What Is Yearn.Finance (YFI) How It Works & Where To Buy It?

Yearn Finance is the world’s largest aggregator service for a variety of decentralized finance products. Essentially, it’s among the most popular lending protocols and gives users an opportunity to earn generous yields on their crypto assets.

The Yearn ecosystem has grown significantly since 2020 and currently has several popular applications utilized by users for yield generation.

The YFI token is the native token and governance token of the finance platform – YFI is currently the 131st largest cryptocurrency by market capitalization.

How Yearn Finance (YFI) Works

Yearn Finance is an innovative decentralized finance protocol that helps users earn more yields on their crypto assets. The protocol can achieve maximum returns by using a variety of decentralized lending protocols where users’ crypto assets can generate rewards.

The protocol uses a lucrative system that takes advantage of profitable DeFi products from the most popular lending protocols.

Essentially, the protocol runs in the following way: YFI contracts are deployed on the Ethereum blockchain, ensuring that the users are provided with optimum services. Yearn Finance ensures that the funds that have been deployed are held in the most profitable liquidity pools, so that users are guaranteed maximum returns on the crypto assets.

Simply put, Yearn Finance will seek out the best decentralized exchanges and compare various interest rates from these exchanges. Yearn Finance supports a variety of crypto assets, including some of the largest stablecoins, such as USDC and USDC, among others.

The system is relatively simple; once a user deposits crypto assets onto the platform, those assets are then converted into a Yearn Finance equivalent. For example, if a user deposits USDT, the assets are converted to yUSDT.

The value of the deposit remains the same, and once these assets have been converted, they are moved to various yield platforms, ensuring that the user receives the highest interest rates. Converted tokens are known as ‘yield-optimized tokens‘.

As mentioned above, the Yearn Finance platform utilizes various protocols to achieve the highest yields for its users. The calculation is based on the amount of money that every user invests, and individuals are provided with an annual potential interest rate for their particular investment.

Additionally, the decentralized platform uses a lucrative application called zapper.fi, which allows the exchange of funds into and out of liquidity pools. Zapper also enables users to seamlessly perform single actions, where they can make multiple deposits without needing to visit various platforms individually.

Users seeking a more detailed and in-depth overview of the protocol can refer to the Yearn Finance whitepaper.

What Is Yearn Finance (YFI) Used For?

One of the most distinctive products of the decentralized platform is Yearn Vaults. These vaults allow users to maximize their investments by initiating the use of self-executing code on the protocol.

Essentially, you can think of this as similar to a savings account but only for crypto investments. These vaults are incredibly innovative, and each of them has various strategies that are implemented to maximize any user’s returns.

Users simply deposit their crypto assets and then select which vault they would like to participate in. There are various strategies, including liquidity provision, participation in lending protocols, generation of revenue through trading fees, and farming different tokens and then flipping them for a profit.

YFI tokens are the governance token of the Yearn Finance protocol. YFI token holders are entitled to voting rights that they can exercise when proposals arise. YFI holders can vote to make critical changes to the Yearn Finance protocol – for example, changes to the percentage charged for transaction fees.

They can also vote on the amount of revenue distributed to liquidity providers and the amount of revenue share taken from the protocol for yield farming. These are some notable examples that only YFI holders vote on.

Where To Buy Yearn Finance (YFI) Token

YFI has been a popularly traded cryptocurrency in recent years. The developers worked hard to create an exceptional product that is in high demand from a large portion of the market.

YFI tokens are commonly traded on most centralized crypto exchanges. Before you’re able to purchase YFI, you’ll need to deposit fiat money onto an exchange; sequentially, YFI tokens will then be credited to your digital wallet on the exchange.

The crypto exchanges below are amongst the safest place where you can buy, sell and store tokens.

1. Gate.io
2. Huobi
3. KuCoin
4. Binance
5. Bitfinex

Token holders can transfer their tokens to compatible wallets, but it should be noted that this isn’t investment advice. However, users can earn interest on their tokens by making use of various decentralized platforms.

About Yearn Finance (YFI)

How long has Yearn Finance (YFI) existed?

The YFI token was initially launched in June 2020. The token was launched only a few months after the launch of the ecosystem. The token was launched by one of the world’s greatest DeFi architects, Andre Cronje.

What’s controversial about Yearn Finance (YFI)?

The crypto space is surrounded by controversy, and anyone entering the space should proceed with caution, learn as much about crypto and blockchain as possible, and never invest more than they’re willing to lose.

There is a distinct lack of regulation in the crypto space; many scam projects try to capitalize on unknowing and poorly-researched retail investors.

Let’s take a look at the top controversy surrounding Yearn Finance (YFI):

• Andre Cronje Left The Project – Andre Cronje is often referred to as one of the greatest DeFi architects that the blockchain world has ever seen. He was the mind behind Yearn Finance and Fantom, and in March 2022, he announced that he would be leaving the blockchain space for good. Following this news, the price of YFI and Fantom (FTM) dropped drastically.

How many Yearn Finance (YFI) Tokens are there?

At the time of writing, Yearn Finance (YFI) has a circulating supply of 36,637.72 YFI

The total supply of Yearn Finance (YFI) is 36,637.72 YFI

The max supply of Yearn Finance (YFI) is 36,637.72 YFI

Can Yearn Finance (YFI) be mined?

YFI can’t be mined. YFI is a governance token, and YFI tokens can’t be mined.

Some centralized exchanges allow users to earn yields from staking their YFI tokens.

What is the market cap of Yearn Finance (YFI)?

The market cap of Yearn Finance (YFI) is: total amount of coins in circulation x current market price of YFI.

Yearn Finance (YFI) Market Cap = 36,637.72 YFI x $4800 = $175 million (131st largest market cap)

YFI is currently one of the top 150 cryptocurrencies by market capitalization.

Biggest Competitors Of Yearn Finance (YFI)

Yearn Finance has a number of competitors, but it is currently the leading protocol in its category, and the protocol has a total value-locked of more than $600m (more than $1 billion at its peak).

Yearn Finance’s Biggest Competitors are:

• Compound
• AAVE

What Are The Future Plans of Yearn Finance (YFI)?

The protocol will continue to focus on expanding its ecosystem, growing user adoption, and incorporating more assets. Yearn Vaults will be prioritized, and innovative strategies will be implemented to maximize users’ returns.

Pros And Cons Of Yearn Finance (YFI)

Pros:

• Leading Aggregator – Yearn Finance is the largest aggregator by market cap. The protocol has a market cap of more than $175m.
• Real Use-Case – The protocol has a real use case and has a genuine demand. Many individuals who aren’t ready or don’t have the time to learn about complex DeFi products and how they work choose to utilize an aggregator like Yearn Finance. The protocol ensures that users get the maximum return on their crypto assets. The protocol has become known as one of the most credible, secure, and profitable blockchain protocols on the market.
• High TVL – Yearn Finance had a TVL of more than $1 billion at its peak. The protocol currently has a total value-locked of more than $600 million – this is among the highest numbers for any protocol.

Cons:

• Andre Cronje Left The Project – The head architect of the blockchain protocol left Yearn Finance in March 2022. This resulted in the YFI token plummeting and many individuals losing faith in the project. The protocol will need to add more value and remain innovative to ensure that it stays among the top projects in the crypto market.
• Significant Decline In TVL – The protocol has seen a significant decline in its total value locked since its peak of $1,000,000,000. Many individuals consider this to be one of the largest cons surrounding the project; this might indicate a lack of trust in the protocol, which may lead to a further decline. The blockchain space is incredibly competitive, and whenever there is bearish sentiment, it often leads to good protocols losing value – regardless of their value proponents.