Launched in early 2020, Yearn.finance is a decentralized financial platform built on Ethereum that provides a variety of financial services. YFI is the governance token of the Yearn Finance platform, and users can use this token to vote on the development direction of the platform. This article will introduce the Yearn.finance (YFI) coin in detail, including its definition, uses, price trends, and investment methods.
What is Yearn.finance (YFI)?
Yearn.finance was launched in 2020 by independent developer Andre Cronje to provide users with diversified financial services. Users can deposit stablecoins (such as USDT, USDC, TUSD, DAI) into the Yearn.finance protocol to receive tokens called yTokens. For example, users who deposit USDC or DAI will receive yUSDC or yDAI. By depositing stablecoins in Curve’s yPool, users can convert them into yTokens and further stake yCRV to earn YFI.
In this process, four different tokens are related to each other: USDT, yUSDT, yCRV, and YFI. YFI's token distribution mechanism is different from previous DeFi projects. COMP, BAL and MTA usually have the participation of investment institutions and pre-mining by the team before providing liquidity mining, while YFI's token distribution is entirely through liquidity Mining is implemented without team pre-mining or investment institutional shares. This mechanism makes YFI attract more attention from the community.
Founder of Yearn.finance
Andre Cronje is a South African financial technology developer who built Yearn.finance after discovering the difference in yields offered by different DeFi applications. Notably, Cronje did not reserve any tokens for itself prior to Yearn.finance’s launch, making Yearn.finance different from most DeFi projects, which typically raise investments from venture funds.
How does Yearn.finance work? Yearn.finance is a protocol designed to deploy contracts to the Ethereum blockchain and other decentralized exchanges on it, such as Balancer and Curve. Yearn.finance’s main features include:
Earn: Users can get the best loan interest rate through this function. It searches different lending protocols (like Aave or Compound) to find the best rates, which users can earn by depositing DAI, USDC, USDT, etc. into the Yearn.finance platform.
Zap: Allows users to complete multiple investments with one click. For example, users can convert DAI to yCRV in one operation, saving time and transaction fees.
APY: stands for annual percentage yield and helps users estimate how much interest they can earn on an annualized basis.
Vaults: This is Yearn.finance’s most sophisticated service, allowing users to follow active investment strategies using the platform’s self-executing code. In this way, Vaults are similar to actively managed mutual funds.
What is YFI Token?
The YFI token was launched on July 17, 2020, with a total supply of 30,000 coins. The distribution model of YFI tokens is relatively fair and open. There is no pre-mining, no crowdfunding, and no team distribution. It is completely distributed to users who provide liquidity through liquidity mining. YFI is regarded as the Bitcoin in DeFi and became the first 10,000-fold coin in 2020 in just 43 days.
Purpose of YFI Coin: YFI is Yearn.finance’s governance token, which allows holders to vote on off-chain proposals and submit rules that govern the ecosystem. For a change to be implemented, a proposal must receive more than 50% of the votes. In addition to managing the platform and its tokens, YFI holders also have rights to the protocol’s earnings.
In early 2021, there were some lasting changes to Yearn’s vaults and tokens, such as:
yVaults’ new fee structure: Starting with a 2% management fee and a 10% performance fee.
Change in protocol revenue distribution method: from staking rewards to repurchase.
Initial YFI supply increased: to 36,666 YFI.
These changes allow Yearn to bolster its funding and implement new revenue generation methods.
Latest Price Movement of YFI Coin: At the time of writing, YFI is quoted at $8,973.94, up 7.72% in the last 24 hours. YFI’s all-time high price is $90,786.89, while its all-time low price is $31.65. YFI has a total market capitalization of approximately $297,379,763 and trading volume of $113,309,242.
The relationship between YFII currency and YFI
YFII is a project launched in July 2020 by a group of Chinese teams as a fork of the revenue aggregation platform YFI. After YFII was launched, it caused widespread controversy in the community. Some people believed that the smart contracts it used were unaudited and had risks of centralized control. In September 2020, the price of YFII surged to $8,500 but has since steadily declined.
Due to the collapse of UST and LUNA, YFII suddenly plunged 70%, which caused Binance to delist the YFII contract in April 2022, and delist YFI and YFII on May 20.
Summarize
Yearn.finance (YFI), as a decentralized financial platform, has attracted a large number of users and investors through its innovative token distribution mechanism and diversified financial services. The YFI token is not only a tool for platform governance, but also provides holders with the opportunity to participate in the protocol’s benefits. Despite market volatility, YFI’s potential is still worth paying attention to. For investors who want to participate in the DeFi field, understanding YFI and its related mechanisms will help make more informed investment decisions.