Yearn Finance

Yearn Finance is an APY-increasing protocol that is built on the Ethereum blockchain. It functions like a decentralized bank whose sole aim is to maximize returns on crypto assets for its users.

What is the YFI token?

YFI is the native governance token of the Yearn platform.

When the token was launched in July 2020, it grabbed people's attention because Yearn's creator didn't set any tokens aside for himself or the company, as most cryptocurrency issuers tend to do. Instead, all of them were distributed to users who had deposits in certain key liquidity pools that benefited the project.

Initially, the circulating supply of the token was capped at only 30,000 YFI. Later, another 6,666 coins were added. According to the YFI documents, more can be minted if users vote for it.

So to get YFI now, users need to buy it.

Those who hold YFI can propose and vote on certain changes to be made to the platform. To do this, they have to stake their YFI tokens. Once votes have been cast, coins are locked for three days. Voters earn a small fee for participating in the decision-making process.

Developments at Yearn

Standardization

In April 2022, Yearn endorsed the new ERC-4626 standard, which streamlines design for yield-bearing tokens on the Ethereum blockchain.

Thanks to the new standard, developers don’t have to write new code to create custom vaults for every single new DeFi application. They can just build upon the new standard. It also creates a shared interface for the tokens held in vaults.

Developers say the standardization allows easier passage between protocols and can unlock innovation in decentralized finance.

Mergers

After launch, Yearn partnered or merged with a string of other DeFi projects such yield seeker Pickle Finance, hedging protocol Hegic, money market Cream and institutional DeFi portal Akropolis.

The goal of these partnerships was to expand Yearn’s offering to become a powerhouse for yield farming.

Hack

In February 2021, Yearn.Finance’s DAI lending pool suffered an exploit, which resulted in a loss of $11 million. The attacker got away with $2.8 million.

Exploits are a constant threat to your holdings in decentralized finance. Chainalysis reported that DeFi theft added up to $2.3 billion in 202. If your fund was stolen, chances are that it would never be recovered.