Yearn Finance Comic - Part 1

By xuanling11 | Crypto Learning | 22 Apr 2022


You probably heard about Yearn Finance, but what is actually Yearn Finance trying to accomplish?

 

Let’s explore.

Table of Content

Yield Aggregators Protocol

Banks Interest Earnings

Why Yearn Finance

In Conclusion

 

Yield Aggregators Protocol 

Yearn Finance is a DAO. No company, no CEO, no single individual charges the operations. It is run by community members. It focuses on yield. Particularly using crypto to leverage the yield.

 

To make yield efficient and return higher profits, Yearn Finance utilized stablecoin to help users to earn more through their liquidity pools.

 

The idea of yield aggregators means people will put their funds together with smart contracts to help them trade and find the best possible earnings through various interest rate choices.

 

Banks Interest Earnings

 

People may wonder why interest earnings from banks are so low. The answer is they do not want your money. There is no incentive for them to ask for a deposit on their accounts. The way banks make profits does not rely on your money deposit. 

 

People usually think that banks use your deposit to make loans. However, that is only their fraction of earnings. Bank’s profits are mainly coming from selling financial products like loans, mortgages, and fees.

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Image credit: https://www.investopedia.com/how-bank-of-america-makes-money-4798042

 

Particularly, those fees are acting as a punishment to people who use their services. Overdraft fees brought banks 1.3% of revenue in 2020. It is a combo of a one-time charge of $36 plus whatever you owe with interest.  

 

Other profits mainly came from service fees that banks provide through credit services, loan services, and investment services.

 

If you cut all their services fees and punishments, their profits will shrink dramatically.

 

Why Yearn Finance

 

By eliminating the middleman, service fees and punishments are gone. All financial services can provide is to make users more profitable. 

 

With this simple intuitive goal, Yearn Finance can easily offer higher APR to users. 

 

In Conclusion

 

There are many valuable Defi projects. Yearn Finance is one of the top projects that you want to hold.


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Photo by Ilya Chunin on Unsplash
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Disclosure: The article was written by a delusional author who is possibly a nut job without any questions whatsoever about expertise in the subject matters. You should not believe any words this author wrote or you may experience similar symptoms or even possibly become a nut job.

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