It's hard to catch up with DeFi these days.
There are new projects that pop up every day, and it is becoming difficult to recognize what has a potential future and what is just a fly-by-night launch.
Not so long ago, it was just Compound and Aave in the DeFi game (obviously MakerDAO is there too). Back then, it was easy to keep up-to-date with the latest happenings in DeFi.
However, today there are so many DeFi products flooding our feeds, and it's hard to keep track of it all.
Yes, it can be VERY confusing at times. It is best to know the basics and then expand outward from there.
In this article, I’ll explain what the YFI craze is all about, starting with its pioneer...
Programmer Andre Cronje solely created yearn Finance (can be pronounced as yEearn). The Yearn Finance protocol started in January 2020, and the YFI token launched in July 2020 with no pre-mine.
Cronje initially started the project while he was managing his family and friends’ funds. He wanted to put the stablecoins he had to work and earn interest through the Aave and Compound platforms that were already around at the time.
Unfortunately, manually hunting for the best APR and switching between pools was cumbersome, and the fees started to add up. For this reason, Cronje coded the yToken system that would automatically check for the best APR and switch without needing to conduct it manually.
It was initially just for himself. However, Cronje eventually opened it up to the public with a disclaimer stating that Yearn Finance was never intended for public use.
What can you do with Yearn Finance?
-Yearn Finance is simply described as a yield aggregator for different lending platforms that rebalances for the highest yield during contract interaction.
-It was built to maximize the annual percentage yields (APY) for its users (initially just himself).
-It utilizes DeFi protocols such as Curve, Compound, and Aave to optimize its token lending.
-yTokens help read the normalized APR output and automatically move to the platform that offers the best returns. Cronje describes the yTokens as APR Oracles.
-The platform accepts deposits in DAI, USDC, USDT, TUSD, sUSD, and wBTC.
-When a user deposits any of these cryptocurrencies into the Yearn.Finance pool, they receive corresponding yTokens (i.e., yDai, yUSDT, etc.).
-Each time a new user deposits into these pools, the smart contract will check the APR and move to the highest yielding location.
-In addition to this, users can deposit their yStablecoins (yDAI, yUSDC, etc.) on the Curve yPool to earn additional trading fees on top of the yield rewards. In doing so, the Liquidity Provider also becomes a market maker for stablecoin trading on Curve.
-the YFI token itself acts as a governance token to allow users to vote on the future direction of the protocol.
-YFI is distributed to Liquidity Providers that deposit liquidity into Curve yPool. The liquidity providers receive yCRV after depositing into the yPool on Curve. This yCRV recieved is then depositing into the yGov pool on Yearn Finance to receive YFI.
-YFI was recently listed on Huobi - LINK
-Yearn Finance will be launching yInsure Finance during September 2020.
-They have plans to release trade.finance with trading with up to 250x.
-The platform almost has 1 billion dollars locked in total value. STATS
YFII is a fork of Yearn Finance that was created on July 26th, 2020. YFI farming stopped on July 26th to prevent a sharp drop in the pools’ liquidity. At the time, the Yearn Finance community proposed an upgrade dubbed YIP-8, which suggested a weekly halving model for yield farming.
More than 80% of the community voted for this proposal; however, it was declined due to the unset 33% quorum requirement. As a result, anonymous developers decided to fork Yearn Finance to give birth to YFII.
What you can do with YFII?
-YFII incorporates the YIP-8 halving model to ensure a fair distribution of the token.
-The YIP-8 improvement encourages active participation whilst still allowing late-comers to earn rewards.
-60,000 YFII will be distributed over a number of weeks through three pools (20,000 YFII each pool - the fourth pool does not come into this).
-There are four options to yield farm on FYII;
- Pool 1: YFII and CRV
- Pool 2: YFII and BAL
- Pool 3: YFII, BAL, and CRV.
- Pool 4: Stake YFII and its derivatives to earn interest
-the YFII token itself will be used for voting on governance proposals.
YFV was created on August 16th by anonymous developers. It was birthed from the idea that small farmers within the community pretty much have zero chance of taking part in the yield farming on Yearn Finance and YFII to farm these governance tokens. YFV aims to change this problem and make farming its governance token accessible to all sized players.
Another improvement that YFV integrated is the on-chain voting system for the supply distribution rate automatically executed based on the votes counted. This removes any sort of manual input required for any proposal to be implemented. There will be a total of 21 million YFVs, which are distributed amongst 11 different pools.
YFValue has also introduced two new elastic supply tokens in vUSD and vETH. Following the steps of the Ampleforth tokenomic model, vUSD and vETH will adjust the supply through rebases to target $1 for vUSD and 1 ETH for vETH.
What can you do with YFV?
-YFV offers the first stablecoin only pool that allows users to farm YFV with just stablecoins.
-Other pools include mixings with; BAL, YFI, BAT, REN, KNC, BTC, ETH, LINK, UNIv2.
-The distribution of each pool is as follows;
-The Dev+MKT Pool will act as a development and marketing budget.
-Whilst harvesting on these pools, farmers will also be harvesting vUSD and vETH at the same time.
-YFValue also comes with a Referral and Burn On-Chain program. Any friends that a user refers to the platform, 1% of their rewards will be automatically sent to the referrer, Gas free. If nobody referred a user, the 1% is burnt on-chain after the YFV is harvested.
-YFV also allows users to vote on how quickly the distribution should be. Votes are counted each week and are automatically adjusted without the need for manual input.