![]() ![]() Lenders can also redeem their assets (plus interest earned) from this pool. ![]() Anyone can borrow from this pool and this incurs interest to the borrower. Meanwhile, the platforms will use the aggregate deposits from many users to create a liquidity pool. In return, users receive an ‘IOU’ token that can be used in the future to redeem the deposited crypto asset and the rewards from the accrued interest. Users deposit cryptocurrencies, tokens, or stablecoins into one of the investment products that the platforms offer. The most important concept to know is that DeFi platforms function similarly to investment banks. How do people earn interest on DeFi platforms? If you are already familiar with DeFi and yield farming, go ahead and skip to What is Yearn Protocol.Īre you more interested in knowing about the YFI token? You’re welcome to skip to this section - What is the YFI token. Still confused about DeFi? Don’t worry, I’ll help you run through the basics below. YFI is the native token (to be specific, an ERC20 token) on Yearn.finance, which is used for governance of the decentralised autonomous organisation that oversees the future development of Yearn. With Yearn, you simply deposit your crypto assets and let the Yearn Protocol algorithm work for you to earn the highest interest on various decentralised finance (DeFi) platforms. Yearn.finance (also known simply as Yearn) is a brilliant solution for those looking to invest in the decentralised finance ecosystem, but wants to take the complexity out of it. So, while your cryptocurrencies sit idly inside your wallet, why not make your crypto money work for you? The more assets users lock in a platform, the more tokens they are awarded by the protocols.If you’ve been holding onto some cryptocurrencies, you’re already ahead of the curve to protect your money’s value from depreciating due to inflation. Additionally, yearn.finance capitalizes on a practice commonly called “yield farming,” in which users lock up crypto assets in a DeFi protocol to earn more cryptocurrency. The yearn.finance system retains $500,000 of fees and distributes the rest to YFI holders. Users who hold YFI can receive revenue collected by the protocol in the form of fees. YFI is also used to encourage users to lock cryptocurrencies in yearn.finance and its contracts running on Balancer and Curve. YFI has an initial fixed supply of 30,000 tokens (which could increase if YFI holders elect to do so). Anyone on the platform can propose, but only YFI holders may vote on it. To be enacted in yearn.finance’s code, a proposal needs more than 50% of the votes. Anyone who holds YFI tokens can vote on the rules users must follow when using yearn.finance. YFI in practice YFI is the cryptocurrency that governs the yearn.finance platform. Due to its governance model, these percentages are subject to change by consensus at any time. Yearn.finance makes a profit by charging withdrawal fees as well as 5% gas subsidization fees. The platform makes use of various tools to act as an aggregator for DeFi protocols such as Curve, Compound and Aave, to bring those who stake cryptocurrency the highest yield possible. One of the aims of yearn.finance is to simplify DeFi investment and activities such as yield farming for the broader investor sector. Cronje has a long career in cryptocurrency and has held positions at smart contract ecosystem Fantom and CryptoBriefing. A brief history Yearn.finance was launched by independent developer Andre Cronje in 2020. ![]()
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