Heard about DeFi—decentralized finance—yet? Maybe you’ve heard something about staking or yield farming, but aren’t quite sure what those are exactly. Yearn.finance (YFI) is at the intersection of all these concepts, as a decentralized finance platform that enables users to leverage their crypto holdings to earn rewards (in the form of more crypto).
Keep reading to learn more about Yearn.finance and its role as a yield farmer in the crypto world.
What is Yearn.Finance?
Yearn.finance is a decentralized platform originally operating on the Ethereum blockchain that functions as a gateway to many yield-generating crypto products in the Ethereum ecosystem. With so many DeFi platforms offering opportunities to earn rewards by providing lending and trading services, Yearn.finance aims to simplify the process and maximize the yield that Yearn.finance users earn on their crypto.
Yearn.finance’s native coin is YFI. Holders of YFI have governance rights over the protocol, which controls where revenues and cash flows are directed.
How does Yearn.finance work?
Yearn.finance maximizes how much crypto you can earn via a practice called yield farming. Yield farming is the practice of depositing your idle assets into a protocol to become one of the early users. These early users get paid out in the native tokens of that particular project. This is to reward early users and incentivize more to join.
Yearn.finance is specifically designed to allow users to deposit their idle assets into Yearn Vaults, but then automatically moves the crypto around to whichever DeFi platform is offering the highest yield at the moment. This is automated yield farming at it’s finest!
Yield farming could be your full-time job, but you probably already have a full-time job, so Yearn.finance does the yield farming for you. Yearn algorithmically then sends your deposited assets into the best protocols to get yield on. This includes protocols such as Aave, Compound, DyDx, Curve and many more. Users get all of the yield based rewards minus a small cut, which is paid to YFI holders and protocol developers.
Yearn.finance, as a fully decentralized platform, is governed by the holders of YFI. Independent developers maintain and support Yearn.finance’s operations and development.
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