The Investor’s Guide to Yearn Finance


What is Yearn Finance (YFI) and how can you invest in it?

Yearn Finance is a suite of performance-optimizing DeFi protocols anchored on the Ethereum blockchain.

Want to read more like the Yearn Finance Guide? Scroll to the bottom for additional reading and a list of other Blockworks Investor Guides.

A quick introduction to DeFi

All you need to get started in DeFi is an internet connection. His central thesis is personal financial autonomy: eliminating unnecessary intermediaries in banking, investing and transactions.

Yearn takes this thesis to logical extremes, providing a fast, decentralized method for using digital assets in ways that mirror traditional finance, including lending and lending, as well as DeFi (decentralized finance)-specific forms, such as staking or yield farming.

Chief among the most widely used DeFi-oriented blockchains today is the Ethereum chain, upon which Yearn Finance was built.

What is Year Finance?

The core goal behind Yearn Finance is to maximize returns on your cryptocurrency by arbitraging different lending platforms for the best available yield, switching between dYdX, Aave, and Compound, as interest rates vary between these platforms.

Within the Yearn Finance ecosystem, investors can choose between three main products:

Below, we’ll take a closer look at each option and how they fit within the larger Yearn ecosystem.

Yearn’s case

With $3.51 billion in total current value locked (TVL), Yearn Finance is one of the fastest growing DeFi projects to date with promising potential for its future. Major mergers with other protocols like SushiSwap and Pickle have deepened Yearn’s market reach in the DeFi world.

For those thinking of Yearn for the long term, the limited supply of YFI tokens is worth noting. Technically speaking, users can vote to change the rules on the token economy. However, if Yearn’s limited supply remains the same, Yearn Finance will follow a similar limited supply model as bitcoin. At the time of writing, 1 YFI token costs $20,610.55. The default total of 36,666 YFIs are in circulating supply.

Yearn Finance remains decentralized and community governed, allowing the Yearn community to shape the future of the project. With a strong product offering that sets the standard for other DeFi projects, Yearn Finance is seen by some as the standard in the ever-evolving space. Remember, DeFi is in its infancy.

More conceptually, Yearn Finance stays true to its core and decentralized values ​​in that it continues to maintain transparency and is governed by users. That means everyone starts out on an equal footing. Token holders can vote on the rules. All proposals require more than 50% approval before being approved. There’s also a Newsletter which users can subscribe to to stay up to date on planned releases, bug fixes, etc.

What started as the first fair token toss it has become one of the most powerful investment opportunities in DeFi. Of course, nothing in the world of cryptocurrencies is risk-free, so proceed carefully.

How to invest with Yearn Finance

Option 1: Buy YFI

As an investor, you have options with Yearn Finance. If your plan is to simply own the YFI token, you can buy it from exchanges like Uniswap or Curve. Then simply store your assets in a crypto wallet. You can also directly cash out your YFI when you decide to make a profit. YFI is also available on centralized exchanges like Binance or Kraken.

Option 2: Yield-farm with YFI

Within the Yearn Finance platform, the suite of products ranges from low to high risk. One of the simplest and lowest risk services is iron benchwhich allows users to borrow using cryptocurrencies as collateral without having to sell.

For those with a slightly higher risk appetite, there are vaults. Simply choose a strategy from Vault Options, deposit the appropriate tokens, and let Yearn’s technology help maximize returns through capital shifting, auto compounding, and rebalancing. Please note that there are no regulations to protect customers or a customer support number to call if there is a bug in the code or in the event of an attack. While Yearn Finance is known to be safe, it is still experimental; it is best to know your own risk tolerance.

Unlike traditional banking products, you can withdraw your investments with Vault at any time.

Finally, yearn laboratories offers an unconventional high-risk, high-reward approach. According to their documentation:

“The emerging strategies you will find here are the newest and most unconventional. Be sure to carefully review the About sections and make sure you understand token locking, temporary loss, and other risks before proceeding.”

Final considerations

As DeFi products go, Yearn Finance has a relatively simple and effective collection. However, emerging markets change rapidly, so staying informed and up-to-date with the latest news and insights is vital.

You can do it here at Blockworks.com.

Additional Resources

Yearn Finance Launches YFI Buyback Program: Markets Wrap

The Investor’s Guide to DeFi

Getting started with Yearn

Yearn Product FAQs

Podcast: The Rebirth of Tokenomics – Yesrn Finance and Ve(3,3)

The Investor’s Guide to DeFi 2.0

Find out. check The Bitcoin Investor’s Guide, The investor’s guide to NFT, The Investor’s Guide to DeFi, The Metaverse Investor’s Guide and The Investor’s Guide to Music NFTs.

The content of this website is not investment advice and does not constitute any offer or solicitation of an offer or recommendation of any company, product or idea. It is for general educational purposes only and does not take into account your individual needs, investment objectives, or specific financial circumstances.

  • Aaron Ahmadi

    blocks

    Content Marketing Manager

    Aaron Ahmadi is a writer based in Colorado. Before joining the Blockworks team, he served as the editor-in-chief of a privacy-focused crypto exchange. He produces the daily Blockworks newsletter written by Byron Gilliam and writes the Blockworks Investor Guides.