Better as Bitcoin ... or just different?

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Authored by: @hetty-rowan


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I told ya'll yesterday that I was going to look for a gem that wasn't that much affected by Bitcoin and Musk. So here we are today with a token that has a HIGHER dollar value as Bitcoin.



Because we're here on Leofinance, I don't need to explain the whole idea of DeFi farming again. I think, we all already know that very well. And we also know that there are risks involved. For example a risk at impermanent loss. So I write about the What is yield farming part very briefly!


What is yield farming?

To better understand Yearn Finance and what you can do with it, it's important to understand what yield farming is. Because that is what Yearn Finance is all about.

You may have heard of it before, but if you haven't been working with crypto that long, yield farming may be new to you.

Yield Farming is a DeFi application that is still under development. So everything about this is exciting, new and often very promising.

Money doesn't grow on trees, it is often said. That's right! Crypto on the other hand? ... You can grow your crypto in yield farms. The "old" money allowed you to grow by investing smartly. Much has changed in the financial world with the advent of blockchain, but growing cryptocurrency is still possible.

Opportunities but also RISKS

Yield farming is a possibility for this with opportunities and, that should certainly be emphasized, also the necessary risks.
A yield farm offers you the opportunity to place the tokens that you have as passive capital in a liquidity pool.

Different token owners can place their tokens here. The tokens can then be used by exchange platforms or other dApps. In this way you give your assets in a kind of loan.

This is rewarded with a fee, which is actually an interest in tokens. Some people would think it's a bit like staking. But with staking you hold your tokens to increase the value and increase the security and network of the blockchain. Yield farming is not like that. It's much more lucrative. But has a much higher risk.

Yield farming is a DeFi application that is becoming very popular because it can bring you nice profits. But it is of course not as easy as I describe it here in a few sentences. This process is quite complicated and that makes it an activity with the necessary risks for the inexperienced crypto investor. I'm not going to describe all the risks here because that's not what this post is for, and there are many posts to find that do explain all the risks in detail. So I will leave it to this for this moment. If you do want me to write much more about it. Gimme a shout out in the comments below this post!

There are many Examples of yield farming, to name a few. We have of course, CubFinance! But there are also Compound (COMP) or Aave (AAVE), for example. We all know Pancakeswap, and many more.

There are therefore various options for choosing a yield farm or pool. So the question is what is the best (read: profitable) option for you at that moment, because this can differ per day or moment.

What is Yearn Finance protocol?

And exactly this is where Yearn Finance provides a solution. This protocol searches for the best yield option for your tokens at that moment and can also move the tokens to the best strategy for you. A kind of price comparator, with a profit strategy in one.

And much more complex of course. This process is completely automatic. Yearn Finance also ensures that it is easy to switch from one pool to another.

The idea of a look-and-compare platform was conceived by Andre Cronje. Cronje started with IEarn, the predecessor of Yearn Finance. This was a site where you could compare the different options in yield farming. Cronje initially made these comparisons manually. But this soon proved to be a time-consuming task. That is why he devised an automated system. However, IEarn was hit with an exploit. This is a type of robbery method in which a glitch or bug in the system is exploited by means of a piece of software or amount of data. Cronje was forced to stop using IEarn due to the exploit.

In the meantime, he had already started revising the IEarn's protocol. Yearn Finance grew out of this. Just under 4 months later, the YFI token and protocol were launched in July 2020. Yearn Finance now wants to offer other tools around DeFi in addition to yield strategies.

What are the different possibilities with Yearn Finance:

  • Vaults

The Vaults is Yearn Finance's main product. The vaults offer automated investment strategies with yield farming. They are capital pools that automatically generate yield. The different strategies are proposed by the holders of the governance tokens. By means of these tokens, the owners have governance, control, over the Yearn Finance protocol. I will give more details about this later.

Initially, the vaults were only usable for stable coins. But now they can also be used for, for example, Ether (ETH), Chainlink (LINK), tokenized Bitcoins, these are Bitcoins adapted to use with other DeFi, and other altcoins.

The vaults have the advantage, in addition to offering the best strategy, that they keep the transaction costs of Ethereum lower. This is possible because the capital is bundled. Transaction costs or the gas then have to be paid in one go for the bundle as a whole by 1 controller, the account of the vault.
earn

This is the original service that Cronje started with: an aggregator or comparator of the yield farms dYdX, AAVE and Compound. This service ensures that users are always presented with the most optimal choice. This tool was only suitable for stable coins.

  • zap

This tool ensures that you can easily switch (zap) assets from one liquidity pool to another within curve.finance. This is an automated market maker (AMM), an automated trading place where agreements are automatically concluded without permission, which is connected to Yearn Finance.

  • cover

The lack of certainty that you are covered against possible losses was a problem with yield farming. Cover is insurance against financial damage of various smart contracts or protocols on Ethereum (ETH).

Work continues on a 5th tool:

  • Stablecredit

This makes decentralized borrowing and lending easier.

Wallets for Yearn Finance

To use Yearn Finance you must first connect your wallet to the site. Of course various wallets are possible, namely:

  • metamask
  • Trezor
  • lattice
  • Portis
  • Opera
  • WalletConnect
  • WalletLink
  • Fortmatic
  • Authereum

New website!

The site yearn.finance is a new version launched in 2021. Not all tools can be used on this site yet. You will find an overview of the vaults on the site. It states which assets are available and what the expectation is, what it yields in terms of growth in percentages. The other services still need to be expanded further.

For the Earn tool you come to the v1site . This is a beta version and is still under development.
This is to be used at your own risk.

Yearns Finance's YFI Token

In July 2020, 30,000 YFI tokens were issued and that is also all tokens that will come into circulation. The YFI token was not introduced in the traditional way with a spectacular ICO. YFI was also not designed as an investment product. It was intended to reward the community that contributed to the Yearn Finance protocol and give them control over its further development.

Yearn Finance (YFI) is a governance token. This means that the token gives control over the development and management of Yearn Finance. The token gives you the right to submit proposals for amendments and vote on proposals.

What is special is that none of the development team or the founders were allocated tokens in advance. There was also no possibility for large investors to buy the tokens in advance. This way of launching without pre-mine is called a fair launch. All YFI tokens are distributed to the community via the pools at once.

After the launch, there was a distribution run of 10,000 tokens each to 3 balancing pools for several days. Those who had deposited capital in this were given the opportunity to claim YFI tokens in the first days after the launch.

This approach received a lot of attention in the crypto world and media and also ensured an engaged community around the launch. The token itself therefore has no intrinsic value other than control over the Yearn Finance protocol. However, this was enough reason to want to own the token.

The choice to keep it at 30,000 tokens for YFI was a decision that not everyone agreed with. This resulted in a fork, a split within the Yearn Finance community. From the fork came DFI.money(YFII).

In addition to a governance token, the tokens are a means of transaction within Year Finance and are now also traded on various exchange platforms. The YFI is an ECR20 token. This is a token protocol from Ethereum. The token YFI is traded on major exchange platforms such as Binance, OKEx, Huobi global or the Dutch Bitvavo.

What is the position of Yearn Finance in the crypto market?

YFI was trading at USD 778 right after launch. The price of the token quickly skyrocketed with a first spectacular ATH of more than USD 40,000 in September 2020. At that time, the token had completely overshadowed Bitcoin (BTC), which was still recovering from the fall in March 2020. Bitcoin was "only" over $10,000 in September. Yearn Finance's market cap is over 1.8 billion in April 2021.

Bitcoin had overtaken Yearn again. But it could not be ruled out that this would change again in the future. Yearn reached a new ATH of over USD 52,000 in April 2021. It is difficult to say how the value of the token will develop further. This will also depend on the developments of the Yearn Finance ecosystem.

The exponential growth is partly due to the fact that governance tokens have become booming in 2020 and 2021. Investing in exchange for control is attractive with these new DeFi tokens. Yearn showed how successful this product can be.

Yearn Finance worth as much as Bitcoin?

So if you look at the price of the coin, YFI and Bitcoin are pretty similar. But if we look at the value of the coin as a whole, it's a different story.

This value is namely the price of the coin or token times the number of coins or tokens in circulation. Because there is a small number of the YFI, namely 30,000 tokens, compared to the more than 18 million Bitcoins, Yearn Finance does not come close to the value of Bitcoin in that regard.

Who are the administrators of the Yearn Finance protocol?

Yearn Finance is a DAO Decentralized Autonomous Organization. It has no permanent board or a director, but the rules are laid down in smart contracts. Who is driving then? Governance rests with the token holders. They can add or reject proposals on the Yearn Finance protocol. If 50% of the tokens are in favour, something is accepted and then implemented by signing at least 6 of the 9 wallet holders.

Because the control over the wallet of Yearn Finance is also divided over several parties. To use the wallet, at least 6 of the 9 wallet holders must sign, it is a multi signed wallet. These 9 members are chosen by and from the token holders and can also change again. For example, the management is not with one party, but with several.

Yearn Finance is really run by a community from which they actively work on the further development of the platform. For example, a proposal has been made about hiring a marketing team. But also substantive matters such as adding strategies to the Vaults are implemented with proposals and votes.

Token holders entitled to protocol profit

An example of an important decision is, for example, that token holders are entitled to a share of the protocol profit. This profit is kept in a treasury and then paid out to the team and token holders if it exceeds a certain amount. Yearn Finance therefore has a return on the profit distribution and is therefore dividend-yielding. This is very common in the investment world. But this sets Yearn Finance YFI apart from Ethereum and Bitcoin that do not know this principle.

The governance token is exactly what makes Yearn Finance so attractive to investors. After the launch of the platform, people were a bit hesitant. Cronje's smart move was to announce in a Medium post that an ECR20 token was coming that would give you control over the Yearn Finance protocol. Control turned out to be an important value, which pushed investors over the threshold. Yearn Finance keeps stakeholders informed through their Reddit, Telegram, Medium and Discord accounts. They also have a site specifically for de governance.

The Yearn Finance project does not have a comprehensive roadmap as it is governance led and all decisions are made through proposals. In the discussions on the forum you notice that Yearn Finance has an active community that is thinking carefully about the next steps to take.

Founders and development team

Yearn Finance therefore has no board or board besides governance. There is, however, a development team. This is led by Andre Cronje. This South African has earned a place in the gallery of the greats of crypto history with Yearn Finance and the development of DeFi. In addition to IEarn and Yearn Finance, he has also contributed to the development of other DeFi such as the Fantom Foundation.

Andre Cronje is without a doubt the big name behind Yearn Finance. A team grows around him, but they are still somewhat invisible to him. In addition to the development team, there is a team of OPS developers. Yearn Finance has a very active community that thinks along about the future and development of Yearn Finance. Framework Ventures, Three Arrows Capital and the Spartan Group are investors in the Yearn Finance project.

Risks

Despite the transparency of the platform and its intentions, making an investment through the platform is never 100% risk-free. Andre Cronje is also very open about this, which in turn increases the reliable image of the platform. Furthermore, yield farming is a DeFi application that is difficult to secure. IEarn had already had to deal with an exploit once. In July 2020, IEarn was again almost a victim of an exploit. An audit has already been done once by an independent party to map out the risks. In this way the risks are reduced. But it is not yet possible to rule out a hack.

Yearn Finance further discusses DeFi applications that entail the necessary risks of loss of value for users. Although the risks are clearly stated, they cannot be ruled out. For example, there is the risk of liquidity problems with sharp falls in prices.
Furthermore, the entire platform was created from the ideas of 1 man: Andre Cronje. This makes the whole project depend on him for the investors' feeling. If, for whatever reason, he suddenly dropped out, confidence in the project might collapse. New people are also being added to the team at the moment, increasing confidence that Yearn Finance can continue without him.

So what is the Conclusion?

Yearn Finance is special project and that has not only to do with the high value or exclusivity of the token. The scarcity is less responsible for the high value of the token than you might think.

It is primarily the "power" of a governance token to control and profit from the success of Yearn Finance, which has allowed the token's value to rise. DeFi and yield farming are in full development and Yearn Finance will grow with it. Yearn Finance naturally operates in a risky playing field where there are many opportunities, but also dangers that one can not forget.

Recently with the crash of Bitcoin, Yearn Finance surpassed Bitcoin again, let's see if Bitcoin can catch up again.

Interesting times ahead!



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Posted Using LeoFinance Beta



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17 comments
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I don't think it can ever be better than bitcoin unless it builds up a similar sized, passionate following and community but it sounds to be an interesting token. 😊

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Not sure about that. Bitcoin was the first, but the technology of Bitcoin is not the best there is. Lots op tokens have better technologies and usecases.

But I just clickbaited you with the title ... It´s a whole different token. They only have their high values in common. Lol. About the similar sized, passionate following community. I think the community is just as passionated as the Bitcoin people, with the difference that the community can never be as big as Bitcoins for the simple reason that YFI is more scarce than Bitcoin is.

And not only that, but many people don´t get into DeFi.

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Thank you for your engagement on this post, you have recieved ENGAGE tokens.

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Is this the one that is like $1200 per token though? Too rich for my blood! :)

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This one is even higher in value than Bitcoin. It was 43K this morning when I was writing this post ...

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Okay yeah, it is the same one I was thinking. That is crazy!

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I for one yearn for stable gains and very little risk, I'm a risk adverse pleb I guess :P

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So nice sharing this concept, I've heard a lot about this DeFi token though I am still getting familiar with it because I used Cub Finance once but with what you shared it will be of great help to me.
Thanks once again.


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Wow its a fairly good model but I don't know if I would really want to enter given the price. I know we can buy fractionalized shares but it just seems too expensive.

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It sounds all great, especially the part not affected by BTC.

Furthermore, the entire platform was created from the ideas of 1 man: Andre Cronje. This makes the whole project depend on him for the investors' feeling.

Rely on a single person is equivalent to rely on a single node, single point of failure. That makes this a bit scary though.

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Happen to stumble upon this project sometime ago. seems like a very good one. My only problem with it is, it depends on a single individual.

Apart from that, the model is a good one. Also don't think it can stay ahead of Bitcoin for so long


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Yes, this is definitely an interesting project but it's hard to see the returns being all that great. I mean, I can buy this at $43k and it will have to go to $130k to triple. Or I can buy Cub at 57 cents and it needs to go to $1.71 to triple. Plus my APY is better. Plus I know the team. I'll stick with Cub. Good write-up though. I always enjoy learning about the cryptos you pick. Knowledge is power after all. :-)

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Lol even the creator says YFI is meant to be a governance token and should have zero financial value.

It’s already been called out a few times for having bugs, and no smart contract on ETH is perfect the bigger the honey pot the bigger chance it gets hacked

I’ll keep my Bitcoin thank you!

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Lol ... I'm not saying you should trade your Bitcoin in for YFI. Not at all. I'm just writing about the cryptos I see out there in the great big crypto jungle. And to clickbait with a title is the least thing I can do. Nothing of what I write is financial advice in any way.

Have a good day to buy the new dip!

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LOL indeed, I do follow the project since I am South African and we have a bit of a community here, and trust me things get ruthless and there has been some shady things happening here too, so I am always cautious having been in these circles and discussions

You know I did, holding the line and I bought some today

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