This is an ERC-20 token and serves as the platform’s cryptocurrency. The Yearn ecosystem is controlled by its native token, YFI. Meanwhile, the user can claim their DAI tokens back anytime by returning yDAI to the protocol by paying a 0.5% withdrawal fee. Let’s assume that Compound gives more yield at a particular time than dYdX then, the protocol would automatically move the funds to Compound. The protocol then moves these tokens to different lending protocols to get maximum yield. Here in our case, the user gets 500 yDAI tokens. After giving tokens to Yearn, the protocol issues and returns yTokens.
Let’s say a user wants to invest 500 DAI tokens. To better understand the platform’s mechanics, let’s illustrate an example. For particular whitelisted protocols, this service also offers zero-collateral loans. Collateral is a valuable asset pledged as security for the repayment of a loan. The service allows borrowing using the crypto as collateral. Iron Bank : This is a lending service for both users and the protocols. Further, the platform also helps users shift capital, auto-compounding, and rebalancing. The platform offers more than ten different strategies for every kind of user. The user can manage their holdings and choose the best strategies to maximize their yield. Vaults : These are like savings accounts for crypto assets. The smart contracts of this product ensure that users are obtaining the highest interest rates at all times. Users can deposit to these aggregators to earn interest. According to the whitepaper, the project provides three core products: Earn, Vaults, and Iron Bank.Įarn : This is a lending aggregator and shifts funds between different platforms. The platform eases users’ interaction with other DeFi projects and offers services such as swap and farm in one place. Running on Ethereum, the project’s primary purpose is to simplify yield farming for the masses. In other words, this platform is an automation tool that invests into the liquidity pools of various projects to deliver the best possible profits. Yearn Finance is a decentralized finance (DeFi) tool that aims to optimize yield to generate a higher return. Yield farming is a process of s taking cryptocurrency to earn interest as passive income. Yearn Finance is a yield farming platform with an intuitive interface.