Yearn
Yearn provides tools to maximize DeFi yields through automatic re-investment of incentives, rewards and other types of payouts.
- Documentation
- Auditors
- Please see our FAQ on experienced auditors
- Website
- Token: YFI
- Tags: Yield Aggregator
- TVL: $347.4M (Rank #27)
- TVL Ranking by Yield Aggregator: #1
- Blockchain: Ethereum, Optimism, Fantom, Arbitrum, Base
- Chain TVL
- Ethereum: $327.26M
- Optimism: $17.96M
- Fantom: $2.08M
- Arbitrum: $78.64K
- Base: $584.47
- Code reviewed by several experienced auditors including Trail of Bits and MixBytes
- Anonymous team reduces transparency
- One hack in a prior version of the protocol
- Core protocol launched in 2021; maturity over one year minimizes technical risk as smart contracts are well battle-tested
- Top 1% by total value locked reduces risk
- Multisig wallet controls protocol upgrades
- Multisig consists of at least 4 signers, which means the protocol is less susceptible to centralization risks
- No timelock exists or no information documented, which mean a malicious actor could approve upgrades without any delay
- Low voting power concentration reduces risk
- No death spiral concerns
- This protocol is susceptible to risks related to yield optimizers which deploy custom strategies to automatically manage user funds
- Yearn will automatically reinvest any available rewards directed to the pool to help you maximize your yield
How Yearn works
Yearn can be thought of as a decentralized asset manager where users deposit their idle crypto assets in various algorithmically managed investment strategies ("vaults") to earn yield. These vaults then strategically invest the user's assets in other DeFi protocols with the goal of maximizing yield across platforms. Yearn achieves this through automatic compounding of token rewards and "profit switching", which means funds are automatically moved between DeFi protocols to always earn the highest interest rates.
How Yearn makes money
Similar to a traditional asset manager, Yearn makes money by charging management, performance and withdrawal fees on its investment vehicles. Yearn currently offers V1 and V2 vaults with the primary distinction being the fees charged. V2 vaults charge a 2% management fee (none for V1) rather than a withdrawal fee (0.5% for V1) in order to better align the protocol's incentives with attracting capital into the system versus exiting the system.
How you make money on Yearn
You generate yield by depositing your asset in a vault strategy. These strategies generally involve depositing the underlying assets to various money market platforms to earn protocol fees and rewards. Your yield can come from lending interest, trading fees, staking rewards, as well as savings on transaction fees from socializing gas costs across all pool depositors.
