Buy YFI (Yearn Finance)
Where to buy YFI?
Although Yearn Finance has a turnover of around 36,000 XNUMX YFIs, its market capitalisation exceeds one billion dollars. That means that YFI is popular, so it is possible to buy Yearn Finance on several cryptocurrency exchanges.
Ways to earn money by investing in YFI
It is not necessary to buy YFI. You can make a profit through an aggregator platform and different exchanges. Popular choices include investing and trading.
Through an aggregator.
A user can hold a coin in their account and receive a % of all commissions from the Yearn Finance platform. This option was made available thanks to a successful hold vote. All fees paid for the use of the project's products are transferred to the fund and then distributed between the holders and the development team. In other words, the platform pays investors a steady dividend.
- Using Vaults. The test version of V3 in December 2021 offered the user an annual rate of 11.01% for investing in Vaults. In version V2, it is possible to invest Coins via the Earn option with the same conditions.
- Iron Bank. In V3 in December 2021, it was possible to invest coins at a minimum interest rate of 0.92%.
Why does YFI have value?
YFI is the cryptocurrency that runs the Yearn Finance platform. If a user buys YFI, they have the power to decide issues in the platform through voting.
A proposal requires more than 50% of the vote to be included in the Yearn Finance code. Anyone can propose, but only YFI holders can vote for it.
It should be noted that YFI has an initial fixed supply of 30,000 tokens, but this supply can increase if YFI holders choose to do so.
Nevertheless, YFI has value because it encourages users to blockchain cryptocurrencies in Yearn Finance and its Balancer and Curve contracts.
For example, anyone who owns YFI can earn income collected by the protocol in the form of commissions. Yearn Finance charges a commission of 5% for its vaulting services and 0.5% for vaults and earnings. Yearn Finance retains a $500,000 commission and distributes the remainder to YFI holders.
Who created Yearn Finance
Independent developer André Cronje launched Yearn Finance in 2020.
Notably, Cronje did not obtain funding for the Yearn finance protocol and did not reserve any tokens for himself before launching Yearn Finance. It distinguishes Yearn Finance from most DeFi projects, which typically raise investment from venture capital funds and then assemble a team to develop the protocol.
In July 2020, the yearn finance platform launched its own cryptocurrency, YFI. As a result, any user can now buy Yearn Finance.
What is Yearn Finance
Yearn Finance is a group of protocols running on the Ethereum blockchain that allows users to optimise their crypto-asset income through credit and trading services.
One of several new decentralised finances (DeFi) projects, Yearn Finance, provides its services using only code, eliminating the need for a financial intermediary such as a bank or custodian. To do so, it has built an automated incentive system around its cryptocurrency YFI.
Yearn Finance's platform consists of several independent products that offer the opportunity to invest in YFI. The group of core products of the platform includes:
- APY is a data table showing interest rates for various lending protocols.
- Earnings - identifies the highest interest rates that users can earn by lending an asset.
- Vaults - a set of investment strategies designed to maximise profits from other DeFi projects.
- Zap - which combines multiple transactions in a single click, saving on costs and labour.
Users earn YFI tokens by locking cryptocurrencies into yearn finance contracts running on the Balancer and Curve DeFi trading platforms using the yearn finance platform. So anyone who wants to invest in YFI can use any of these products on offer. The protocol also has other tools with which to invest in YFI.
Thus, Yearn Finance Finance uses a practice commonly referred to as "crop farming", in which users lock crypto-assets into the DeFi protocol to earn more cryptocurrency. The more assets users close onto the platform, the more tokens they receive through the protocols.
In its first month of operation, the Yearn Finance platform raised about $800 million in assets.
How Yearn Finance works
Step-by-step instructions for using the aggregator:
1. Choose the platform version (V2 is available in December 2021, and V3 is in the testing phase).
2. Connect a wallet. Some wallets can be downloaded as a browser extension, installed on a smartphone via App Store or Google Play.
3. Choose a chain to interact with, e.g. Ethereum and Fantom.
4. Choose the yVault Vault you want to deposit into. Then specify the exact number of coins.
5. Click on the "Deposit" button and confirm the transaction via the cryptocurrency wallet. Usually, the process takes 3 min, but it can be accelerated by paying a higher fee in gas.
Assets will first be automatically transferred to a yVault smart contract and then sent to 1 or more strategic contracts. Strategists and custodians will take care of the management of the deposited assets so that the holder receives the maximum income.
6. When the operation is completed, the assets will be displayed in yVault.
To withdraw funds from the Vault, you need to open it and go to Withdraw, specify the amount and confirm the transaction through the wallet.
Additional settings that the investor can set:
- Slippage tolerance: 1%, 2% or 3%. The transaction will be voided if the price changes for the worse by the percentage chosen.
- Themes. You can create your own themes.
- Language. Supported languages: English, Spanish.
Lending and trading
Most Yearn Finance services - Earn, Zap and APY - aim to allow users to lend or trade their cryptocurrency.
Earn is a way for users to get the best lending rate, and it works by searching through various lending protocols, such as Aave or Compound, to find the best rates.
Users can then deposit their DAI, USDC, USDT, TUSD or sUSD on the Yearn Finance platform to get these interest rates.
Similarly, Zap allows users to make multiple investments with a single click. For example, a user can exchange DAI for yCRV (another DeFi cryptocurrency) in one action, compared to three steps on the Yearn Finance and Curve platforms.
That saves the user time, opportunity cost and transaction fee.
APY (which stands for annual percentage yield) searches the lending protocols Earn uses and gives the user an estimate of how much interest they can expect to earn year on year for a given amount of capital.
Yearn Finance Vaults
Vaults is Yearn Finance's most sophisticated service, allowing users to follow active investment strategies using the platform's self-executing code. In this sense, vaults are similar to actively managed mutual funds.
Still, in the experimental stages, these strategies are expressed in Solidity, which means that the user will need some familiarity with the code to understand how vaults work.
However, investing in Vault is not tricky. Yearn Finance's user interface allows the user to invest popular coins such as DAI and USDC in each strategy, displaying historical investment returns.
The platform's native tokens have no backing in the form of gold or dollar reserves. Although the aggregator specialises primarily in stablecoin transactions, YFI is not linked to the fiat exchange rate. In fact, the popularity of the Yearn Finance platform and the volume of assets locked into it serve as collateral and protection against depreciation. As the DeFi sector becomes more popular, pharming programmes and the aggregator develops, the price of a native coin will have reason to rise.
Farming, revenue farming are both designations for the same process, where the user earns from the coins they already have. Liquidity providers contribute assets to specific smart contracts (pools). In exchange, they receive rewards in cryptocurrency.
What is decentralised finance (DeFi)
Decentralised finance (DeFi) is a set of specialised applications and financial services based on a blockchain (a continuous, sequential chain of blocks containing information built according to specific rules).
DeFi's main idea is to create an independent and transparent financial ecosystem unaffected by regulators and human error.
Simply put, DeFi makes finances available to anyone: users conduct transactions and resolve financial issues directly with each other, rather than going through intermediaries like banks, brokerage houses or other financial institutions. The decentralised ecosystem software allows buyers, sellers, lenders and borrowers to interact.
The difference between centralised (CeFi) and decentralised financial systems is how their users achieve their goals. In CeFi, users rely on the people behind the business and the regulatory framework. In the case of DeFi, users rely entirely on technology, software code and encryption algorithms.
What forms the DeFi ecosystem
DeFi ecosystem is formed with:
Stablecoins - cryptocurrencies whose value is tied to an underlying asset (e.g. Tether USDT is tied to the US dollar exchange rate).
Farming - any action aimed at obtaining tokens for some activity, usually - providing its computing power to perform blockchain calculations.
Issuance of tokenised shares. These are analogous to traditional securities but with the benefits of blockchain. There are several uses for such tokens: a debt or investment instrument, a derivative, a digital stake. There are also token baskets, the decentralised equivalent of an ETF.
Decentralised Exchanges (DEX). They lack an exchange operator and need registration, identity verification, and fees. Instead, payments are processed by smart contracts. The platform does not access the funds and does not hold its customers' assets, meaning that there is essentially a real exchange without an intermediary.
Cryptocurrency loans. Some users lend their coins, and others take them. Decentralised platforms automatically enforce the terms of the loans and distribute the interest. To borrow money, you will need to provide the platform with collateral.
The final part
Most are now primarily interested in the YFI token as a promising investment asset. It has shown the fastest growth that the cryptocurrency market has ever seen. Such gains have not been seen since the ICO boom in 2017. Those who had the earliest time to buy in made hyper profits. Make decisions with a cool head but a warm heart. If you do, you won't go wrong. We wish you successful trading!