFI is the native cryptocurrency of the Yearn Finance platform: a collection of decentralized finance (DeFi) products that allow users to earn interest on their crypto assets using smart contract platforms like Ethereum. Yearn Finance’s yield products typically offer yields of 25% to 35%.
Yearn Finance price
When YFI was launched, the platform didn’t allocate any funds to investors, the founding team or community members. Instead, it distributed its initial 30,000 tokens equally to liquidity providers and platform users.
In July 2020, the price of YFI jumped 35,000% in a single week, reaching a high of $3,125. Not long after that, Yearn Finance became the sixth-largest crypto lending protocol with $4 billion in liquidity locked on the protocol, up 4,600% in one week.
Yearn’s price reached an all-time high of $93,435.53 on May 12, 2021, and hit a low of $739.44 on July 21, 2020.
How Yearn Finance works
The Yearn platform officially launched on July 17, 2020, as a “profit switching” lender. Since then, Yearn has offered a variety of other products to maximize yield for its users. Yearn offers two core products within its network called Vaults and Earn.
Vaults are pools of capital that automatically generate yield based on market changes. Vaults spread gas fees among all participants, automate yield generation and automatically adjust capital allocations when new opportunities arise. Vault was launched as part of Yearn Finance’s V2 update.
Earn is a lending aggregator and the first product offered by Yearn. An aggregator automatically shifts funds between decentralized exchanges (DEXs) and lending protocols such as AAVE, Compound and dYdX to obtain the best interest rates. To use Earn, users just need to deposit funds into the lending aggregator and the Earn platform does the rest.
In addition to Vaults and Earn, Yearn also offers:
- StableCredit: A feature that allows users to deposit collateral and open credit lines.
- yTrade: Where users can borrow DAI, BUSD, USDT and USDC stablecoins with up to 1,000 times leverage.
- ySwap: Creates liquidity pools where users can deposit tokens into in exchange for a cut of transaction fees charged to users of the pool. It also allows liquidity providers to deposit single tokens into pools (instead of two assets, normally). This mitigates the usual risks associated with decentralized finance (DeFi) lending, including impermanent loss.
- yBorrow: Described on the official website as being an “internal tool enabling credit delegation for smart contract to smart contract lending.”
- yLiquidate: An automated liquidation service for the Aave protocol.
- Delegated funding DAO vaults: Where approved decentralized autonomous organizations can receive funds donated by YFI holders.
- yGift: A way to send custom non-fungible tokens as gifts.
Decisions for the direction of the Yearn ecosystem are decided by YFI token holders. Because Yearn doesn’t implement on-chain voting, YFI holders vote on proposals using an off-chain governance system. A majority consensus (over 50%) is required for a proposal to be implemented by Yearn’s nine-member multi-signature wallet. The changes within the proposal must be agreed on and signed by at least six of the multi-signature wallet holders for it to be implemented. YFI holders vote for the nine multi-signature wallet holders and can vote on changing the members during governance votes.
Key events and management
Previously known as yEarn.finance, Yearn Finance was developed entirely by Andre Cronje, a South African software developer. Unlike with similar launches, Cronje didn’t receive venture funding for the project and didn’t reserve any tokens for himself prior to the launch. Following an exploit to the platform in February 2020, Conje stepped away from the project entirely. He later returned to rebrand the platform and launch Yearn’s Earn and Vaults features.
In November 2020, Yearn merged with DeFi protocol and Yearn fork Pickle Finance. The merger came just days after Pickle was hacked for over $20 million in DAI. Although the hack was disclosed, few details were shared as the platforms were merging together just after the incident.
Two days after the Pickle merger, Yearn announced that it would merge with DeFi loss insurance protocol Cover Protocol just eight days after Cover Protocol was launched. Cover’s first customers were users who made claims for losses resulting from the Pickle hack. It paid out a total of $282,000 to those who were insured.
On Nov. 28, two days after the Cover Protocol merger, Yearn merged with institutional service provider Akropolis’s Development. On the same day, Yearn posted a blog post asking users to vote on whether they should merge with DeFi exchange SushiSwap. Yearn acquired SushiSwap on that day.