Yearn.finance is a DeFi project that provides a range of financial products across its platform. It runs on the Ethereum and Fantom blockchains and it was created with the primary goal of allowing users to maximize earnings on their crypto assets through creating simpler, cheaper and more efficient lending and trading processes. The core products designed to do this include yVaults, Earn and Iron Bank. Since Yearn.finance provides its services via smart contracts, it can guarantee that the code will work as written and remove the need for a third party to verify transactions, reducing costs and time.

Yearn.finance was created in 2020 by independent developer Andre Cronje and its native currency, the YFI token, launched in July 2020. In its first month following the launch, the yearn.finance platform attracted almost $800 million in assets, making it a very fast-growing DeFi project.

What are Yearn.finance’s key features and how does it work?

Notably, Yearn.finance has several key products. yVaults, the most complex product, acts in a similar way to actively managed mutual funds. Users deposit crypto assets into yVaults, with yVaults consisting of up to 20 strategies per vault. A user’s deposit is then routed through the strategies whilst guardians and strategists monitor them. The deposits can be moved through rebalancing, shifting capital and auto-compounding, with the goal being to seek out the highest possible returns from other DeFi projects.

yVaults does not charge a deposit or withdrawal fees however it does charge a 20% performance fee and 2% management fee. The auto-compounding feature reduces costs, and instead of paying a transaction fee when manually compounding yield, yVaults combines your transactions with many other depositors meaning the cost per depositor is reduced.

Iron Bank is a lending service for users and protocols. Loans provided to users are overcollateralized whilst approved loans provided for protocols are zero-collateral.

Another function, APY (Annual Percentage Yield), is a database displaying different interest rates from the lending protocols that provide users with estimates for how much annual interest they can expect to earn.

The Zap feature allows users to quickly and efficiently deposit most tokens into any vault by bundling several investments into one click. It automatically converts tokens into compatible tokens for yVault (providing there is less than 1% slippage) and deposits the assets into a yVault in one transaction. This is designed to save time and transaction fees.

What is noteworthy about Yearn.finance?

The native token, YFI, governs the yearn.finance platform. This means that holders of YFI can vote on platform regulation proposals. Whilst anyone can make proposals, only YFI holders can vote.

YFI can be earned through ‘yield-farming’, by locking in cryptocurrencies in yearn.finance through smart contracts (i.e. through Vaults and Earn).

What can Yearn.finance be used for?

The yearn.finance platform has some key use cases. The main ones are the lending and trading of cryptocurrencies, where the majority of its products have been designed to facilitate these uses.