Yearn Finance perfectly defines the term DeFi, popularly known as a term that refers to an ecosystem of financial products built on blockchain networks that allow easy access to financial products. Previously known as iEarn, Yearn Finance, was created by a single developer, Andre Cronje. Let's see what Yearn Finance is and what it offers us.
What is Yearn Finance
Yearn Finance perfectly defines the term DeFi, popularly known as a term that refers to an ecosystem of financial products built on blockchain networks that allow easy access to financial products, facilitating access to the current financial system for people without knowledge. . Days before the token launch, the protocol had around $8 million in assets under custody, which quickly appreciated by over $400 million in the first week. Anyone who had deposited liquidity into Curve yPool or YFI Balancer pools during the first week of launch were qualified to claim YFI. These facts are what captured all the public's attention towards Yearn Finance, given that the mechanism with which it was launched later helped to convert decentralized applications (Decentralized Apps or DApps) into an active community, due to the fact that they were one of the first projects in which there was no token allocation for the development team or investors. This fact gave all control of the supply to the community users, making it a project completely governed by the users themselves.
Yearn Finance main tab. Source: Yearn Finance.
What is the technology like? Year Finance
- vaults (Vaults translated into Spanish): the protocol that predominates due to its use by the majority of users, Vaults represent 67% of the Total Value Locked (TVL or Total Value Locked translated in English) of Yearn Finance. Users deposit into a vault that is defined by asset and underlying performance strategies are executed to deploy capital.
- Earn: Similar in nature to vaults, but even simpler. It originally focused on stable assets that users could deposit, and underneath, assets move between money market protocols depending on which offers the highest return.
- Iron Bank: A money market protocol focused on serving users and protocols. Users can deposit approved assets as collateral to earn returns from borrowers or borrow other assets. Users of the protocol can be whitelisted to facilitate unsecured loans.
- yInsure: A combined insurance that provides coverage against financial losses due to smart contract errors and various risks underwritten by Nexus Mutual. Unlike Nexus Mutual, to own the token, the user does not need to be KYC. Furthermore, the token is also transferable as it is in the form of an NFT (non-fungible token). Each deposit into the insured vault is charged a 0,1% initiation fee and 0,01% for rolling weeks. All subject to change by the YFI government.
- StableCredit: It works similarly to MakerDAO's multi-collateral model, but the difference here is that you can deposit any asset we want as collateral and get a line of credit once the asset is deposited. It is essentially a lender, combined with automatic market makers that make a dynamic utilization rate (line of credit) so that it can keep up with the amount of credit the user borrowed based on the collateral the user provides.
Yearn Finance Total Locked Value History. Source: Defillama.
Who is part of the team? Year Finance
Previously known as iEarn, Yearn Finance, was created by a single developer, Andre Cronje. After suffering an exploit in February 2020, Andre announced that he would be stepping away from the project after facing backlash from the community. He later returned and the project changed to have its current look; Yearn Finance, and introduced a set of new tools. In his early years he studied Law, but changed careers when he saw in virtual codes a more promising future and greater growth to explore. So he ventured out by choosing a career in Software Architecture in his native country, South Africa. Having finished his studies, he worked as a professor at the same institution where he had developed his studies for 5 years. His work in the field of Big data and security on mobile devices allowed him to learn about the world of cryptography from the inside. He assimilated first-hand with all the concepts about blockchain technology, and it was mainly the operation of this technology that attracted him to the world of cryptocurrencies.
What is token Year Finance (YFI)
The native token of the Yearn Finance protocol is recognized by the YFI ticker. It is a token that since the beginning of its creation and today continues to be minted as a governance token, which is required to be able to participate in the governance decisions processed by the protocol. At first, Andre was the only person allowed to mint tokens, but that privilege was later extended to 9 multi-signature owners requiring 6 signatures. These members are active members in the DeFi community and Andre did not list himself as a signatory. Users must stake their YFI in the governance pool in order to vote and claim their earnings. In the initial stage of the project, the voting process is 100% on-chain, where the user commits to YFI for 3 days in a voting contract.
YFI token price history. Source: Tradingview.
Pros and cons of Year Finance
Although at first the community had fallen on André Cronje after the exploit that the platform suffered when Andre Cronje decided to temporarily abandon the project, the team's continuous effort to move forward with the project along with the new additions of options for the platform's users allowed it to recover the spirit deposited at the beginning of the project. When its creator returned and the launch of the platform token began, it was already seen how the community gave value to the project in its own way, given that the token they devised was governance, which is why the price levels that we have observed since its creation are amazing as it is a token that was created with the idea of being able to participate in project decisions and has been able to reach almost $100.000 in mid-May 2021. We could observe this as one of the positive points that , together with its products with an intuitive interface, present it as a great project to observe in the long term. However, we must also keep in mind that one of the negative points that we could observe within the Defi ecosystem and that can also directly affect Yearn Finance is the censorship one day of this type of financial digital assets by governments themselves. establish CBDC (Central Bank Digital Currency or Central Bank Digital Currency in Spanish) with the same products that current protocols can offer but with the typical returns that banking entities offer us today. We must also count on competitors that may arise offering better performance.