Yearn Finance And YFI Token Explained

Yearn

Okay, let’s start with what Yearn Finance is all about.

Mechanics of Yearn

The protocol, in essence, creates a pool for each stable coin.

Further Development

After the initial version of the protocol was completed, Andre decided to open it up to more people who were also interested in automating their yield strategies. From the protocol’s perspective, adding more funds to the pool was beneficial as there were more opportunities for triggering rebalances with more deposits and withdrawals taking place.

Liquidity Mining

Up to this point, finding out what the best APY on a given stable coin was fairly easy. This changed dramatically with the introduction of liquidity mining with Compound’s COMP token distribution as a prime example.

YFI Token

Now, let’s talk about the Yearn’s token — YFI.

Other Services

Summary

Yearn is clearly one of the most interesting protocols in the DeFi space, but like with pretty much everything else in DeFi, before deciding to use a particular protocol always make sure to understand the associated risks.

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