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What is Yearn Finance cryptocurrency and how does it work?
Cryptocurrencies have played a vital role in strengthening the resolve of the future with decentralized finance. The programmability of the blockchain using Ethereum has played a crucial role in the growth of decentralized applications for financial services. For a couple of years, decentralized finance (DeFi) has become a keyword among blockchain applications. One of the well-known DeFi platforms that have gained worldwide popularity is Yearn Finance.
Yearn.Finance is a wide range of DeFi or decentralized finance offerings. It is actually a collection of different protocols offering insurance, loan pooling and income generation on Ethereum.
The protocol is based on independent developers, as well as facilitating governance through YFI token holders. The underlying infrastructure of the protocol makes all Yearn features available through decentralized mechanisms. Yearn can be presented of as a set of DeFi protocols that help crypto asset owners optimize their earnings through trading and lending services. Comparing Yearn to other DeFi protocols, we can say that it provides easier access to financial services without the need for intermediaries.
Origin story of Yearn
Yearn was founded by South African software developer and entrepreneur Andre Cronje. André created the Yearn protocol in February 2020 after evaluating and comparing DeFi protocols offering the best APY. He compared several DeFi protocols to increase his cryptocurrency earnings. Some of the notable DeFi protocols Andre reviews include dYdX, Compound, Fulcrum, and Aave. Through comparison, Cronje determined that the process used in existing DeFi protocols is comparatively boring and monotonous. Thus began the journey of creating the earliest version of Yearn. The project is now focused on automating the process in order to use the best optimization in well-performing strategies. One of the main objectives of the project was to provide the best annual percentage return for various stablecoins.
Working Protocol Yearn
Yearn Finance includes four important components:
- Storages. The storages operate as staking pools in the Yearn protocol, which help generate decent returns for depositors according to market opportunities. Users can access more profitable storage opportunities through various processes such as automating revenue generation and rebalancing processes.
- Earn (Earn). One of the important components is also the Earn function, which defines another noticeable advantage of the protocol. The Earn function was the first proposal in the Yearn protocol and acted as a loan aggregator. It works by moving funds between various DeFi protocols including Compound, dYdX and Aave.
- The Zap function. The next important offer in the portfolio of yearn.finance functions is Zap. It helps yearn.finance holders to exchange assets in liquidity pools on the CurveDAO platform. The Zap feature supports five different stablecoins such as USDC, USDT, TUSD, DAI and BUSD. The work of Zap practically helps to combine various transactions in one click, thereby providing better savings on labor and user costs.
- Cover (Cover). As the name suggests, Cover helps users get the coverage they need in the event of a financial loss. The amount of insurance coverage is applicable for various smart contracts and protocols associated with the Ethereum network.
Uniqueness of Yearn Finance
Yearn’s greatest strength is its commitment to simplifying the experience for every DeFi user. It focuses not only on usability in terms of interface, but also on access to simplified DeFi activities. Hence, it can also help newcomers benefit from the benefits of decentralized finance. The uniqueness of Yearn Finance is also manifested in the presence of various customizable tools that can work as aggregators of popular DeFi protocols. In addition, the Yearn platform also has built-in interest rate mechanisms for purchases, which provides better prospects for higher returns. At the same time, Yearn also achieves the desired benefits through withdrawal fees that are considered reasonable. 0.5% may not hurt new DeFi users. However, it is important to pay attention to the gas subsidy fee of 5%, which depends on the load of Ethereum. The positive point is that the Yearn decentralized management model can allow fees to be changed based on the consensus of protocol users.
What is a YFI token?
YFI is an ERC-20 token that is designed to govern and incentivize on the Yearn platform. The token was released in July 2020, it caught the attention of people because the creator of Yearn did not allocate tokens to himself or the company, as most cryptocurrency issuers usually do. Instead, they were all distributed among users who had deposits in certain key liquidity pools that benefited the project.
Initially, the number of tokens in circulation was limited to just 30,000 YFI. Later, another 6666 coins were added. According to the YFI documents, if users vote for it, more coins can be mined.
Therefore, in order to get YFI now, users need to buy it, including on our website. Token holders have the right to vote on the rules for using the protocol through various proposals. Each proposal requires more than 50% votes to be implemented in the yearn.finance codebase. While any user of the yearn protocol can submit a proposal, they can only vote on accepted proposals if they have the yearn.finance token.
Where to store Yearn Finance?
The introduction of the Yearn protocol pretty much highlights the pros it offers for accessing different DeFi services. Yearn Finance uses the native token as a reward or as a governance token. You can start using the protocol by selecting a specific wallet. The native token of the Yearn protocol is an ERC-20 token, which implies compatibility with any Ethereum compatible wallet. You can choose the type of wallet depending on the number of tokens you want to have and their purpose. These can be different types of wallets: hardware wallets, software wallets and online exchanges. With secure wallets, you can buy and sell yearn.finance tokens or invest in staking. Token holders can deposit their assets on the platform in a variety of ways. The first option would be to hold the token and acquire a share of the costs of the yearn.finance system. At the same time, token holders can place personal assets in Yearn storages, which offer higher returns. At the same time, the volatile nature of vaults may pose more risk to investors.
YFI exchange rate forecast. Prospects for the development of the Yearn Finance platform
With Yearn Finance continuing to team up with new projects while developing new features, it has a bright future. Yearn Finance has proven to be one of the best DeFi projects on the market so far. It continues to stand out in terms of profits, not only in DeFi, but in the entire crypto market. As more investors enter DeFi, the potential of Yearn Finance will only increase.
The biggest attraction for Yearn Finance remains the low supply of tokens. With a limited supply of 36,000 tokens, Yearn Finance is the perfect option for big money investors looking for high returns. In addition to the low supply, the ability to earn passive income from this cryptocurrency makes it even more attractive.
As for the rate of cryptocurrencies in the near future, experts and analysts in the crypto niche agree on a single positive opinion – the rate will grow. To date, the yearn.finance rate is $5,739.70.
Digital Coin believes that the YFI rate could reach $41,694 in 2023, $54,046 in 2025, and $109,336 in 2029.
Price Prediction thinks the same way: in 2025 they forecast the exchange rate at $100,930, and in 2030 it could rise to $598,784.
But Wallet Investor believes that the rate will still fall and fall to $624.87 by the end of December 2025, but by February 2027 it may still grow a little – to $1,201.47.
Considering all of the above, it seems that YFI is a very promising investment. Price predictions for YFI are almost all positive, mainly because the token has really big potential.
Of course, as with any investment, there is no guarantee that YFI will hit the target price. However, if you are looking to invest in crypto, YFI is definitely worth considering.
