Yearn (yEarn; YFI)

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Yearn.Finance
Yearn finance logo.jpeg
Founded 2020
Key People Andre Cronje, Founder
Products DeFi trading, lending and borrowing platform
Twitter @iearnfinance
Website Yearn.Finance Home
Blog Yearn blog

Launched in July 2020, yEarn is a profit switching lender as well as the name for decentralized finance (DeFi) protocol.[1] Profit switching refers to moving between various DeFi protocols to increase yield on cryptocurrencies that are being lent.

There is also a single-sided market maker called ySwap.exchange.

The YFI token governs the yEarn ecosystem which is expected to grow to include at least these additional services:

  • ytrade.finance - Leveraged stable coin trades (in testnet phase)
  • yliquidate.finance - 0 capital automated liquidations for Aave (in testnet phase)
  • iborrow.finance - Credit delegation vaults for smart contract to smart contract lending (in testnet phase)[2]

YFI

YFI is the governance token for the yEarn protocol. It can be earned by participants on the platforms associated with yEarn by providing liquidity.[3]

The protocol's founder, Andre Cronje, speaking about the issuance of YFI tokens when the protocol was launched in July, said, "In further efforts to give up this control (mostly because we are lazy and don’t want to do it), we have released YFI, a completely valueless 0 supply token. We re-iterate, it has 0 financial value. There is no pre-mine, there is no sale, no you cannot buy it, no, it won’t be on Uniswap, no, there won’t be an auction. We don’t have any of it. Earning YFI is simple, provide liquidity to one of the platforms above, stake the output tokens in the distribution contracts (we will provide an interface for this), and you will earn a (governance controlled) amount per day."[4]

In late August 2020, YFI tokens soared in price to almost $40,000.[5] By late November of that year the tokens were each trading at about $23,400.[6]

Protocol mergers

On November 24, 2020, Yearn announced that its protocol will merge with Pickle Finance, a DeFi protocol that uses a forked version of Yearn's vault technology. Like Yearn, Pickle arbitrages among various lending protocols in order to improve returns on stablecoin deposits for its own customers. Set to occur after the yet to be scheduled launch of the second version of Yearn, this is the first announcement of such a combination in the DeFi space. At the time of the merger, the "Pickle Jar" vaults, which are forks of Yearn's yVaults, will merge with the Yearn protocol, as will the Total Locked Value (TLV) of the Pickle protocol (the TLV of Yearn was $433 million and the TLV of Pickle was $33 million at the time of the announcement). After merging protocols, Pickle developers of Pickle are expected to help develop the common protocol, sharing in its profits.[7]

Pickle had been exploited on November 21 a few days before the merger with Yearn was announced. About $20 million in DAI were lost when the protocol's DAI PickleJar strategy was hacked. Although promptly reported on the Pickle Twitter feed, few details of the incident were disclosed at the time.[8]

On November 26, Yearn Founder Cronje wrote in a blog post titled Yearn & Cream v2 merger that developers from Yearn and Cream, a leveraged lending platform, would jointly work on Cream v2. Although no longer term implications of the joint development were disclosed, Cronje added that the Cream protocol "is a launchpad for future Yearn & Cream collaborative lending products."[9]

Cronje announced on November 28 that Yearn would also take over Cover Protocol, which is a DeFi provider of loss insurance for DeFi deposits.[10] Cover apparently faced its first claim as a result of the November 21 Pickle hack which caused a payout of $282,035, the full amount of the claim. Cover had launched its full protocol on November 18, 2020, just three days before the Pickle hack.[11]

On November 30, Yearn said it had merged its protocol development with Akropolis's development. Yearn said that it would use Akropolis as the "front-of-house institutional service provider" for its lending protocol.[12] Akropolis deposits had been exploited earlier in the month, generating $2 million in losses for Akropolis Protocol users.[13]

Later that same day, Cronje posted a blog saying that SushiSwap would merge into Yearn, subject to votes by holders of each protocol's governance tokens.[14] They plan to develop and launch Deriswap, a platform for swaps, options and loans. Combined, Yearn and SushiSwap Protocols held about $1.185 billion worth of locked value at the time of the announcement.[15]

References