Yearn Finance(YFI) Listing Analysis

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About Yearn Finance

Overview of Yearn Finance

Yearn Finance is a yield aggregator for decentralized finance (DeFi) investors. It uses automated revenue strategies to give users the maximum profit from yield farming. Its goal is to simplify the path to the expanding DeFi space for investors unfamiliar with blockchain technology or wishing to invest less than serious traders. Yearn is designed to lower the entry threshold for DeFi, allowing users to achieve high returns without proactive capital management or volatile asset exposure.

yearn finance official website
Source: yearn.finance

Main Team of Yearn

Yearn is a community governance model. The soul figure and founder is the famous Andre Cronje. Andre Cronje is from Goldman Sachs and has 20 years of experience in fintech engineering. From early technology enthusiasts to blockchain project consultants to self-hired Yearn Finance creator, Andre Cronje has now become a pivotal core role in the DeFi field. Unlike the current public cognition that Yearn is only developed independently by Andre, the fair and just charm of the Yearn project has attracted a large number of top talents around the world. Yearn was built together by participants from around the world, and Andre Cronje is simply the creator of the Yearn project.

Yearn Finance creator Andre Cronje
Source: CoinMarketCap

VC Fund Back up Yearn

The project has no fundraising and is distributed entirely through liquid mining. Due to the early surge in its token YFI, Yearn Finance is financially healthy in the short term. The project rebranding has also introduced new products, such as Vaults, StableCredit, yInsure and Earn. Initially, only founder Cronje had the right to cast tokens and now it has since expanded to include nine members. The nine members are the closest members to the board. To make any changes to the agreement, at least six of these nine members need to be approved by the Multi-sig wallet. Multi-signed ownership contains only active members of the DeFi community, and Cronje is not part of the signers.

Yearn Finance invest team
Source: CypherHunter

Number of Fans on Each Social Media

Social media fans of Yearn
Source: CoinGecko

About Yearn Finance Token-YFI

Token Economics Overview

YFI is the governance token of Yearn Finance. The value of governance token mainly comes from the prosperity and health of their governance ecology.

YFI Token Supply

Early Yearn had three liquid pools, each assigned 10,000 YFI. The current total of 30,000 YFI tokens are distributed to users. The release of YFI tokens is an extreme example where 100% of its supply is distributed within nine days. To ensure fairness in distribution, the tokens are not pre-mined. There is no VC quota, or even team rewards. All the tokens were distributed among the users of the project. Currently Yearn is a community system, so if most of the later community members support the additional issue, then the tokens will not be limited to the current 30,000 total.

Mechanism of YFI Liquidity Mining

To understand YFI mining, first you should understand yToken, yCRV tokens.

yToken

Users can generate yToken, and get yToken (Yield Optimized Tokens). Storage interest is available by depositing assets like USDC into lending protocols such as Compound, Aave. Yearn optimizes the storage proceeds through an algorithm, due to the different interest rates of the different lending protocols. In short, the current Yearn Finance is the revenue optimizer for token storage.

yCRV

There is a yPool liquidity pool on Curve, in which you can deposit USDT, USDC, TUSD as well as DAI on yPool. These deposited stablecoins are converted to yToken, users to obtain yCRV tokens. Curve is a DEX. focusing on stablecoin trading. yToken can be traded on yPool. When depositing the yUSDT, the yCRV can be obtained. So, what is the yCRV? yCRV is similar to a set of yToken (yUSDT, yUSDC, yTUSD, yDAI) indexes. Holding the yCRV can obtain the depositing interest stored in the stablecoin and cost of providing liquidity. When users stake yCRV for liquidity mining, they can get YFI tokens for return.

yearn finance deposit rate liquity mining
Source: yearn.finance

Token Use Case

YFI is the governance token of the Yearn Finance, which, according to Andre Cronje, is community governance tokens of little value and wants the hype to stay away. However, YFI is a governance token, which means that it can run the future direction of Yearn. As for how YFI captures value, this is not only what Andre Cronje can decide, but ultimately by community governance.

The value of the governance token mainly comes from its governance mechanism. One is from the security value of governance which can protect the assets on the project and prevent attacks. If the locked asset is larger, the higher this gives it the corresponding value. In addition, governance tokens have potential return values. Fees can be captured by voting. If Yearn extends its business to a larger future and success, YFI naturally has a chance to capture greater protocol value.

Holder Wallet Address of YFI(ERC-20)

holders of YFI
Source: Etherscan

Top 10 Holders of YFI(ERC-20)

holders of YFI addresses
Source: Etherscan

Value Analysis of YFI

Industry Prospects

In cryptocurrency, investors often face several problems with DeFi investments such as:

1.Investment threshold is too high. The vast majority of players are unable to complete the operation. The DeFi yield aggregator solves the threshold problem;

2.Users operates independently, and the Gas cost of calling these contracts is often extremely high. In DeFi lending or mining, fees vary between a dozen and dozens of dollars, ETH is higher when Ethereum is congested. The aggregator will operate the large capital centrally, equivalent to sharing these Gas costs;

3.Security problem. Many new liquidity mining pools are risky, whether malicious, when their codes are wrong. Smart pool deployment strategy is usually code audit, basically ensuring that the principal will open policy pool, security is guaranteed, but the code audit contract does not mean completely safe, there is still the risk of attack, but the probability is small, users still need to be cautious. Aggregators are undoubtedly the best choice for new DeFi users who aspire to participate but have relevant experience.

Value Analysis

Yearn Finance contains two core products that can run seamlessly together to run the protocol smoothly and give users investment returns:

1.Vaults: A passive investment tool that automatically generates revenue through capital pools;

2.Earn: Constantly looking for loan aggregators at the most favorable rates.

vaults of Yearn Finance
Source: yearn.finance

The Yearn Finance protocol model design is clear and rigorous, and it is completely assigned to community fair and open governance. For the DeFi aggregator, where there is a capital exchange, it can be aggregated. Product iterator capabilities must be considered when viewing the DeFi aggregator project. Yearn’s iterative ability is beyond doubt. In terms of ease of use, Yearn’s UI design is simple and requires an Ethereum wallet link to its website. YFI is a community governance token, fairly distributed. In addition, the tokens are partly positively correlated to the benefits of the product.

Ecology of YFI

As the allocation of YFI was completed, discussions about economic arrangements and governance also received quality feedback in the community. The Yearn platform utilizes the key concept of combinability through aggregation capabilities on multiple protocols. It is a product ecosystem that redefines the concept of “money.” Fund utilization is high and there are a lot of income sources. Its “no pre-mining and no private equity” blockchain spirit has attracted a large number of supporters. The concept of high yield attracts a large number of users into mining, and the yield of market-making mining is far higher than lossless mining, leading to a high flow of users into the project for market-making mining.

TVL of DeFi protocols
Source: DeFi Pulse

Future Potential of YFI

Yearn recovered in the second quarter of 2021 and saw increased market dominance. With Yearn’s incentive adjustment issues resolved in the first quarter, the current market focus has shifted to Yearn’s V2 Vault. Yearn V2 was a huge success, increasing the size of Yearn managed assets from $540 million at the beginning to $4 billion today. In addition, Yearn’s revenue grew accordingly. Revenue in the second quarter was $18.5 million, up 236% from the first quarter.

Potential Risk Analysis of YFI

Competitors’ Analysis

Due to the success of Yearn Finance, its fork tokens emerged endlessly. With the liquidity mining led bull market, more and more DeFi yield aggregator projects appear. But it is generally much the same, and the biggest difference is the underlying strategy of the various protocols. The core competition in the short term is how to maintain a high yield of liquidity mining to attract users to provide liquidity. The long-term competition lies in the iterative ability of the project and the ease of use of the product.

Yearn has a first-mover advantage building a huge asset size. As competition on the asset management track intensifies, yields tend to flatten out and can also reduce Yearn’s asset scale growth. Aggregators make up for the current market gap. Fair mining methods also attract funds, making the Yearn lock volume and YFI soared. There is still huge room in this field, and the competition pattern of the asset management track will change at any time.

Potential Risk of YFI

The high yield is also accompanied by the high risk of combinability. Specific performance is shown in the following aspects:

1.Risk of multilayer nesting. YFI involves many DeFi projects, gains high returns of combinability, while also having high risk of nesting.

2.High yield is not sustainable. The yield rate of the smart pools is unsustainable. With the decline of heat, the market and capital efficiency improve, the yield will return to rationality.

3.Interests or be squeezed quickly because the smart pool strategy and discussion are open. There is preemptive trading.

4.Operating risk of tokens. The number of YFI tokens are small. Small circulation plate means it is easy to manipulate the price, which is not conducive to the expansion of community scale.

Risk Warning

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