What is Yearn.Finance (YFI) in DeFi and how does it work?
Today, digital currencies and various blockchain projects are becoming more and more popular among users. One such project is Yearn.Finance that better known as YFI. Yearn.Finance is one of the ERC-20 tokens that cost approximately $20,226. Despite the fact that the project was launched relatively recently, it is in great demand. The high cost of the token also speaks of its popularity. Let’s take a look at what Yearn.Finance is and why this project is attracting the attention of investors.
What is Yearn.Finance?
Yearn.Finance is a protocol that runs on the Ethereum blockchain and is designed to use decentralized financial services (DeFi), including lending, interest earnings, and trading.
The goal of the decentralized ecosystem of the platform is to maximize the invested funds of investors due to the fact that the main protocol of the ecosystem automatically moves investors’ digital coins between credit pools (Dydx, Aave, Compound).
Yearn is currently considered one of the most sought-after decentralized projects in the DeFi world.
YFI is an internal token of Yearn.Finance that has a self-contained protocol.
This means that investors can vote on the platform for the protocol direction that best suits their goals. Today, the YFI crypto is one of the largest digital assets based on the Ethereum blockchain, the priority of which is yield farming.
The History of creation of Yearn.Finance
Yearn.Finance was created by Andre Cronje in 2020 and was a protocol based on Ethereum. The purpose of this protocol was to give users the opportunity to increase profits from deposits of ether, stablecoins, and altcoins.
Andre Cronje is a South African IT developer of financial technology who made the decision to develop the Yearn.Finance platform after noticing a mismatch in the yield of different DeFi applications.
It was hacked, soon after the protocol was launched. Then, it was significantly improved to provide users with the opportunity to use new, more quality products of the platform.
Yearn.Finance is considered one of the fastest-growing DeFi projects that uses only code to deliver their services, completely eliminating the need for intermediaries like a bank.
To that end, an automated reward system was created on the platform, which is based on the own cryptocurrency of the YFI platform.
Yearn.Finance platform includes several products:
- APY is a data table that shows interest rates for different lending protocols.
- Earn – provides information to users about the highest interest rates they can earn by borrowing a digital asset. To do this, it interacts with protocols such as Compound, Dydx, Aave and allows users to receive passive income from stablecoins (sUSD, USDT, DAI, USDC, TUSD) and wBTC.
- Vaults are a series of investment strategies that are used to maximize profits from other DeFi projects.
- Zap – provides users with the ability to make multiple investments with a single click of the computer mouse, saves the user time, and minimizes opportunity costs and transaction fees.
Basically, all these Yearn.Finance’s services were developed so that users can borrow a coin or use their funds in trading. Thus, the project made investing in DeFi and yield farming more accessible to users.
How does Yearn.Finance work?
As we mentioned above, Yearn.Finance operates through the autonomous movement of investors’ funds to the most profitable projects. That is, it finds the protocol that offers the best Annual Percentage Return (APR).
This platform is considered a very profitable solution in the DeFi sector, as it allows its users to generate high income by blocking ERC-20 stablecoins (USDT, DAI, USDC, TUSD, or SUSD) in the protocol. In return, investors receive an equal amount of yToken. Thus, the YFI coin is no different from any other ERC-20 digital asset from a technical point of view.
The Yearn.Finance platform automatically switches deposited digital assets to the protocol with the highest profitability to maximize investor returns.
Unlike other tokens, YFI has better automation and flexibility that has never been seen in blockchain before. Another notable advantage of using Yearn.Finance is that the network collects a small fee that was contributed to the platform’s pool. Then, it is distributed among holders of YFI token as dividends.
Where can you buy a YFI token?
There are various ways to purchase YFI crypto. Let’s take a closer look at each of them:
- One of the easiest ways to get a YFI token is by purchasing it on exchanges such as Binance, OKEx, FTX, Huobi Global, and LocalTrade.
- The next way is to put the yCRV token into the yGov pool. This strategy is considered one of the easiest and fastest.
- More advanced users can obtain a YFI token by depositing tokens in the balancer protocol in exchange for digital assets BPT or BAL, and then depositing these tokens in yGov in exchange for YFI.
How can you purchase Yearn.Finance through the Cryptorobotics platform?
If you want to buy YFI through the Cryptorobotics trading terminal, you need to follow these steps:
- Go to the trading terminal.
- Go through the registration process.
- Create an account on one of the available crypto exchanges in the terminal.
- Link your account to the Cryptorobotics terminal (you can find all detailed instructions here).
After you complete this procedure, you can buy YFI.
Is it worth buying Yearn.Finance in 2022?
Despite the popularity and all the advantages of the project, investing in a management token carries certain risks, since Yearn.Finance price has shown both a sharp rise and a rapid decline. On the other hand, this fact also makes this cryptocurrency interesting for traders who can use various strategies in their trading. In the long term, Yearn.Finance may become a profitable investment for investors if the project continues to gain popularity.