What is Yearn Finance? Yearn Finance is a decentralized finance (DeFi) system built as a gateway or portal for accessing DeFi products in the Ethereum blockchain ecosystem. The various services offered by YFI include vault, express credit, liquidation of funds and loans.
This service was originally a DeFi project known as iEarn. But in February 2020 Andre Cronje stopped it and took the development of the YFI DeFi protocol more seriously to be able to launch products such as the YFI token.
Jesse Walden of Variant Fund, the first venture firm to invest in a crypto network, revealed that the main goal of all Yearn products is to create a simple intuitive interface across DeFi so that traders can easily access transactions.
Yearn Finance Development
Since its first launch in July 2020 by Andre Cronje, Yearn Finance has experienced considerable growth. Public enthusiasm for this one DeFi protocol is very good.
According to a report by Brady Dale from Coindesk, between mid-August and early September last year, $650 million worth of crypto assets were stored in Yearn Finance. One of the reasons is the YFI token product which is well received by DeFi users.
Statistics obtained from the Coinmarketcap page show that the YFI token growth 2020-2021 is quite good. First traded in the range of $1, now the value of YFI tokens has reached $38,152 as of August 3, 2021. Not only that, the price of YFI tokens was recorded at $63,503 last April.
Not only that, as of August 3, 2021, the market capitalization of YFI tokens has reached $716 billion. Reporting from the Coinmarketcap page, the total assets of users locked in Yearn Finance are currently $3,778,518,779.
Advantages of Yearn Finance
Being dubbed the DeFi giant, YFI certainly has plus points compared to other DeFi protocols. Here are some of the advantages of Yearn Finance, including:
1. Multiple Features in One Protocol
As previously explained, this platform was built with the aim of being an intermediary for borrowers and lenders. In addition, YFI also offers a variety of features such as a software wallet (vault), credit, cryptocurrency exchange, to more effective methods of liquidating funds.
2. Cheaper Cost
Reporting from Cryptonewz, Yearn Finance charges a lower fee for all the services and features it provides compared to other DeFi protocols.
3. Access to all DeFi products
Apart from providing access to YFI products, users of this platform can also enjoy access to all DeFi products on the Ethereum network.
4. Great Return on Investment
Quoted from the yearn.finance page, this protocol offers a higher return on investment ratio than other protocols. YFI claims that investors can earn up to 115% more per week.
This is in line with YFI’s target market, namely investors who do not have time to study every increasingly complex DeFi phenomenon and investors who want to optimize their profits.
5. Self Management by User
Yearn Finance is a platform where the spatial management is managed by the YFI community or users. This shows that this platform has perfect security standards. Each rule is made with the approval of the whole community where each token represents one user vote.
One of the mutually agreed upon protocols is regarding the supply of YFI tokens which was recently discussed. In order to maintain the value of YFI’s valuable tokens, the addition of the token supply must be approved by the YFI token holder.
Lack of Yearn Finance
As the DeFi protocol has only been running for a year, YFI certainly has flaws in its system. Here are some of the shortcomings of Yearn Finance, including:
1. Intense competition
Cryptonewz revealed that the number of DeFi protocols that grew from year to year allowed the YFI platform to face stiff competition. If YFI does not immediately remove its limitations and innovate, users can easily switch to other DeFi protocols.
2. Self-Managed Systems vs Smart Contract Systems
Although many users felt the positive impact of YFI’s space self-management system, some parties actually opposed the existence of this system at the beginning of YFI’s establishment.
Andrew Thurman from Cointelegraph reveals that the DeFi space self-managed system is at odds with the generally elegant and secure incentive economy systems that underlie various Smart Contract systems.
3. Token Scarcity
Yearn Finance offers rarer tokens compared to other protocols. Actually the protocol has reached its maximum token count (30,000), so no more supply can be generated.
However, as the interest increases, there are rumors of talks to release a second iteration token. Even so, these rules must go through a consensus involving all YFI token holders.
What is the Potential of Yearn Finance in the Future?
Unlike other DeFi platforms, Yearn Finance is a DeFi giant with an excellent reputation in the DeFi space. Various innovations, service improvements, infrastructure development to product expansion continue to be carried out.
Cointelegraph’s Andrew Thurman reports that Yearn is joining forces with other teams to explore new products, develop new chains and protocols. This is done to improve the platform while driving the value of the YFI token.
Doggy B, a pseudonym for YFI, a safe deposit specialist, revealed that YFI is currently conducting internal discussions regarding the new insurance product that will be issued. When asked further, he was reluctant to share details of the launch time.
After getting more information about What is Yearn Finance and its potential for future development, are you more interested in investing in this one crypto asset?
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Author: Muhammad Zaki Fajrul Haq
Follow me at @mzfajrulhaq (Instagram) or @ZakiFajrul (Twitter).