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What Is YFI

 

Yearn Finance (YFI) is a group of protocols running on the Ethereum blockchain that allows users to automatically get the highest yields on several Decentralized Finance (DeFi) platforms. It can be seen as an automatic yield farming protocol that searches the market for the best return opportunities and automatically allocates supplied liquidity to different pools in the DeFi ecosystem. Yearn Finance allows users to maximize their investments through lending aggregation, yield generation, and insurance.

The protocol is maintained by various independent developers and is governed by YFI holders, allowing all of Yearn's features to be provided in a decentralized manner.

Yearn.finance removes the need for a financial intermediary like a bank or custodian.  It provides services using only code through a built-in system of automated incentives around YFI cryptocurrency. YFI acts as a governance token concerning voting and decision-making on the protocol.

YFI is a freely tradable token with widely available pairs for cryptocurrencies, stablecoins, and fiat currencies. Major exchanges trading YFI include Binance, OKEx, Huobi Global, and automated market maker ( AMM ) Uniswap.

The yearn.finance platform consists of several core products, including:

• Vaults – A collection of investment strategies designed to generate the highest returns from other DeFi projects. Vaults benefit users by crowdsourcing gas costs, automating the yield generation and rebalancing process, and automatically shifting capital as needed.
• Earn – A lending aggregator, which ensures users take advantage of the highest interest rate lending an asset.
• Zap – This product bundles several trades in one click, enabling users to swap in and out of liquidity pools on Curve and saving on costs and labor.
• Yinsure - A KYC-less insurance policy for smart contracts.

YFI Founders

Andre Cronje, a cryptocurrency expert with extensive knowledge in mobile development and distributed systems, is the founder of Yearn Finance. Cronje's goal was to allow investors to find the best yield for their investments in a practical and automatic way.

Cronje raised no private or public funding for the yearn.finance protocol and didn't reserve tokens for himself.

Cronje was previously Head of Technology for several companies involved in blockchain and cryptocurrencies. He also worked as an advisor, engineer, analyst, and consultant for CryptoCurve or Kosmos Kapital and FUSION foundation or Fantom Foundation.

Since going live in July of 2020, Yearn has held just over $1 billion in assets at a single time.

How Does YFI Work

Yearn Finance is a yield optimizer that moves funds around the decentralized finance ("DeFi") ecosystem to generate a high return.

The majority of yearn. finance's services seek to enable users to lend or trade their cryptocurrency.

Yearn Vaults allows to automatically invest user deposits in the highest-yielding place available in the DeFi ecosystem. The returns are then distributed proportionally to users, accumulating to the yTokens they get when making deposits.

Yearn can similarly help users earn competitive returns on stablecoins by depositing them straight to the highest-yielding lending platform available.

Performance fees and other costs can be paid to YFI  holders as dividends, in an amount the community of token holders agrees on. They also earn rewards for lending cryptocurrency through the network and earn the highest possible yield when staking tokens.

Earn is a way for users to get the best interest rate on lending, and it works by searching across different lending protocols to find the best rates.

Zap allows users to complete several investments with one click.

APY (which stands for annual percentage yield) searches across the lending protocols that Earn uses. It gives the user an estimate for how much interest they can expect to earn, on an annualized basis, for a certain amount of capital.

Yearn finance debuted on July 21, 2020, with a price of YFI $804.44. It began an upward trajectory and reached $4,156.59 at the end of July. The Yearn price had risen to $33,545.84 by early September when it was posted on the most popular exchange, Coinbase Pro. It then began to fall but hit a New All-Time High of $43,873.82 by mid-September, only to fall again by the end of September.

In addition to factors affecting the crypto market, the YFI price is primarily associated with the Yearn community and reflects people's confidence in Yearn. This makes it highly unpredictable and speculative.

Yearn.Finance Network Security

The Yearn Finance network is secured by Ethereum's state-of-the-art cryptographic protocols.

Yearn.finance can be considered a platform with impeccable security standards. YFI is the ERC-20 crypto token that governs and incentivizes the Yearn Finance platform. It is a self-governed platform where only YFI holders may vote to determine if a proposal should pass. To pass and be implemented into yearn. finance's codebase, a proposal needs to have more than 50% of votes.

Yearn Finance users can sometimes face a moderate risk of losing money due to market conditions changing rapidly and opportunistic entities attempting to profit from less-experienced participants.

Andre Cronje maintains transparency about the platform's potential risks. He made it clear in the community that even after independent code audits, Yearn Finance could not be guaranteed to be 100% safe at all times. This is simply a fact of decentralized finance: DeFi involves inherent risk.