A Simple Introduction to Yearn Finance

What is Yearn Finance?

  • Gateway of yield-generating products in the Ethereum ecosystem
  • Community-driven robo-adviser for yield
  • yearn.finance capitalizes on a practice commonly called “yield farming,” in which users lock up crypto assets in a DeFi protocol in order to earn more cryptocurrency
  • The more assets users lock in a platform, the more tokens they are awarded by the protocols.
  • Users earn YFI tokens by locking cryptocurrencies in yearn.finance contracts
  • If you’re unfamiliar with staking crypto, I recommend reading this article first: A Simple Introduction to Staking Crypto

Yearn Finance Products

Earn

  • Is a way for users to get the best interest rate on lending, and it works by searching across different lending protocols, such as Aave or Compound, to find the best rates
  • How it works is that you would lend ETH as an example, you will get yETH in return.
  • The ETH you deposited will be automatically lent to the lending platform with the highest yield.
  • You don’t have to worry about doing the research yourself to determine which is the best lending platform that will get you the highest yield
  • Think of Yearn as a broker that helps you find the best return from different lending platforms for the specific crypto currency you want to lend out

Vaults

  • A collection of investment strategies designed to generate the highest returns from other DeFi projects
  • Can be a selection of different strategies such as farming other tokens sending them for profit, providing liquidity to liquidity pools or borrowing stable coins and much more
  • Each vault follows a strategy that is voted in by the yearn community
  • Vaults are like actively managed mutual funds.

If you would like to learn more, visit the official Yearn finance website here.

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Hi! I'm

Ricky Young

My belief is that financial freedom cannot be obtained by just a 9-to-5, but a combination of smart investing and passive income. This is my journey to achieve financial freedom.

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