Despite the fact that 2020 has been one of the busiest years (in a negative sense), members of the crypto community have been able to witness the growth of different cryptocurrency projects. Although these projects not only stand out for the price of their respective tokens in the market but also for their technological properties, this time we will talk about a cryptocurrency that even exceeded the price of BTC recently.
What is Yearn.Finance? (YFI)
Yearn.Finance (YFI) is a financial protocol created in July of this year by a well-known programmer named Andre Cronje, seeking to optimize the performance obtained by being a liquidity provider. Yearn.Finance was the first platform to provide a good interface to all the potential that exists in this network, including benefits such as loans, interest rates and stablecoin management.
Basically, Yearn.Finance takes the assets deposited by users and places them as liquidity where it offers the best performance. This search is carried out through smart contracts and a decentralized way to decide each protocol. For this, Andre Cronje created the YFI token, which is used to participate in the Yearn.Finance protocol.
What is the YFI token
It is a token that its intention is only a vote value, a governance token in the pfyf. What has given value to these projects is decentralization, all about the chain (onchain). This token should have 0 value since it should only be used for voting and decide how the protocol is governed and how the platform code works.
However, the YFI token has become a cornerstone of the entire DeFI ecosystem. YFI is part of the “lego” DeFi, in which everyone was connected in some way and the highest performance is made precisely in the synergy that is obtained in these legos.
There is only a supply of 30,000 YFI, which makes it easy for its price to be pushed up. Although the scarcity of this token is believed to have been the reason for its price, YFI’s interoperability with the existing DeFi on Ethereum manages to connect with UniSwap, Compound, and other protocols.
This token is used as leverage in other DeFi protocols, so all this interoperability on the liquidity provided is what has really pushed the price of YFI to such high levels. We are facing a software creation that decentralizes and gives transparency to the entire financial process that exists today in blockchain.
The YFI platform
Once you know what YFI is and what purpose it was created for, getting to know the whole package. Upon entering Yearn.Finance you will find a friendly platform with Earn, ZAP, APR and Vaults options. In Earn you can see how to deposit stablecoins and wBTC to generate a passive interest on them. What the YFI protocol does is take this money and invest it in places where there is better performance in terms of liquidity, which is known as capital farming. The interface shows you the available stablecoins and the interest rates that will be returned to you annually for these deposits.
The APR is the annual interest calculated by the platform on the different available digital assets (Tether, BUSD, ZRX, BAT, etc …) of which you can have the amount invested (in each one) that you want.
In short, what YFI establishes is a synergy with financial protocols to obtain the highest possible performance. For providing liquidity, investors will receive annual remuneration on their initial investments.
Recently, it has been communicated that YFI will be listed on Binance, one of the biggest crypto exchange platforms.