YEARN FINANCE And YFI Token Explained | DeFi, Ethereum #Finance

confused about how why earn Finance works and what is the wi-fi token all about you’ll find out all of this and more in this CashNews.co before we begin if

you’re interested in learning more about decentralized Finance make sure you subscribe to this channel okay let’s start with what why earn

href="https://cashnews.co/finance" style="font-weight: bold; color: #1a73e8; text-decoration: none;">Finance is all about the main element of why earn Finance is

the why iron or yearn protocol the iron protocol in essence is a Yield optimizer that focuses on maximizing defy capabilities by automatically switching between different lending protocols before we explain the mechanism of the protocol itself let’s see how yearn came into

existence in early 2020 the author of the yearn protocol andrei cronier started looking into automating his strategy for choosing the highest paying lending protocol for his stable coins before the first iteration of the protocol andre had to wake up every day and manually check which protocol pays

the best apy on that day and consider moving his funds to that protocol there are always a few options available at the time such as compound ava fulcrum or dydx this manual work quickly became repetitive and boring so andrei started coding the first version of the yearn protocol to automate the

whole process of choosing the most optimal strategy for his stable coins the protocol in essence creates a pool for each stable coin by depositing a stable coin to a pool the user receives their y tokens that are Yield bearing equivalence of the coin that was deposited for example

if a user deposits die the protocol issues wide eye the dye that is pulled together can then be moved between different landing protocols to always maximize the Yield for instance if ave offers a better Yield on diet than compound the iron protocol can decide to

move all or some of the die to other the protocol checks if there is a better Yield available at the time a user deposits or withdraws money from the pool triggering a rebalance of the pool if necessary if a user wants to withdraw their initial die plus accrued interest they can

redeem their wide eye and receive the underlying die one thing that the protocol always assures is to never swap the initially deposited stable coin to a different stable coin even if there is a higher Yield available so for example if a user deposits die the protocol would never

swap it to usdc even if usdc has a higher Yield this is because most users want to withdraw the same stablecoins as they initially deposited after the initial version of the protocol was completed andrei decided to open it up to more people who were also interested in automating

their Yield strategies from the protocols perspective adding more funds to the pool was beneficial as there were more opportunities for triggering rebalances with more deposits and withdrawals taking place after the initial warm welcome by the community andre started working on

improving the protocol itself as the money in the pools started growing some of the previously obvious strategies like moving coins into the highest paying lending protocol stopped working now the protocol had to also anticipate what would happen to the apy if a large amount of funds are moved in

so it would have to also optimize splitting funds between different protocols and choose the most optimal solution at this point andrei also started working with curve on the ycrv Liquidity pool ycrv pool contains the following y tokens y die y usdc y usdt and y tusd making it easy

to swap between the y tokens without unwrapping them into their underlying tokens by depositing stable coins to the ycrv pool the users can earn trading fees for providing Liquidity on top of getting a return on their Yield bearing y tokens up to this point finding

out what the best api on a given stablecoin is was fairly easy this changed dramatically with the introduction of Liquidity mining with compound’s comp token distribution as a prime example the comp token distribution was also pretty much the time when all the

Yield farming hype started if you need a recap on Yield farming and Liquidity mining you can check out this CashNews.co here comp farming basically changed the whole landscape of finding the best Yield and checking the apy of a

deposit was no longer sufficient to find out the actual Yield you would have to add up all the extra tokens that were being distributed finding the best strategies became more and more complex with all the Yield farming craze going on andrei together with the yearn

community started working on another idea vaults yearn walls in essence are pools of funds with an associated strategy for maximizing returns on the asset in default vault strategies are more active than just lending out coins in fact most of all strategies can do multiple things to maximize the

returns such as farming other tokens and selling them for Profit providing Liquidity or borrowing stable coins each vault follows a strategy that is voted in by the yearn community the full explanation of the vault’s mechanism is outside of the scope of this

CashNews.co but i’ll make another one that focuses just on this super interesting topic so make sure you subscribe to this channel to stay in the loop now let’s talk about the yearns token wifey to further decentralize the yearn protocol and allow other people to make meaningful

decisions on the future of the protocol andre decided to distribute a governance token to the yearn community the token distribution was focused on having a fair launch and rewarding the yearn community to ensure a fair launch the wi-fi token had no pre-mine no vcs allocation and even no team

reward all the tokens were distributed to the users of the protocol a 9 day long token distribution started with allocating 10 000 wifi tokens to the Liquidity providers of the white crv pool the lps had to stake their ycrv lp tokens to receive wifey rewards shortly after two more

balancer pools were added with 10 000 tokens each totaling 30 000 wifi tokens regardless of a disclaimer that the wifey token has zero financial value the money started flowing into the incentivized pools topping 600 million dollars in locked value also the wi-fi token itself started rapidly

appreciating in value this created additional risk as the author of the protocol was in control of the governance admin ki before the governance went live this key could potentially be used to create more wi-fi tokens which would result in collapsing the price of wifi this was quickly fixed by

changing the single admin key to a multi-seek key requiring multiple signers from the defy yearn community the wifey token as design is extensively used in the yearn governance to decide on the future of the protocol with one of the most active and loyal communities in the whole defy space

there’s also a lot of speculation on the potential future Revenue from the wi-fi tokens that fuels the price appreciation the wi-fi token increased in value from around six dollars when it started trading to over thirty thousand dollars per token less than two months later

pretty much a parabolic run although the earned protocol and most recently the vaults are at the core of the yearn Finance ecosystem there are also other services such as why

swap why trade why borrow and why insure that are outside of the scope of this CashNews.co you can look them up by checking some of the links i’ll put in the description box below yearn is clearly one of the most interesting protocols in the device space but like with pretty much everything

else in defy before deciding to use a particular protocol always make sure to understand the associated risks so what do you think about yearn and the wifey token did you manage to participate in their initial token distribution comment down below if you like this CashNews.co don’t forget to

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