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Ethereum: Does DeFi project yEarn.Finance offer big profits?

  • Ethereum-based yEarn Finance platform becomes one of the investors’ favorites during 2020 for its benefits.
  • The utility of the yEarn Finance platform and the return of the YFI token, positions it as one of the biggest winners in the DeFi sector.

After its launch in January this year, the yEarn Finance platform has taken the Ethereum DeFi sector by storm. By displacing longstanding protocols such as Compound and Synthetix, investors are attracted to yEan Finance for its trading mechanism, rate of return, and other incentives.

Facilitating Yield Farming in the Ethereum DeFi sector

Unlike other platforms and protocols in the DeFi sector, yEarn Finance is an ecosystem in itself. The platform offers its investors the advantages of “yield farming” by bringing together different components of the DeFi sector in one place. In that sense, yEarn Finance can be considered one of the pioneering yield farming platforms from its launch.

One of the most popular trends among investors, yield farming, is a combination of different strategies an investor uses to take advantage of different DeFi protocols to get the highest returns. yEarn Finance simply makes it easier for investors by offering them different tokens (DAI, USDC, USDT, WBTC) to practice yield farming. The platform’s user interface is easy to use, compared to other protocols and the obstacles an investor has to face when using more than one platform to do yield farming.

The yEarn Finance platform has an “earn” button that users can access after connecting it to their crypto wallet. In addition, the platform allows users to receive profits when depositing funds. Profits are granted in the form of a y-token. In other words, if an investor deposits DAI, they can receive yDAI. This function is enabled by the Curve protocol and also offers gains for additional trading fees.

However, the platform’s popularity has received increased attention because of the performance of its governance token YFI. As reported by CNF, YFI Show a 2,000% gain in less than 24 hours after its launch. In one week, YFI had made over 11,000% in returns. This reflects the success and popularity of the platform, which offers investors returns of up to 1,000% for holding YFI.

Users cannot buy the YFI token, but must either receive it or earn it. To do so, users can go to the Curve protocol and delegate a portion of their tokens to Y (y-token). After that, an investor has to go to the Balancer protocol and provide liquidity to one of the available groups to obtain LP tokens. The user can then stake these tokens to obtain YFI.

Investors can also use Curve to earn yEarn Finance’s governance token. Currently, Curve has the liquidity pool and Curve LP tokens with yEarn.finance to earn YFI. Recent data shows that after the launch of YFI less than two weeks ago, liquidity in Curve has skyrocketed and the protocol has managed to exceed $300 million in Total Value locked. In addition, YFI’s staking stands at 10.22% on the yEarn.finance platform.

The growth of the DeFi sector seems to respond to the bullish sentiment present throughout the crypto market. As a consequence, the Coinbase exchange announced that it is considering adding new cryptocurrencies to its platform. Some of the cryptocurrencies, that will be added are tokens in the DeFi sector.

The listed currencies could benefit and enter a new rally due to the “Coinbase Effect”. This effect is based on the positive performance that cryptocurrencies listed in the exchange present, at least in the short term. Therefore, it is possible that the already extraordinary gains of YFI and other tokens in the DeFi sector will continue to rise.

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About Author

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Reynaldo Marquez has closely followed the growth of Bitcoin and blockchain technology since 2016. He has since worked as a columnist on crypto coins covering advances, falls and rises in the market, bifurcations and developments. He believes that crypto coins and blockchain technology will have a great positive impact on people's lives.

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